Audit Committee Charter

 

Purpose

The primary purpose of the Audit Committee of the Board of Georgia-Pacific Corporation is to assist the Board in its oversight of:

The integrity of the financial statements of the Company.

The independent accountants' qualifications and independence.

The performance of the Company's internal audit function and independent accountants.

The compliance by the Company with legal and regulatory requirements.


The Committee also shall prepare the report required by the rules of the Securities and Exchange Commission to be included in the Company's annual proxy statement.

The function of the Committee is oversight. It is the responsibility of management to ensure that the Company's financial statements are complete, correct and prepared in accordance with generally accepted accounting principles. Management and the Internal Audit Department are responsible for maintaining appropriate accounting and financial reporting policies and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws, rules and regulations.

Authority

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities enumerated in this Charter--including unrestricted access to the Company's employees, books and records and the authority to retain counsel and other experts or consultants--and such other duties and responsibilities as it may be assigned upon the direction and approval of the Board. If the Committee uses third-party service providers in carrying out its duties, the Committee shall have the sole authority to select, retain and terminate any such third-party service provider and to approve the provider's fees and other retention terms.

Membership

The Committee shall be comprised of not less than three non-management members of the Board, each of whom shall be an "independent director" in accordance with the Company's Corporate Governance Guidelines. All committee members shall be financially literate, and at least one member shall satisfy the definition of, and be designated as, a "financial expert," as defined by Securities and Exchange Commission rules and regulations. The members of the Committee shall be appointed annually by the Board, and the Board shall designate one member of the Committee as Chairperson. The Board may fill vacancies on the Committee, and may remove a Committee member at any time with or without cause.

Operations

The Committee shall meet at least quarterly and at such other times as the Chairman of the Committee shall designate, or at the request of a majority of Committee members, the Chairman of the Board or a majority of the Board, in each case in accordance with the Company's Bylaws.

Reports and Minutes

The Committee shall report to the Board periodically or as required by the nature of its duties on all of its activities and shall make such recommendations to the Board as the Committee decides are appropriate. The Committee shall record minutes for each meeting. The Committee shall review and approve the Committee minutes and they shall be filed with the Secretary of the Company for retention with the records of the Company.

Duties and Responsibilities

The duties and responsibilities of the Committee are to:

1.

Oversee the activities of the Company's management in its preparation of the Company's financial statements and related financial disclosures, and review and discuss the audited financial statements with management. To carry out this responsibility, the Committee shall:

(a)

review with management the existence and substance of any significant accounting accruals, reserves or other financial reporting judgments that had or may have a material impact on the Company's financial statements;

(b)

discuss with management and the independent public accountant any significant changes in the accounting principles used to prepare such financial statements, including significant proposed changes in accounting and financial reporting standards, as well as all alternative accounting treatments of financial information within generally accepted accounting principles;

(c)

discuss with management and the independent public accountant any significant issues or disagreements between them affecting the preparation of the Company's financial statements and how they were resolved;

(d)

review and discuss with management the scope and content of the Management Discussion and Analysis section of the Company's quarterly and annual financial statements; and

(e)

establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

2.

Oversee the activities of the Company's independent public accountant. To carry out this responsibility, the Committee shall:

(a)

be directly responsible for the appointment, compensation and oversight of the work of the independent public accountant, including resolution of disagreements between management and the independent public accountant regarding financial reporting;

(b)

approve the annual audit plan of the independent public accountant and its fees;

(c)

discuss the results of its quarterly reviews and other matters required to be communicated to the Committee by the independent public accountant under generally accepted auditing standards;

(d)

meet with management and the independent public accountant to discuss the audited financial statements and disclosures of the Company, including their judgment about the quality, not just the acceptability, of accounting principles, the reasonableness of significant judgments and the clarity of the disclosures in the financial statements, the scope of the audit, the adequacy of the Company's internal financial controls and other matters that could significantly affect the quality of the Company's audited financial statements;

(e)

discuss with the independent public accountant the matters required by Statement on Auditing Standards No. 61, review and discuss with the independent public accountant the written disclosures required by Independence Standards Board No. 1 regarding their independence, and recommend to the Board any appropriate action to ensure such independence;

(f)

review with management and the independent public accountant key issues involved in the Company's quarterly financial statements prior to the filing of such financial statements with the SEC;

(g)

pre-approve all audit and non-audit services provided by the independent public accountant and not engage the independent public accountant to perform specific non-audit services proscribed by law, rule or regulation. The Committee may delegate pre-approval authority to a member of the Committee; provided, that the decisions of any Committee member to whom pre-approval authority is delegated shall be presented to the full Committee at its next scheduled meeting;

(h)

at least annually, obtain and review a report by the independent public accountant that describes: 1) the firm's internal quality control procedures, 2) 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 governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues, and 3) all relationships between the independent public accountant and the Company (to assess the independent public accountant's independence); and

(i)

set clear hiring policies for employees or former employees of the independent public accountant that meet the listing standards of the New York Stock Exchange and any other applicable laws, rules and regulations regarding such policies in effect from time to time.

3.

Periodically review with management the areas of greatest risk to the operations and financial results of the Company, including environmental regulations, major pending litigation, tax issues or significant financial exposure and the steps management has or intends to take to monitor and control such risks. To carry out this responsibility, the Committee shall:

(a)

periodically meet with management to review such areas of risk, and discuss the steps management has taken or proposes to take to monitor and control such risks;

(b)

oversee the functioning of the Internal Audit Department, including its staffing, budget and work-plans, review the periodic reports prepared by it, and review its charter, responsibility, authority and reporting relationships;

(c)

review with the General Counsel all legal and regulatory matters that may have a material impact on the Company's financial statements and the scope and effectiveness of its compliance policies;

(d)

review periodically with the Director of Corporate Security significant cases of alleged employee conflict of interest, ethical violations, misconduct or fraud, the volume and nature of calls to the Company's "hot line" and other matters and issues affecting the security of the Company's assets and employees;

(e)

review management's assertions on its assessment of the effectiveness of internal controls as of the end of the most recent fiscal year and the independent public accountant's report on management's assertions;

(f)

review and discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; and

(g)

receive corporate attorneys' reports of evidence of a material violation of securities laws or a breach of fiduciary duty.

4.

Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

5.

Evaluate the performance of the Committee annually. This evaluation will be conducted in coordination with procedures established by the Executive and Governance Committee.

6.

Perform any other duties or responsibilities delegated to the Committee by the Board from time to time.