2003 Audit Charter: MSPQEOB

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS AS ADOPTED BY THE BOARD OF DIRECTORS ON SEPTEMBER 27, 2002


PURPOSES AND RESPONSIBILITIES

The purpose of the Audit Committee is to (a) assist Board oversight of (i) the integrity of the financial statements of Mississippi Chemical Corporation (the "Company"), (ii) the Company's compliance with legal and regulatory requirements, (iii) the qualifications and independence of the Company's independent auditors (the "Outside Auditors") and (iv) the performance of the Company's internal audit function and the Outside Auditors, and (b) prepare the report required by the rules of the Securities and Exchange Commission (the "Commission") to be included in the Company's annual proxy statement.

The Audit Committee has responsibility to:

oversee the integrity of the audit process, financial reporting and internal accounting controls of the Company;

oversee the work of the Company's financial management ("Management"), internal auditors (the "Internal Auditors") and independent auditors (the "Outside Auditors") in these areas;


ensure that Management properly develops and adheres to a sound system of internal accounting and financial controls and that the Internal Auditors and the Outside Auditors objectively assess the Company's financial reporting, accounting practices and internal controls; and


provide an open avenue of communication between the Outside Auditors, the Internal Auditors and the Board.

The Audit Committee will adopt policies and procedures for carrying out its responsibilities. Such policies and procedures should be flexible so the Audit Committee may react to changing conditions.

MEMBERSHIP OF THE COMMITTEE

The Audit Committee will consist of three or more directors as determined by the Board (upon the recommendation of the Corporate Governance Committee) and appointed in accordance with the Company's bylaws.


Each member of the Audit Committee shall satisfy the independence and experience requirements of the New York Stock Exchange, as such requirements are interpreted by the Board in its business judgment.


The Chairman of the Audit Committee must have accounting or related financial management expertise, as the Board interprets such qualification in its business judgment from time to time.


The Board (upon the recommendation of the Corporate Governance Committee) will determine a director's eligibility to serve on the Audit Committee.


MEETINGS OF THE AUDIT COMMITTEE


The Audit Committee will meet as often as it deems appropriate to discharge its responsibilities, but shall meet at least quarterly. The Audit Committee may ask members of Management, the Outside Auditors, the Internal Auditors or others to attend any of its meetings and to provide any information it may deem appropriate. Meetings may be telephonic.


To the extent it deems necessary in its business judgment, the Audit Committee will meet separately with Management, the Outside Auditors and the Internal Auditors not less frequently than quarterly to discuss matters for which the Audit Committee has responsibility.


SPECIFIC RESPONSIBILITIES OF THE AUDIT COMMITTEE


Selection and Oversight of the Outside Auditors


The Outside Auditors are ultimately accountable to the Board and the Audit Committee.


The Audit Committee shall have the sole authority to (a) appoint or replace the Outside Auditors and (b) approve all audit engagement fees and terms, as well as all non-audit engagements of the Outside Auditors.


The Audit Committee will, at least annually, obtain and review a report by the Outside Auditors describing (a) such firm's internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of such firm or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by such firm, and any steps taken to deal with any such issues, and (c) all relationships between the Outside Auditors and the Company (in order to assess the Outside Auditors' independence).


The Audit Committee will evaluate the qualifications, performance and independence of the Outside Auditors, including considering whether the Outside Auditors' quality controls are adequate and the provision of non-audit services is compatible with maintaining the Outside Auditor's independence and taking into account the opinions of Management and the Internal Auditors. The Audit Committee shall present its conclusions to the Board and, if so determined by the Audit Committee, recommend that the Board take additional action to satisfy itself of the qualifications, performance and independence of the Outside Auditors.


The Audit Committee will consider whether, in order to assure the continuing independence of the Outside Auditors, it is appropriate to adopt a policy of rotating the lead and/or concurring audit partner of the Outside Auditors.


Appointment and Oversight of Internal Auditors.


The Audit Committee will review and concur in the appointment, replacement, reassignment or dismissal of the Company's Manager, Corporate Audit and the size of the audit staff.


The Audit Committee will, as it deems necessary in its business judgment, evaluate the Internal Auditors and their impact on the accounting practices, internal controls and financial reporting of the Company.


Oversight and Review of Accounting Principles and Practices and Internal Controls.
The Audit Committee will, as it deems necessary in its business judgment, exercise oversight of, and review and discuss with Management, the Outside Auditors and the Internal Auditors:

the quality, appropriateness and acceptability of the Company's accounting principles used in its financial reporting, the clarity of the financial disclosures made, changes in the Company's accounting principles or practices, the application of particular accounting principles and disclosure practices by Management to new transactions or events;

potential major changes in generally accepted accounting principles and the effect of those changes on the Company's financial statements;


changes in accounting principles and financial reporting policies proposed to be implemented by the Company;


significant litigation, contingencies and claims against the Company and material accounting issues that require disclosure in the Company's financial statements;


information regarding any "second" opinions sought by management from an independent auditor with respect to the accounting treatment of a particular event or transaction;


Management's compliance with the Company's processes, procedures and internal controls;


the adequacy and effectiveness of the Company's internal accounting and financial controls and the recommendations of Management, the Outside Auditors and Internal Auditors for the improvement of accounting practices and internal controls;


disagreements between Management and the Outside Auditors or the Internal Auditors regarding the application of any accounting principles or any other matter;


all material off-balance sheet transactions, including related-party transactions, that could have a material effect on the Company's financial statements;


information regarding the value of goodwill on the balance sheet;


information on the carrying value on the balance sheet of impaired or non-performing assets;


information regarding any substantial risk that accrued revenue of a significant amount will be unrealized;


the existence of material pledges or guarantees by the Company of the obligations of others, including employees;


the existence and disclosure of all material related-party transactions;


method of accounting of any derivatives and its compliance with applicable standards;


discussion of all material contingent liabilities; and


the status of compliance with loan covenants.


Oversight and Monitoring of the Company's Financial Statements and Audits.

The Audit Committee will, as it deems necessary in its business judgment:


review with the Outside Auditors, the Internal Auditors and Management the audit function generally, the scope of proposed audits of the Company's financial statements and the audit procedures to be used in those audits;


review the audit efforts with the Outside Auditors, the Internal Auditors and Management to ensure effective use of audit resources;


review information regarding internal audits;


review with the Outside Auditors and Management each set of audited financial statements and the notes to those financial statements and, with respect to the Company's audited financial statements for the preceding fiscal year, to recommend whether those audited financial statements should be included in the Company's Annual Report on Form 10-K relating to that fiscal year; and


discuss with the Outside Auditors any serious difficulties or disputes with Management encountered during the course of the audit, including any adjustments to the financial statements recommended by the Outside Auditors and rejected by Management.


Communications with the Outside Auditors.

The Audit Committee will, as it deems necessary in its business judgment, communicate with the Outside Auditors:


to obtain information concerning accounting principles adopted by the Company, internal controls of the Company, Management, the Company's financial, accounting and internal auditing personnel and the impact of each on the quality and reliability of the Company's financial reporting;


obtain the information required to be disclosed to the Company by generally accepted auditing standards in connection with the conduct of an audit, including topics covered by SAS 54, 60, 61 and 82, and any issues involving the Company on which the Outside Auditors communicated with their national office;


require the Outside Auditors to review the financial information included in the Company's Quarterly Reports on Form 10-Q in accordance with Rule 10-01(d) of Regulation S-X of the Securities and Exchange Commission (the "Commission") prior to the Company filing such reports with the Commission and to provide to the Company for inclusion in the Company's Quarterly Reports on Form 10-Q any reports of the Outside Auditors required by Rule 10-01(d).


Communications with the Internal Auditors.

The Audit Committee will, as it deems necessary in its business judgment, communicate with the Internal Auditors to obtain information concerning accounting principles adopted by the Company, internal controls of the Company, Management, the Company's financial and accounting personnel and the impact of each on the quality and reliability of the Company's financial statements.


Communications with Management.

The Audit Committee will, as it deems necessary in its business judgment, communicate with Management to obtain information concerning accounting principles adopted by the Company, internal controls of the Company, the Outside Auditors, the Company's financial, accounting and internal auditing personnel and the impact of each on the quality and reliability of the Company's financial statements.


Audit Committee Reports.


The Audit Committee will prepare annually a report for inclusion in the Company's proxy statement relating to its annual shareholders meeting. In that report, the Audit Committee will state whether it has: (a) reviewed and discussed the audited financial statements with Management; (b) discussed with the Outside Auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as that statement may be modified or supplemented from time to time; (c) received from the Outside Auditors the written disclosures and the letter required by Independence Standard Board Standard No. 1, as that standard may be modified or supplemented from time to time, and has discussed with the Outside Auditors, the Outside Auditors' independence; and (d) based on the review and discussions referred to in clauses (a), (b) and (c) above, recommended to the Board that the audited financial statements be included in the Company's Annual Report on Form 10-K for the last fiscal year for filing with the Commission.


To the extent such information is not included in the annual report of the Audit Committee to be included in the Company's proxy statement relating to its annual shareholders meeting, the Audit Committee will also report at least annually to the Board on significant results of its activities and compliance with this Charter.


Additional Responsibilities.

The Audit Committee will:


As it deems necessary in its business judgment, conduct or authorize investigations into any matters within the Audit Committee's scope of responsibilities. The Audit Committee shall be empowered to retain independent counsel and other professionals to assist in the conduct of any investigation.


Review annually with the General Counsel the controls and policies pertaining to hedging activities with respect to natural gas and fertilizer products.


Review annually with the Chief Financial Officer the Company's Interest Rate Risk Management Policy. There should also be reviewed at least annually a report showing outstanding interest rate derivatives transactions and market positions.


Review annually risk management with the Company's risk manager. This review would include the cost and coverage.


Review annually with the full Board of Directors the adequacy of the Audit Committee Charter.


Report regularly to the Board on the business conducted by the Audit Committee.


Evaluate the Audit Committee's performance annually.


Establish hiring policies for employees or former employees of the Outside Auditor.