2003 Audit Charter: GKSRAI. PURPOSE
The primary function of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") of G&K Services, Inc. (the "Corporation")
in fulfilling its oversight responsibilities by reviewing the integrity of
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance, and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes. Consistent with this function, the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
o Review and appraise the audit efforts of the Corporation's independent
accountants and internal audit department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal audit
department, and the Board.
The Committee has the authority to obtain services and assistance from
outside legal, accounting or other advisors as deemed appropriate to perform its
duties and responsibilities.
The Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors (as defined by all
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC"), Nasdaq and any other appropriate body), and free from any relationship
that, in the opinion of the Board, would interfere with the exercise of his or
her independent judgment as a member of the Committee. All members of the
Committee should have a working familiarity with basic finance and accounting
practices, including being able to read and understand financial statements, and
at least one member of the Committee shall have accounting or related financial
management expertise. The committee shall use its best efforts to have, as one
of its members, an individual who qualifies as an "audit committee financial
expert" in compliance with the criteria established by the SEC and other
relevant regulations at the time the regulations require disclosure of the
existence of an audit committee financial expert. The existence of such an audit
committee financial expert, including his or her name and whether or not he or
she is independent, or the lack of an audit committee financial expert, shall be
disclosed in the Corporation's periodic filings as required by the SEC.
The members of the Committee and Chair of the Committee shall be elected by
the Board at the annual organizational meeting of the Board or until their
successors shall be duly elected and qualified.
The Committee shall formally meet at least three times annually, or more
frequently as circumstances dictate. As required, the Committee should meet with
management, the director of internal audit and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee is expected
1. Provide an open avenue of communication between management, the
internal audit department, the independent accountant, and the Board
2. Review the Committee's charter at least annually and recommend to the
Board any necessary or desirable amendments as conditions may dictate.
3. Maintain sole authority and responsibility for hiring and firing the
independent accountants. Be directly responsible for the appointment,
compensation, and oversight of the independent accountants' work
(including resolution of disagreements between management and the
auditor regarding financial reporting) for the purpose of preparing or
issuing an audit report or related work. The independent accountants
shall report directly to the Committee.
4. Confirm and assure the independence of the internal audit function and
the independent accountant, including considering whether the
independent accountant's performance of permissible non-audit services
and the compensation received for such services is compatible with the
independent accountant's independence.
5. Review and pre-approve the performance of all audit and non-audit
accounting services to be performed by the independent accountant
(other than with respect to de minimus exceptions permitted by the
Sarbanes-Oxley Act of 2002), to the extent such services are permitted
under applicable rules and regulation. By action of the Committee, the
authority to grant pre-approval may be delegated to one or more
designated members of the Committee who are independent members of the
Board, with any such pre-approval to be reported to the Committee at
its next regularly scheduled meeting. Approval of non-audit services
shall be disclosed to investors in the Corporation's periodic reports
required by Section 13(a) of the Securities Exchange Act of 1934, as
6. Consider, in consultation with the independent accountant, the audit
scope and plan of the independent accountant.
7. Consider and review with the independent accountant and the director
of internal audit:
(a) The adequacy of the Corporation's internal controls, including
computerized information system controls and security.
(b) The Corporation's risk assessment and risk management policies,
including the Corporation's major financial risk exposure and
steps taken by management to monitor and mitigate such exposure.
(c) Any related significant findings and recommendations of the
independent accountant together with management's responses
8. Review the items set forth below with management and the independent
accountant at the completion of the annual examination, and recommend
to the Board whether the financial statements should be included in
the Annual Report on Form 10-K:
(a) The Corporation's financial statements and related footnotes.
(b) The independent accountant's audit of the financial statements
and his or her report thereon.
(c) Any significant changes required in the independent accountant's
(d) Any serious difficulties or disputes with management encountered
during the course of the audit.
(e) Other matters related to the conduct of the audit, which are to
be communicated to the Committee under generally accepted
9. Consider and review with management and the director of internal audit
the results of internal audits completed, including:
(a) Significant findings during the year and management's responses
(b) Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access
to required information.
(c) Any changes required in the planned scope of their audit plan.
(d) The internal audit department charter.
10. As required, review with management and the independent accountant,
the interim financial results that are filed with the SEC or other
11. Review the Corporation's critical accounting policies and estimates
and all alternative treatments of financial information within GAAP
discussed between the independent accountants and management.
12. Review the internal controls report prepared by management for
insertion into the annual report and the independent account's
attestation on the assertions of management that are contained in the
internal controls report.
13. Ensure there is a process for the confidential, anonymous submission
by the Corporation's employees of concerns regarding questionable
accounting and auditing matters.
14. Ensure procedures are established for the receipt, retention and
treatment of complaints received by the Corporation regarding
accounting, auditing, and internal accounting controls.
15. Review and investigate any matters pertaining to the integrity of
management, including conflicts of interest, or adherence to standards
of business conduct as required in the ethics policies of the
16. Review and approve (with the concurrence of a majority of the
disinterested members of the Board) any related party and affiliated
17. Evaluate audit committee effectiveness (i.e. self-assessment), as
18. Report Committee actions to the Board with such recommendations, as
the Committee may deem appropriate.
19. The Committee will perform such other functions as required by law,
the Corporation's charter or bylaws, or the Board.