Audit Committee Charter


MACDERMID, INCORPORATED

Organization

There shall be a committee of the board of directors to be known as the audit committee. The audit committee shall be composed of directors who are independent of the management of the corporation and are free of any relationship that, in the opinion of the board of directors, would interfere with their exercise of independent judgment as a committee member. No committee member may, directly or indirectly, within the last fiscal year, or will while a member, accept, any consulting, advisory or other compensatory fee (other than directors' compensation) from the Company or its subsidiaries.

Statement of Policy

The audit committee shall have oversight responsibility in fulfilling the Board's responsibility to the shareholders, potential shareholders, and investment community relating to corporate accounting, reporting practices of the corporation, and the quality and integrity of the financial reports of the corporation. In doing so, it is the responsibility of the audit committee to maintain free and open communication between the directors, the independent auditors, the internal auditors, and the financial management of the corporation.

Qualifications

Each member of the audit committee must have a working knowledge of corporate financial, accounting and reporting practices. In addition the chairman of the audit committee should, through education or experience, have (1) an understanding of U.S. generally accepted accounting principles and their application to financial statements, (2) experience in preparing, evaluating, or auditing financial statements of a U.S. public company and in the use of estimates, accruals and reserves, (3) experience with internal accounting controls, and (4) an understanding of audit committee functions. The board of directors may determine that a person meets the foregoing attributes if, in the board's judgment, such person has expertise and experience similar to the attributes noted.

Responsibilities

In carrying out its oversight responsibilities, the audit committee believes its policies and procedures should remain flexible, in order to best react to changing conditions and to ensure to the directors and shareholders that the corporate accounting and reporting practices of the corporation are in accordance with all requirements and are of the highest quality.

In carrying out these responsibilities, the audit committee will:

  • Have sole authority to appoint, compensate and oversee the independent auditors who will audit the financial statements of the corporation and its subsidiaries. The selected independent auditors shall report directly to the committee.
  • Review, on a periodic basis, all relationships between the independent auditors and the corporation in order to determine whether any such relationship has a likelihood of compromising the auditor's independence and take action to ensure that independence is maintained.
  • Approve, in advance, the engagement of and the fees to be paid to the independent auditor for any function other than the audit, if the aggregate of such other fees will amount to more than five percent (5%) of the approved audit compensation.
  • Meet with the independent auditors and financial management of the corporation to review and determine the scope of the proposed audit for the current year and the audit procedures to be utilized, and at the conclusion thereof, review such audit, including any comments or recommendations of the independent auditors.
  • Review with the independent auditors, the company's internal auditor, and financial and accounting personnel, the adequacy and effectiveness of the accounting and financial controls of the corporation, and elicit any recommendations for the improvement of such internal control procedures or particular areas where new or more detailed controls or procedures are desirable. Particular emphasis should be given to the adequacy of such internal controls to expose any payments, transactions, or procedures that might be deemed illegal or otherwise improper. Further, the committee periodically should review company policy statements to determine their adherence to the appropriate standards.
  • Review the internal audit function of the corporation including the independence and authority of its reporting obligations, the proposed audit plans for the coming year, and the coordination of such plans with the independent auditors. Ensure that the internal auditor reports findings directly to the committee.
  • Receive a summary of findings from completed internal audits and a progress report on the proposed internal audit plan, with explanations for any deviations from the original plan.
  • Review the financial statements and notes contained in the corporation's quarterly and annual reports filed on forms 10-Q and 10-K with management and the independent auditors (together and separately) to determine that the independent auditors are satisfied with the disclosure and content of the financial statements to be presented to the shareholders. Any changes in accounting principles should be reviewed.
  • Provide sufficient opportunity for the internal and independent auditors to meet with the members of the audit committee without members of management present. Among the items to be discussed in these meetings are the independent auditors' evaluation of the corporation's financial, accounting, and auditing personnel, and the cooperation that the independent auditors received during the course of the audit.
  • Review sufficiency of accounting and financial human resources and succession planning within the company.
  • Submit the minutes of all meetings of the audit committee to, or discuss the matters discussed at each committee meeting with, the board of directors.
  • Investigate any matter brought to its attention within the scope of its duties, with the power to retain outside counsel for this purpose if, in its judgment, that is appropriate.
  • Investigate and be responsible for the resolution of any disagreements between management and the independent auditor.
  • Have in place procedures for addressing complaints concerning auditing issues and procedures for employees to anonymously submit their concerns regarding accounting or auditing issues.
  • Review with the corporation's counsel any legal matters that could have a significant adverse impact on the corporation's financial statements and the corporation's compliance with legal and regulatory requirements as required.
  • Prepare the audit committee report to be included in the corporation's annual proxy statement.
  • Review the corporation's policy and strategy regarding financial risk management.
  • Set clear hiring policies for employees or former employees of the independent auditors.

 

Sep.disc:
Audit Comm.Charter