CHARTER OF THE
2003 Audit Charter: IMR
OF THE BOARD OF DIRECTORS OF
IMCO RECYCLING INC.
The Audit Committee is a committee of the Board of Directors of IMCO Recycling Inc. Its purpose is to:
· Assist the Board in fulfilling its oversight responsibilities by:
· Overseeing the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company.
· Monitoring the integrity of financial information that will be provided to the shareholders and others and the Company's compliance with legal and regulatory requirements.
· Reviewing areas of potential significant financial risk to the Company including evaluation of the system of internal controls and procedures for financial reporting which management and the Board of Directors has established.
· Monitoring the qualifications and independence of the Company's external auditors.
· Monitoring the performance of the Company's external auditors and internal auditing function.
· Reporting on all such matters to the Board of Directors.
· Prepare the report required by the SEC rules to be included in the Company's annual proxy statement.
Membership & Meetings
· Committee members shall meet the requirements of the New York Stock Exchange.
· The Committee shall consist of not less than three members and all members must be directors of the Company, affirmatively determined by the Board of Directors to be independent directors as defined by New York Stock Exchange requirements. Notwithstanding the foregoing, no member of the Committee may be an "affiliated person" of the Company or any of its subsidiaries as defined by the Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated thereunder.
· All members of the Committee shall be financially literate and able to read and understand fundamental financial statements.
· All members of the Committee shall be determined by the Board to be a "financial expert" as defined by the Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated thereunder. For purposes of this determination by the Board, the term "financial expert" means a person who has, through education and experience as a public accountant or auditor, or a principal financial officer, controller, or principal accounting officer, of a company that, at the time the person held such position, was required to file reports pursuant to section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or experience in one or more positions that involve the performance of similar functions (or that results, in the judgment of the Board, in the person's having similar expertise and experience), the following attributes:
a. An understanding of generally accepted accounting principles and financial statements;
b. Experience applying such generally accepted accounting principles in connection with the accounting for estimates, accruals, and reserves that are generally comparable to the estimates, accruals and reserves, if any, used in the Company's financial statements;
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c. Experience preparing or auditing financial statements that present accounting issues that are generally comparable to those raised by the Company's financial statements;
d. Experience with internal controls and procedures for financial reporting; and
e. An understanding of audit committee functions.
· The Committee shall meet at least four times each year.
· The Committee should meet privately in executive session at least quarterly with the Vice President of Audit Services (or any other officer of the Company having overall responsibility at the time in question for the Company's internal auditing function) and the external auditors to discuss any matters that the Committee believes should be discussed.
· Director's fees shall be the only compensation a Committee member shall be permitted to receive from the Company. Without limiting the foregoing, no member of the Committee may accept any compensatory fees (other than director's fees), consulting or advisory fees from the Company.
Duties & Responsibilities
· Consider, in consultation with the external and internal auditors, the audit scope and plan for the Company.
· Review with management and the external auditors the Company's annual and quarterly financial results prior to release of earnings. Discuss certain matters required to be communicated to audit committees in accordance with Statement of Auditing Standards (SAS) No. 61.
· Meet separately with each of management, the external auditors and the internal auditors, at least quarterly, to review the integrity of the Company's financial statements and the Company's compliance with legal and regulatory requirements, including, without limitation, a review of significant issues concerning litigation, contingencies, claims, or assessments and all material accounting issues that require disclosure in the financial statements. This review should include a discussion of recent FASB or other regulatory agency pronouncements that have a material impact on the organization.
· Review analyses prepared by management and/or the external auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including analyses of the effect of alternative GAAP methods on the Company's financial statements and review the effect of regulatory and accounting initiatives, as well as off-balance sheet structures on the Company's financial statements.
· Review and discuss with management and the external auditors filings with the SEC and other published documents containing the Company's financial statements and consider whether the information contained in these documents is consistent with the information contained in the Company's financial statements.
· Review the Company's policies relating to compliance with laws and regulations; the Company's Code of Conduct; ethics; officers' expense accounts, perquisites, and use of corporate assets; conflict of interest and the investigation of misconduct or fraud.
· Review legal and regulatory matters that may have a material impact on the Company's financial statements, the Company's related compliance policies and programs and reports received from regulators.
· Annually, prepare a report to the shareholders as required by the Securities and Exchange Commission ("SEC"). The report should be signed by the chair of the Committee and included in the Company's annual proxy statement.
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· State in the Company's annual proxy statement that the Committee has adopted a written carter, and include a copy at least every three years.
· Conduct an annual performance valuation of the Committee.
· Review the Committee charter annually and recommend modifications to the Board as needed.
· Review earnings press releases paying particular attention to any use of "pro forma", or "adjusted" non-GAAP information, and discuss financial information and earnings guidance provided to analysts and rating agencies.
· Obtain advice and assistance from outside legal, accounting or other advisors, as appropriate, in the sole discretion of the Committee and determine the fees to be paid to any such advisors.
· Discuss guidelines and policies with respect to risk assessment and risk management, including discussion of the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures.
· Report regularly to the Board of Directors on any issues arising with respect to the quality or integrity of the Company's financial statements, the Company's compliance with legal or regulatory requirements, the qualifications, performance and independence of the external auditors, or the performance of the internal auditing function.
· 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.
· Receive and respond to any report of evidence material violation of securities law or breach of fiduciary duty or similar violation by the Company or agent thereof which may be received from an attorney for the Company pursuant to the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder.
· Review and discuss with management and the external auditors the Company's annual and quarterly financial statements and the "Management's Discussion and Analysis" section of the Company's annual and quarterly reports filed with the SEC.
· Monitor major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles and instances where management seeks second opinions on significant accounting matters.
· Review management's evaluation of the adequacy of the design and operation of the Company's internal controls and procedures for financial reporting, any significant deficiencies or material weaknesses in such controls and procedures which could adversely affect the Company's ability to timely record, process, summarize and report financial information required to be disclosed by the Company in the reports it files under the Exchange Act, and the extent to which recommendations made by management, the external auditors and the internal auditors in light of any such deficiencies or weaknesses have been implemented.
· Review the services provided by the internal auditing function, including:
· The planned scope for the internal audit program, its objectives, and the staff required to attain these objectives.
· Reports that detail the activities of the internal auditing function.
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· The working relationship between the internal auditing department and the external auditors.
· The appointment and termination of the Vice President of Audit Services (review and approve).
· Provide for periodic quality assurance reviews to ensure that the internal auditing function is operating in accordance with The IIA's Standards for Standards for the Professional Practice of Internal Auditing.
· Retain and terminate the external auditors subject, if applicable, to ratification by the Company's shareholders.
· Review and have sole authority to approve the annual external audit engagement fees and terms, as further described under "Preapproval of Audit and Non-Audit Services" below.
· Review and approve in advance the scope of non-audit professional services to be performed by the external auditors (to the extent such non-audit services may lawfully be performed under the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder) as well as the related fees, and consider the possible effect that these services could have on the independence of such external auditors.
· Review the qualifications, performance and independence of the external auditors and to this end, obtain and review annually a report by the external auditors describing:
· the external auditors' internal quality control procedures
· any material issues raised by the most recent internal quality-control review or peer-review, or the external auditors, or by any inquiry or investigation by governmental or professional authorities within the preceding 5 years; and
· all relationships between the external auditors and the Company.
· Report to the full Board of Directors annually on the Committee's conclusions with respect to the qualification, performance and independence of the external auditors.
· Review with the external auditors any audit problems or difficulties and management's response. Such review shall cover any restrictions on the scope of the external auditors' activities or on access to requested information, any significant disagreements with management, any accounting adjustments that were noted or proposed by the external auditors but were "passed" (as immaterial or otherwise), any communications between the external auditors and the external auditors' national office respecting auditing or accounting issues presented by the engagement and any "management" or "internal control" letter issued, or proposed to be issued, by the external auditors to the Company, and discuss with the external auditors the responsibilities, budget and staffing of the Company's internal auditing function.
· Set clear hiring policies for employees or former employees of the external auditors.
Preapproval of Audit and Non-Audit Services
· The Committee shall approve in advance all auditing services (including without limitation the provision of comfort letters in connection with securities underwritings) and, other than as provided below, non-audit services provided to the Company by the external auditors to the extent such non-audit services may be lawfully provided pursuant to the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder.
· The Committee need not preapprove the provision of non-audit services if (i) the aggregate amount of all such non-audit services provided to the Company constitutes not more than 5% of the total amount of revenues paid by the Company to its external auditors during the fiscal year in which the non-audit services are provided; (ii) such services were not recognized by the Company at the time of the
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· Approval by the Committee of any non-audit services by the external auditors shall be disclosed in the Company's periodic reports filed with the SEC.
· The terms "audit" and "non-audit services" shall have the meanings assigned to them in the Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated thereunder.