Audit Committee Charter
I. Statement of Purpose
The Audit Committee is an arm of the Board of Directors and must diligently fulfill its objectives for the Board while meeting its responsibilities to the stockholders by maintaining a close working relationship with the Board of Directors, executive management, independent auditors and Vice President, Internal Audit. Its primary purpose is to assist the Board of Directors in its oversight of: the integrity of the Corporation's financial statements; the Corporation's compliance with legal and regulatory requirements; the independent auditor's qualifications and independence; and the performance of the Corporation's internal audit function and independent auditors; and to prepare any required report(s) that must be included in the Corporation's annual proxy statement, in accordance with the rules of the Securities and Exchange Commission.
II. Structure and Compensation
· The Audit Committee shall be comprised of three or more directors appointed by the Board of Directors, one of whom shall be Chairperson, each free from any association with the Corporation that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee and meeting the definition of "independent" contained in the Listing Standards of the New York Stock Exchange or in any other applicable law, rule or regulation.
· The Board of Directors shall determine the compensation for members of the Audit Committee. A member of the Audit Committee may not, other than in his or her capacity as a member of the Audit Committee, Board of Directors, or any other Board committee (1) accept any consulting, advisory or other compensatory fee from the Corporation or (2) be an affiliated person of the Corporation or any subsidiary.
· The Audit Committee shall include at least one member who is a financial expert, as that term is defined by the Securities and Exchange Commission.
· The Audit Committee shall meet at least four times per year. One meeting shall be held prior to the start of the independent audit to review the audit plan and planned audit scope of the independent auditor. One meeting shall be held upon completion of the year-end audit to discuss the management letter prepared by the independent auditor, at which time a decision should be made by the Audit Committee, regarding the retention of the independent auditors for the ensuing year. Matters considered at these and other meetings will include: approval of the Annual Internal Audit Plan, review of the Internal Audit Activity Reports, review of recent Internal Audit Reports, and presentations by management on key business processes. Additional meetings will be called as required.
· Except for meetings held separately with management, the independent auditors or the internal auditor, the Chief Executive Officer, Chief Financial Officer, Vice President, Internal Audit and Corporate Controller will be invited to attend meetings of the Audit Committee.
· As a matter of sound business practice and to provide a record that the Committee has appropriately discharged its responsibilities, minutes will be taken of all Audit Committee meetings.
IV. Responsibilities and Duties
The Committee is an agent for the Board of Directors to help ensure the integrity of management, the independence of the Company's independent auditors, the effectiveness of the internal audit function, and the adequacy of disclosures to stockholders. The Audit Committee's primary duties and responsibilities are to:
· Retain, oversee and terminate, if necessary, the Corporation's independent auditors (subject, if applicable, to shareholder ratification), including prior approval of all audit engagement fees, as well as significant, non-prohibited, non-audit engagements.
· Obtain and review, at least annually, a report by the independent auditor describing: the firm's internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by government or professional authorities, within the preceding five (5) years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues, and (to assess the auditor's independence) all relationships between the independent auditor and the Corporation.
· Discuss the annual audited financial statements and quarterly financial statements with management and the independent auditor, including the Corporation's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations."
· Discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.
· As appropriate, obtain advice and assistance from outside legal, accounting or other advisors.
· Discuss policies with respect to risk assessment and risk management.
· Meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with independent auditors.
· Review with the independent auditor any audit problems or difficulties and management's response.
· Establish clear hiring policies for employees or former employees of the independent auditors.
· Report regularly to the Board of Directors.
· Review and appraise the audit practices of the Corporation's internal audit department.
· Establish and maintain procedures for the receipt, retention, and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters, and for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.
· In conjunction with the Board of Directors and executive management, review and update this Charter as conditions dictate.
· Review and act upon the regular reports prepared by the internal audit department and management's response.
· Periodically consult with the independent auditors about internal controls and the fullness and accuracy of the Corporation's financial statements.
· Consider such other matters in relation to the financial affairs of the Corporation and its accounts, and in relation to internal and external auditors of the Corporation as the Audit Committee may deem advisable.
The Audit Committee must distinguish its oversight responsibility from any involvement in the day-to-day management of the Corporation and the conduct of the audit. The Committee must not be considered an adversary of management; rather, it is part of the Corporation's governance and oversight process.
The most important key to success for an Audit Committee is effective communication between the Committee, executive management, the Board of Directors, independent public accountants and the Vice President, Internal Audit.
V. Annual Performance Evaluation
The Committee shall review (i) major issues regarding accounting principles and financial statement presentations, (ii) analyses prepared by management and/or the independent auditor setting forth significant reporting issues and judgments made in connection with the preparation of the financial statements, and (iii) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Corporation.
VI. Internal Audit Function
The Committee shall review the Internal Audit function responsible for reviewing and monitoring administrative controls in the accounting, financial and operating functions of the Corporation, and shall make recommendations for improvements to the quality of the overall internal control system. The Internal Audit function shall operate with maximum objectivity and have direct and unrestricted access to the Committee. The Vice President, Internal Audit shall report directly to the Audit Committee Chairperson and have dotted-line reporting responsibility to the Chief Financial Officer of the Corporation.
At the Board of Directors meeting next following each Audit Committee meeting, the Committee Chairperson shall make a report to the Board of Directors.