AUDIT COMMITTEE CHARTER
- Mission Statement
The audit committee (the “Committee”) will assist the Board of Directors
(the “Board”) of Intermagnetics General
Corporation (the “Company”) in fulfilling the Board’s general oversight
and monitoring of the independent auditor’s participation in the Company’s
financial reporting process, the Company’s process for financial
reporting, its system of internal control, audit process, and process for
monitoring compliance with legal and regulatory requirements. In
performing its duties, the Committee will maintain effective working
relationships with the Board, management and the Company’s auditors. The
primary objective of the Committee in fulfilling its responsibilities is
to promote and preserve the integrity of the Company’s financial
statements and the independence and performance of the Company’s external
2.1. Committee Composition: The Committee shall consist of not less
than three (3) members who shall be appointed annually by the Board. The
Board shall designate one (1) member of the Committee to serve as Chair.
2.2. Member Qualifications: Each member should make a unique and
valuable contribution to the Committee. Members must have the ability to:
recognize the significance of the Committee; dedicate the time and energy
necessary to accomplish the Committee’s role; understand the Company’s
business, risks and controls; read and understand fundamental financial
statements; and offer new and different perspectives and constructive
suggestions. At least one member of the Committee shall have accounting or
related financial management expertise. In addition, Committee members
will satisfy the qualification requirements for audit committee members
set forth in any rules, regulations or laws applicable to the Company.
Compensation of the members shall be as determined by the Board of
Directors. No member of the Committee may receive any compensation from
the Company other than director’s fees.
2.3. Independence of Members: Members of the Committee shall be
independent. A member shall be considered independent if he or she has no
relationship with the Company that may interfere with his or her independence
from management, or if he or she is an “independent director” as that term
may be defined by applicable rules, regulations or laws.
2.4. Meetings: The Committee shall schedule and hold regular
meetings with sufficient frequency to carry out its responsibilities.
Whenever possible, Committee meetings will be scheduled in conjunction
with meetings of the full Board. Committee meetings shall, when
appropriate, include the Company’s external auditors and appropriate
management representatives (e.g., President, CFO).
- Audit Committee Activities
The principal activities of the Audit Committee will generally include the
3.1. Review of Charter: Review and reassess the adequacy of this
Charter annually and submit it to the Board for approval along with any
3.2. Internal Control: The Committee shall review and evaluate
corporate policies and controls and ensure that the Company’s external
auditors keep the Committee informed about fraud, illegal acts,
deficiencies in internal controls and other matters related to the
Company’s financial processes.
3.3. Financial Reporting:
3.3.1. The Committee shall review the Company’s audited financial
statements and annual audit process. Generally, the Committee shall:
- review the overall audit plan with the
independent auditor and management responsible for maintaining the
Company’s accounts and preparing the Company’s financial statements (the
“Senior Accounting Executive”).
- review and discuss with management and
the independent auditor:
the Company’s annual audited financial statements, including any
significant reporting issues that arose in connection with the preparation of
the adequacy of the Company’s internal financial reporting controls; and
major changes in, and questions regarding, accounting and
auditing principles and procedures.
- review and discuss with the independent
auditor (outside the presence of management) how the independent auditor
plans to handle its responsibilities under the Private Securities
Litigation Reform Act of 1995.
- review and discuss with the independent
auditor (outside the presence of management) any problems or difficulties
the auditor may have with management or others including any management
letter provided by the auditor and the Company’s response to that letter.
This review shall include any difficulties encountered by the auditors in
the course of performing its audit, including any restrictions on the
scope of its activities or access to information.
- review and discuss any major changes to
the Company’s auditing and accounting principles and practices as may be
suggested by the independent auditor or management
- discuss with the independent auditor issues
that may be brought to the Committee’s attention pursuant to any
applicable Statement on Auditing Standards (e.g. SAS No. 61).
- based on the Committee’s review and
discussions with management and the independent auditors of the matters
outlined above, make a recommendation to the Board as to whether the
Company’s audited financial statements should be included in the Company’s
annual report on Form 10-K.
- prepare the Audit Committee Report required by
Item 306 of Schedule 14A of the Securities Exchange Act of 1934 (or any
successor provision) to be included in the Company’s annual proxy
3.3.2. The Committee shall review and discuss with management and the
independent auditor the Company’s quarterly financial statements. Such
review shall include discussions between the Chair of the Committee, or
the full Committee and the independent auditor of such issues as may be
brought to their attention pursuant to Statement on Auditing Standards No.
3.4. Selection, Performance and Independence of Independent Auditors: The Committee
3.4.1. have the sole authority and responsibility
for the appointment and termination of the Company’s independent auditors,
as well as being responsible for setting the compensation and retention
terms for, and overseeing and evaluating the performance of.
3.4.2 request that the independent auditor
provide the Committee with the written disclosures and letter required by
Independence Standards Board Standard No. 1, and review and discuss the
independence of the auditor with the Committee and the independent
auditor. The Committee shall recommend that the Board take appropriate
action, if necessary, to ensure the independence of the auditor.
3.5. Investigations: The Board may request that the Committee
review or investigate on behalf of the Board activities of the Company or
of its employees, including compliance with applicable laws, regulations
or Company policy.
3.6. Procedures for Complaints: The Audit Committee will establish
procedures for (i) the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters; and (ii) the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
3.7. Other Oversight Functions: The Committee will perform such
other oversight functions as may be requested by the Board.
4. Scope of Responsibilities
4.1. In performing its responsibilities, the Committee shall be entitled
to rely upon advice and information it receives in its discussions and
communications with management and the independent auditors. The Committee
shall have the authority to retain special legal, accounting or other
professional advisors to the Committee. The Committee shall also have the
authority to request that any Company officer or employee, outside legal
counsel, independent auditor or other professional retained by the Company
to render advice, attend meetings of the Committee or cooperate with any
investigation conducted by the Committee. The Committee has authority to
cause the Company to pay the compensation of such advisors, without
further action by the Board.
4.2. Notwithstanding the powers and responsibilities of the Committee as
set forth in this Charter, the Committee does not have the responsibility
of planning or conducting audits of the Company’s financial statements or
determining whether the Company’s financial statements are complete,
accurate and in accordance with generally accepted accounting principles.
Such responsibilities are the duty of management and the independent
auditor (to the extent consistent with the independent auditor’s scope of
review). It is also not the duty of the Committee to resolve
disagreements, if any, between management and the independent auditors or
to ensure compliance with laws, regulations or Company policies.