Audit Committee Charter

Purpose

The Audit Committee shall provide assistance to the full Board of Directors of the Corporation in fulfilling its responsibility to the shareholders, potential shareholders and investment community relating to the accounting and reporting practices of the Corporation, and the quality and integrity of the financial reports of the Corporation. The Audit Committee's primary duties and responsibilities are to:

Oversee that management has maintained the reliability and integrity of the accounting policies, independent audit process and financial reporting and disclosure practices of the Corporation;

 

Oversee that management has established and maintained processes to assure that an adequate system of internal controls is functioning within the Corporation; and

 

Oversee that management has established and maintained processes to assure compliance by the Corporation with all applicable laws, regulations and corporate policy.

The Audit Committee will fulfill these responsibilities primarily by carrying out the activities enumerated in Section V of this Charter.

Defined Terms

"Affiliate" shall mean a subsidiary, sibling corporation, predecessor, parent corporation or former parent corporation.

"Board" shall mean the Board of Directors of the Corporation.

"Corporation" shall mean Genzyme Corporation and its consolidated subsidiaries.

"Financially Expert" shall mean a person who has prior employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the development of financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.

"Financially Literate" shall mean the ability to read and understand fundamental financial statements, including a company's balance sheet, income statement and cash flow statement .

"Independent Auditors" shall mean a public accountant which (a) satisfies the requirements set forth by Rule 101 of the American Institute of Certified Public Accountants ("AICPA") Professional Standards, (b) satisfies the requirements of the Independence Standards Board ("ISB"), and (c) is a "registered public accounting firm" as that term is defined by the Sarbanes-Oxley Act of 2002.

 

"Independent Director" shall mean a director who (a) satisfies the criteria for independence under Rule 4200(a)(15) of the listing requirements for Nasdaq National Market issuers, (b) has not participated in the preparation of the Corporation's financial statements at any time during the past three years, (c) does not, other than in his or her capacity as a member of the Board or any Board committee, accept any consulting, advisory or other compensatory fee from the Corporation, and (d) is not an affiliated person (as define by applicable law or regulation) of the Corporation.

Composition

The Audit Committee shall be comprised of three or more directors of the Corporation, each of whom shall be (i) Independent Directors, (ii) 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 Audit Committee, and (iii) Financially Literate or must become Financially Literate within a reasonable period of time after his or her appointment to the Audit Committee. Further, at least one member of the Audit Committee shall be Financially Expert.

Each member of the Audit Committee shall be elected by the Board at the annual organizational meeting of the Board, and shall serve for a term of one year or until he or she dies, resigns or a successor shall be duly elected and qualified. The eligibility of a director to serve as a member of the Audit Committee, including a determination of financial sophistication and independence, shall be determined by the Board in its reasonable discretion. Unless a Chairperson is elected by the Board, the members of the Audit Committee may designate a Chairperson by majority vote of the full Audit Committee membership.

Meetings

The Audit Committee shall meet as frequently as circumstances warrant, but at least four times annually (which meetings may include the quarterly meetings described below). To foster open communication between the Board and management, the Audit Committee should meet separately at least once annually with management and at least once annually with the Corporation's Independent Auditors to discuss matters that the Audit Committee or each of these groups believes should be discussed privately. The Audit Committee or its Chairperson, or the Chairperson's designee, must meet with the Corporation's Independent Auditors and management quarterly to review the Corporation's financial statements and internal controls consistent with Section V.2 of this Charter. Members of the Audit Committee may participate at meetings of the Audit Committee by video conference, tele-conference or other electronic means.

Responsibilities, Duties and Authority

To achieve its purpose the Audit Committee shall:

Reports and Review

1. Review annually the adequacy of this Charter. The Audit Committee shall recommend to the Board, as conditions warrant, that the Board amend or supplement this Charter.

2. Review and approve all related-party transactions required to be disclosed pursuant to SEC Regulation S-K, Item 404.

3. Review with the Corporation's management and the Independent Auditors the interim financial statements of the Corporation prior to their filing or prior to the release of earnings, including a discussion with the Independent Auditors of the matters to be discussed under Statement of Auditing Standards ("SAS") No. 61, as amended, which include:

a) the Independent Auditors' responsibility under AICPA "Generally Accepted Auditing Standards";

b) the Corporation's significant accounting policies;

c) management judgments and accounting estimates;

d) significant audit adjustments and passed adjustments;

e) other information in documents containing audited financial statements;

f) disagreements with management;

g) consultation with other accountants;

h) major issues discussed with management prior to retention; and

i) difficulties encountered in performing the audit.

The Chairperson of the Audit Committee, or the Chairperson's designee, may represent the entire Audit Committee for purposes of this review.

4. Review with the Corporation's management and the Independent Auditors the Corporation's annual financial statements, including a discussion with the Independent Auditors of the matters required to be discussed under SAS No. 61.

5. Review with the Independent Auditors at the completion of the annual examination the Independent Auditors' judgments about the quality, not just the acceptability, of the Corporation's accounting principles as applied in its financial reporting. The review should include such issues as:

a) consistency of application of the Corporation's accounting policies and the clarity, consistency and completeness of the Corporation's accounting information contained in its financial statements and related disclosures; and

b) certain items that have a significant impact on the representational faithfulness, verifiability, neutrality and consistency of the accounting information included in the Corporation's financial statements.

6. Include in the Corporation's annual proxy statement a report of the Audit Committee (the "Annual Report") that states whether the Audit Committee has:

a) reviewed and discussed the audited financial statements with the Corporation's management;

b) discussed with the Corporation's Independent Auditors the matters required to be discussed under SAS No. 61, as may be modified or supplemented;

c) received the written disclosures and letter from the Independent Auditors regarding the Independent Auditors' independence as required by the ISB No. 1; and

d) discussed with the Independent Auditors the Independent Auditors' independence.

7. Include in the Annual Report, a statement, based on the review and discussions required under sections V.2, V.4 and V.12 of this Charter, that the Audit Committee recommended to the full Board that the audited financial statements be included in the Corporation's Annual Report on Form 10-K for filing with the Securities and Exchange Commission.

8. Disclose in the Corporation's proxy statement whether the Audit Committee has adopted a written charter, and include a copy of the charter as an appendix to the Corporation's proxy statement at least once every three years.

9. Disclose in the proxy statement whether the Audit Committee members are Independent Directors and disclose the nature of the relationship that makes any Audit Committee member not an Independent Director and the reasons for the Board's determination to include the non-Independent Director as a member of the Audit Committee.

Independent Auditors

10. The Audit Committee, in its capacity as a committee of the Board of Directors, shall be directly responsible for the appointment, retention, compensation and oversight of the work of the independent auditors and the auditors shall report directly to the Audit Committee.

11. Pre-approve the engagement of the Corporation's Independent Auditors for all audit and audit-related services in accordance with the Corporation's Auditor Independence Policy.

12. On an annual basis, the Audit Committee should review and discuss with the Corporation's Independent Auditors all significant relationships the Independent Auditors have with the Corporation to determine the Independent Auditors' independence.

13. Oversee the independence of the Corporation's Independent Auditors by:

a) receiving from the Corporation's Independent Auditors on a periodic basis a formal written statement delineating all relationships between the Corporation's Independent Auditors and the Corporation consistent with ISB No. 1; and

b) on a periodic basis reviewing and actively discussing with the Board and the Corporation's Independent Auditors any disclosed relationships or services between the Independent Auditors and the Corporation or any other disclosed relationships or services that may impact the objectivity and independence of the Independent Auditors.

Financial Reporting Process

14. Prior to the filing of the Corporation's Annual Report on Form 10-K and each Quarterly Report on Form 10-Q, discuss with management and the Independent Auditors the quality and adequacy of the Corporation's internal controls, including any significant deficiencies in the design or operation of those controls which could adversely affect the Corporation's ability to record, process, summarize and report financial data

15. Prior to the filing of the Corporation's Annual Report on Form 10-K and each Quarterly Report on Form 10-Q, discuss with management and the Independent Auditors any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation's internal controls.

16. Consider and approve, if appropriate, significant changes to the Corporation's accounting principles and practices proposed by management. Discuss with the Corporation's Independent Auditors any significant changes in auditing standards or their scope.

17. Establish regular systems of reporting to the Audit Committee by the Corporation's management and the Corporation's Independent Auditors regarding significant judgments made in management's preparation of the Corporation's financial statements and significant difficulties encountered during the course of the review or audit, including restrictions on the scope of work or access to required information.

18. Review significant disagreements among the Corporation's management and the Corporation's Independent Auditors in connection with the preparation of the Corporation's financial statements.

Complaints

19. Establish procedures for the receipt, retention, and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters and periodically review such procedures for adequacy.

20. Establish procedures for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting for audit matters and periodically review such procedures for adequacy.

Legal Compliance/General

21. Review with the Corporation's legal advisors legal matters that could have a significant impact on the Corporation's financial statements.

22. Report material information through its Chairperson to the Board following meetings of the Audit Committee.

23. Maintain minutes or other records of meetings and activities of the Audit Committee.

24. Engage independent counsel and other advisors, as the Audit Committee determines necessary to carry out its duties.