2003 Audit Charter: MESAMESA AIR GROUP, INC.
AUDIT COMMITTEE CHARTER
The role and responsibilities of the Audit Committee of the Board of Directors (the "Committee") of Mesa Air Group, Inc. (the "Company") are as follows:
The Committee's role is to act on behalf of the Company's Board of Directors (the "Board") and oversee all aspects of the Company's control, reporting and audit functions, except those specifically related to the responsibilities of another standing committee of the Board. The Committee's role includes a particular focus on the qualitative aspects of financial reporting to shareholders and on Company processes for the management of business/financial risk and for compliance with significant applicable legal, ethical and regulatory requirements.
The role also includes coordination with other Board committees and maintenance of strong, positive working relationships with management, external and internal auditors, counsel, and other Committee advisors.
Committee membership shall consist of at least three independent, nonexecutive Board members that meet the requirements of the Audit Committee Policy of NASD. Committee members shall have: (1) knowledge of the primary industries in which the Company operates, (2) the ability to read and understand fundamental financial statements, including a balance sheet, income statement, statement of cash flow and key performance indicators; and (3) the ability to understand key business and financial controls and related controls and control processes. One member, preferably the chairperson, should have the knowledge of financial reporting including applicable regulatory requirements, and accounting or related financial management expertise. The Committee shall have access to its own counsel and other advisors at the Committee's sole discretion.
Should the Board determine that it is in the best interest of the Company and its shareholders, one non-independent director may serve on the Audit Committee. Should the Board make such a determination it will disclose the reasons for the determination in the Company's next annual proxy statement.
Committee members shall be nominated and approved annually by the full Board. The Committee members shall elect the Committee chairperson.
The Committee shall fulfill its responsibilities within the context of the following activities:
I. Continuous Activities — General
1. Provide an open avenue of communication between the independent auditors' Internal Audit and the Board of Directors.
2. Request from the outside auditors annually, a formal written statement delineating all relationships between the auditors and the Company consistent with Independence Standards Board No. 1. Discuss with the outside auditors any such disclosed relationships and their impact on the outside auditors' independence and recommend that the Board take appropriate action to oversee the independence of the outside auditors.
3. Inquire of management, the independent auditor and the Director of Internal Audit about significant risks or exposures and ensure that the yearly audit plan addresses such risk.
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4. Review with the independent auditors and the Director of Internal Audit the coordination of the audit efforts to assure completeness of coverage, reduction of redundant efforts, and the effective use of audit resources.
5. Consider and review with the Director of Internal Audit, and the independent auditors:
(a) The adequacy of internal controls, including computerized system controls and security.
(b) Related findings and recommendations of the independent auditors and Internal Audit, together with management responses.
(c) Significant findings during the year, including the status of Previous Audit recommendations.
(d) Any difficulties encountered in the course of audit work including any restrictions on the scope of activities or access to required information.
(e) Any changes required in the planned scope of Internal Audit plan.
(f) The Internal Audit Department charter, budget and staffing.
6. Meet four times per year or more frequently as circumstances require. The Committee may ask members of management or others to attend meetings and provide pertinent information as necessary.
7. Meet periodically with the independent auditors, the Director of Internal Audit and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately with the Audit Committee.
8. The Committee shall review with management and the outside auditors the audited financial statements to be included in the Company's Annual Report on Form 10-K (or the Annual Report to Shareholders if distributed prior to the filing of Form 10-K) and review and consider with the outside auditors the matters required to be discussed by Statement of Auditing Standards ("SAS") No. 61.
9. As a whole, or through the Committee Chair, the Committee shall review with the outside auditors the Company's quarterly reports to be filed with the Securities and Exchange Commission and the matters required to be discussed by SAS No. 61; this review will occur prior to the Company's filing of the Form 10-Q.
10. Meet at least annually with the chief financial officer, the senior internal auditing executive and the independent auditors in separate executive sessions.
11. Report periodically to the Board of Directors on significant results of the foregoing activities.
II. Continuous Activities — Re: Reporting Specific Policies
1. Advise financial management and the independent auditors that they are expected to provide a timely analysis of significant current financial reporting issues and practices.
2. Provide that financial management and the independent auditors discuss with the audit committee their qualitative judgments about the appropriateness, not just the acceptability, of accounting principles and financial disclosures used or proposed to be adopted by the Company and, particularly about the degree of aggressiveness or conservatism of its accounting principles and underlying estimates.
3. Inquire as to the auditors' independent qualitative judgments about appropriateness, not just the acceptability, of accounting principles and the clarity of the financial disclosure practices used or proposed to be adopted by the Company.
4. Inquire as to the auditors' views about whether management choices of accounting principles are conservative, moderate or aggressive from the perspective of income, asset, and liability recognition, and whether those principles are common practices or are minorities practices.
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5. Assure that the auditors' reasoning is described in determining the appropriateness of changes in accounting principles and disclosure practices.
III. Scheduled Activities
1. Recommend the selection of the independent auditors for approval by the Board, approve compensation for the independent auditors, and review and approve the discharge of the independent auditors.
2. Consider, in consultation with the independent auditors and the Director of Internal Audit, the audit scope and plan of the independent auditors and internal auditors.
3. Review with management and the independent auditors the results of annual audits and related comments:
(a) Any significant changes required in the independent auditors' audit plans.
(b) Any difficulties or disputes with management encountered during the course of the audit.
(c) Other matters related to the conduct of the audit which are to be communicated to the Audit Committee under Auditing Standards Generally Accepted in the United States of America.
4. Review the results of the annual audits of member reimbursements, director and officers' expense accounts and management perquisites prepared by Internal Audit and the independent auditors respectively.
5. Arrange for the independent auditors to be available to the full Board at least annually to help provide a basis for the board to recommend the appointment of the auditors.
6. Assure that the auditors' reasoning is described in accepting or questioning significant estimates by management.
7. Review and update the Committee's Charter annually.
IV. When Necessary Activities
1. Review and concur in the appointment, replacement, reassignment or dismissal of the Director of Internal Audit.
2. Review and approve requests for any management consulting engagement to be performed by the Company's independent auditors and be advised of any other study undertaken at the request of management that is beyond the scope of the audit engagement letter.
3. Conduct or authorize investigations into any matters within the scope of the Committee's responsibilities. The Committee shall be empowered to retain independent counsel and other professionals to assist in the conduct of any investigations.