2003 Audit Charter: FUL H.B. FULLER COMPANY
AUDIT COMMITTEE CHARTER
The Committee is appointed by the Board to assist the Board in monitoring:
. the integrity of the financial statements of the Company,
. the compliance by the Company with legal and regulatory requirements,
. the independence, qualifications and performance of the Company's
internal and external auditors,
. the adequacy of internal controls, and
. the adequacy of risk management policies and procedures.
. The Committee shall have a minimum of three directors as members.
. The members of the Committee shall meet the independence and experience
requirements of the New York Stock Exchange ("NYSE").
. At least one member shall meet the "financial expert" requirements of
federal law and applicable regulations. The member who serves as the
"financial expert" on the Committee shall not serve on more than three
audit committees of publicly traded corporations, unless the Board
determines such service is consistent with the member's duties to the
Company and discloses such reasons in the Company's annual proxy
. The Board will appoint a Chairperson(s) and other members to this
Duties and Responsibilities
In addition to such other matters the Board or Corporate Governance and
Nominating Committee may assign, the Committee shall perform the following
duties and responsibilities. In the event that any deficiencies are noted by
the Committee, the Committee shall monitor the process of corrections and
follow up and report any significant unresolved issues to the Board for
Review of Financial Information and Disclosure
. Discuss with management the Company's regular earnings press releases,
as well as the Company's approach to earnings guidance and other
financial presentations provided to analysts, rating agencies and
. Review a summary prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
. Review with the independent auditor all critical accounting policies and
practices used by the Company and alternative treatments of financial
information within GAAP that would result in material differences from
the current presentation. This review will include all alternative
treatments of financial information within GAAP that have been discussed
with management, the ramifications of the use of such alternative
treatments and the treatment preferred by the independent auditor, as
well as any material written communications between the auditor and
management of the Company, including the independent auditor's
assessment of management's annual report on the adequacy of the
Company's internal controls.
. Review, through its Chairman or the Committee as a whole, prior to the
filing thereof, the Company's quarterly reports on Form 10-Q and the
matters required to be discussed by the applicable Statement of Auditing
. Review the certifications of the Chief Executive Officer and Chief
Financial Officer of the periodic reports of the Company as filed with
the Securities and Exchange Commission, including any reported
significant internal control defects and acts of fraud.
. Review the annual audited financial statements and annual report on Form
10-K with management and the independent auditor.
. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement and
disclose the name of the member who meets the "financial expert"
requirements of federal law and applicable regulations.
. Appoint the independent auditor.
. Approve the scope of the independent auditor's annual engagement
. Approve the terms and fees of all audit and non-audit engagements with
the independent auditors, such approval to occur prior to the provision
of any such services.
. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and, if
so determined by the Committee, take appropriate action to satisfy
itself of the independence of the auditor.
. Evaluate, together with the Board, the experience, qualifications and
performance of the independent auditor and, if so determined by the
Committee, replace the independent auditor.
. Obtain from the independent auditor assurance that they are not aware of
any illegal act or other facts implicating Section 10A of the Securities
Exchange Act of 1934, as amended.
. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit, including: the adoption of, or change to, the
Company's significant auditing and accounting principles and practices,
the management letter provided by the independent auditor and the
Company's response to that letter, any difficulties encountered in the
course of the audit work, including any restrictions on the scope of
activities or access to requested information and any significant
disagreements with management.
. Recommend policies to the Board with respect to the Company hiring
current or former employees of the independent auditor.
. Review and approve the appointment and replacement of the senior
internal auditing executive; and review the performance of the senior
internal auditing executive and make recommendations to appropriate
. Review and discuss with the independent auditors the internal audit
department responsibilities, budget and staffing.
. Review significant internal audit reports to management.
. Advise the Board with respect to the Company's (including subsidiaries
and foreign affiliated entities) policies and procedures and compliance
with applicable laws and regulations and with the Company's code of
. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
. Insure the Board establishes and maintains a code of business conduct
and ethics, including procedures to verify compliance with such code and
the receipt, retention and resolution of violations, including any
complaints regarding accounting and auditing matters. These procedures
must include the ability for an employee or other persons to report on a
direct confidential and/or anonymous basis to the Committee.
. Review the Company's risk management policies and procedures to assess
their adequacy and appropriateness in the context of the Company's
business and operating environment.
. The Committee shall review and reassess the adequacy of this charter at
least once each year and recommend any proposed changes to the Board for
. The Committee shall make regular reports to the Board.
While the Committee has the responsibilities and powers set forth in this
charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Committee to conduct investigations or to assure compliance with laws and
regulations and the Company's code of conduct.
In connection with the exercise of its duties and responsibilities, the
Committee shall have the authority to retain special legal, accounting or other
consultants to advise the Committee. The Committee may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee.
Last Revised January 17, 2003