Heartland Express, Inc. Audit Committee Charter

 

Purpose

 

     The  purposes  of Board of  Directors  Audit  Committee  are to manage  the

Company's  relationship  with  its  independent  public  accounting  firm and to

represent the Board in its oversight of the Company's  accounting  and financial

reporting processes and audits of the Company's financial statements. Management

is  responsible  for (a) the  preparation,  presentation  and  integrity  of the

Company's   financial   statements;   (b)  accounting  and  financial  reporting

principles;  and (c) establishing,  implementing,  and maintaining the Company's

internal controls and procedures  designed to promote compliance with accounting

standards and applicable laws and regulations.  The Company's independent public

accounting  firm is  responsible  for  performing  an  independent  audit of the

consolidated financial statements in accordance with generally accepted auditing

standards.

 

Membership

 

     The Audit  Committee shall consist of not less than three members who shall

be appointed  by the Board of  Directors.  Each member  shall be an  independent

director as defined under listing standards of The NASDAQ Stock Market, Inc. and

applicable  laws and  regulations.  In addition  each member  shall  satisfy the

independence  and  other  requirements  for  audit  committee  membership  under

Securities and Exchange Commission regulations.

 

Responsibilities and Authority

 

o    The  appointment,   compensation,  retention  and  oversight  of  the  work

     (including   resolution  of  disagreements   between   management  and  the

     independent  public  accountants  regarding  financial  reporting)  of  any

     independent  public accounting firm engaged for the purpose of preparing or

     issuing  an audit  report  or  performing  other  audit,  review  or attest

     services for the Company.  Any such independent  auditing firm shall report

     directly to the Audit Committee.

 

o    Obtain and review a written statement from the Company's independent public

     accounting  firm  delineating  all  relationships  between the firm and the

     Company, consistent with Independence Standards Board Standard 1. The Audit

     Committee shall actively  engage in a dialogue with the independent  public

     accountants  with respect to any disclosed  relationships  or services that

     may impact their objectivity and  independence,  and take action to oversee

     the independence of the Company's independent public accounting firm.

 

o    Obtain and review  annually a report by the  Company's  independent  public

     accounting firm describing the firm's internal  quality control  procedures

     and any issues raised by the most recent  internal  quality control review,

     peer review, or regulatory inquiry within the preceding five years.

 

o    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 concerns regarding questionable accounting or auditing matters.

 

o    Shall have the authority to engage independent legal,  accounting and other

     advisors,  as it  determines  necessary to carry out its duties.  The Audit

     Committee  shall have sole authority to approve  related fees and retention

     terms.

 

o    Shall be  entitled  to  appropriate  funding,  as  determined  by the Audit

     Committee,  from the  Company  for  payment  of:  (a)  compensation  to any

     independent  public accounting firm engaged for the purpose of preparing or

     issuing  an audit  report  or  performing  other  audit,  review  or attest

     services for the Company;  (b)  compensation to any advisers engaged by the

     Audit Committee pursuant to the authority set forth above; and (c) ordinary

     administrative  expenses  of the  Audit  Committee  that are  necessary  or

     appropriate in carrying out its duties.

 

o    Review and reassess the adequacy of this charter on an annual basis.

 

o    Issue the report of the Committee  required by the rules of the  Securities

     and Exchange Commission to be included in the annual proxy statement.

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o    Establish  policies and procedures for the review and  pre-approval  by the

     Committee of audit and permissible  non-audit services,  including fees and

     terms, to be performed by the Company's independent public accounting firm.

 

o    Establish  policies  for the  Company's  hiring  of  employees  and  former

     employees of the Company's independent public accounting firm.

 

o    Unless  another  independent  committee of the Board has been  specifically

     created for such purpose,  the Audit  Committee shall review and approve in

     advance all transactions  that the Company enters into with related parties

     that would require  disclosure under Item 404 of Regulation S-K promulgated

     by the Securities and Exchange Commission.

 

 

     In addition,  in connection with its oversight of the Company's  accounting

and  financial  reporting  processes  and  audits  of  the  Company's  financial

statements, the Audit Committee shall, as appropriate:

 

o    Consult with the Company's  independent  public  accounting firm regarding:

     (a) its audit plans and procedures, including scope, fees and timing of the

     audit;  (b) the  results of the annual  audit  along with any  accompanying

     management suggestions;  and (c) the results of its procedures with respect

     to interim periods;

 

o    Review and discuss with the  independent  public  accountants  all material

     accounting issues, including alternative accounting treatments within GAAP,

     which have been discussed with management or may have a significant  impact

     on the Company;

 

o    Review with the Company's  independent  public accounting firm its judgment

     as  to  the  quality  and  appropriateness  of  the  Company's   accounting

     principles   and  the  adequacy  of  the  Company's   financial   statement

     disclosures;

 

o    Discuss with management and the independent  public  accountants  quarterly

     earnings press releases,  quarterly  financial  statements,  and the annual

     financial statements prior to filing, including Managements' Discussion and

     Analysis of Financial Condition and Results of Operations;

 

o    Review and discuss with management and the independent  public  accountants

     the adequacy and the  effectiveness  of the  Company's  internal  controls,

     including any significant  deficiencies and significant changes in internal

     controls reported to the Committee by the independent public accountants or

     management,  and the adequacy and effectiveness of the Company's disclosure

     controls and procedures;

 

o    Review and discuss with  management  the  Company's  major  financial  risk

     exposures  and the steps  management  had taken to monitor and control such

     exposures;

 

o    Review the effectiveness of the Company's system for monitoring  compliance

     with laws,  regulations and the Company's business conduct policies and the

     results of management's  investigation and follow-up on any fraudulent acts

     or accounting irregularities;

 

o    Obtain  periodic  reports from  management  regarding  legal and regulatory

     compliance; and

 

o    Review with the  Company's  outside  counsel  legal matters that may have a

     material impact on the consolidated  financial  statements and any material

     reports or inquiries  received  from  regulators or  governmental  agencies

     regarding financial reporting compliance.

 

     When  appropriate,  the Audit  Committee  may  designate one or more of its

members  to  perform  certain  of its  duties  on its  behalf,  subject  to such

reporting to or ratification by the Committee as the Committee shall direct.

 

     The  Audit  Committee  shall  meet at such  times  and  places as the Audit

Committee shall determine.  The Audit Committee shall meet in executive  session

with  the  independent  public  accountants  and  management  periodically.  The

Chairman of the Audit Committee  shall report on the Audit Committee  activities

to the full Board.