AUDIT COMMITTEE CHARTER
This Audit Committee Charter governs the operations of the Audit
Committee. The Committee shall review and reassess the charter at least annually
and obtain the approval of the Board of Directors. The Committee shall be
members of, and appointed by, the Board of Directors and shall comprise at least
two directors, each of whom are independent of management and the Company.
Members of the Committee shall be considered independent as long as they do not
accept any consulting, advisory, or other compensatory fee from the Company and
are not an affiliated person of the Company or its subsidiaries, and meet the
independence requirements of the stock exchange listing standards. All Committee
members shall be financially literate.
The Committee shall provide assistance to the Board of Directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to: the integrity of
the Company's financial statements; the financial reporting process; the systems
of internal accounting and financial controls; the performance of the Company's
internal audit function and independent auditors; the independent auditor's
qualifications and independence; and the Company's compliance with ethics
policies and legal and regulatory requirements. In so doing, it is the
responsibility of the Committee to maintain free and open communication between
the Committee, independent auditors, and management of the Company.
In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the authority to engage
independent counsel and other advisers as it determines necessary to carry out
III. DUTIES AND RESPONSIBILITIES
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and report the
results of their activities to the Board. While the Audit Committee has the
responsibilities and powers set forth in this Charter, it is not the duty of the
Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. Management is responsible for the
preparation, presentation, and integrity of the Company's financial statements
and for the appropriateness of the accounting principles and reporting policies
that are used by the Company. The independent auditors are responsible for
auditing the Company's financial statements and for reviewing the Company's
unaudited interim financial statements.
The Committee, in carrying out its responsibilities, believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and circumstances. The Committee should take appropriate
actions to set the overall corporate "tone" for quality financial reporting,
sound business risk practices, and ethical behavior. The following shall be the
principal duties and responsibilities of the Audit Committee. These are set
forth as a guide with the understanding that the Committee may supplement them
The Committee shall be directly responsible for the appointment and
termination (subject, if applicable, to shareholder ratification), compensation,
and oversight of the work of the independent auditors, including resolution of
disagreements between management and the auditor regarding financial reporting.
The Committee shall pre-approve all audit and non-audit services provided by the
independent auditors and shall not engage the independent auditors to perform
the specific non-audit authority to a member of the Audit Committee. The
decisions of any audit Committee member to whom pre-approval authority is
delegated must be presented to full Audit Committee at its next scheduled
At least annually, the Committee shall obtain and review a report by
the independent auditors describing:
o The firm's internal quality control procedures.
o Any material issues raised by the most recent internal quality
control review, or peer review, of the 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 the firm, and any steps taken to deal with
any such issues.
o All relationships between the independent auditor and the Company
(to assess the auditor's independence).
In addition, the Committee shall set clear hiring policies for
employees or former employees of the independent auditors that meet the SEC
regulations and stock exchange listing standards, if and when applicable.
The Committee shall discuss with the independent auditors the overall
scope and plans for their respective audits, including the adequacy of staffing
and compensation. Also, the Committee shall discuss with management, and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's policies and procedures to assess,
monitor, and manage business risk, and legal and ethical compliance programs
(e.g., Company's Code of Conduct).
The Committee shall meet separately periodically with management, and
the independent auditors to discuss issues and concerns warranting Committee
attention. The Committee shall provide sufficient opportunity for the
independent auditors to meet privately with the members of the Committee. The
Committee shall review with the independent auditor any audit problems or
difficulties and management's responses.
The Committee shall receive regular reports from the independent
auditor or the critical policies and practices of the Company, and all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management.
The Committee shall review management's assertion on its assessment of
the effectiveness of internal controls as of the end of the most recent fiscal
year and the independent auditors' report on management's assertion, when that
requirement becomes effective.
The Committee shall review and discuss earnings press releases, as well
as financial information and earnings guidance provided to analysts and rating
The Committee shall review the interim financial statements and
disclosures under Management's Discussion and Analysis of Financial Condition
and Results of Operations with management and the independent auditors prior to
the filing of the Company's Quarterly Report on Form 10-Q. Also, the Committee
shall discuss the results of the quarterly review and any other matters required
to be communicated to the Committee by the independent auditors under generally
accepted auditing standards. The Chair of the Committee may represent the entire
Committee for the purposes of this review.
The Committee shall review with management and the independent auditors
the financial statements and disclosures under Management's Discussion and
Analysis of Financial Conditions and Results of Operations 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), including their judgment about
the quality, not just the acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of the disclosures in
the financial statements. Also, the Committee shall discuss the results of the
annual audit and any other matters required to be communicated to the Committee
by the independent auditors under generally accepted auditing standards.
The Committee shall establish procedures for the receipts, retentions,
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.
The Committee shall receive corporate attorneys' reports of evidence of
a material violation of securities laws or breaches of fiduciary duty.
The Committee also prepares its report to be included in the Company's
annual proxy statement, as required by SEC regulations.
The Committee shall perform an evaluation of its performance at least
annually to determine whether it is functioning effectively.