Audit Committee Charter of Pnc Financial Services Group Inc

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                                                                    Exhibit B
 
    
 
                                    CHARTER
 
                                     OF THE
 
                                AUDIT COMMITTEE
 
                                     OF THE
 
          BOARD OF DIRECTORS OF THE PNC FINANCIAL SERVICES GROUP, INC.
 
    
 
                      AS APPROVED AND AMENDED BY THE BOARD
 
                               FEBRUARY 16, 2005
 
    
 
   I. LEGAL OR OTHER REQUIREMENTS' AUTHORITY ; MINIMUM MEMBERSHIP; MEMBERSHIP
   REQUIREMENTS; MINIMUM NUMBER OF MEETINGS
 
    
 
   The Audit Committee ("Committee") of the Board of Directors ("Board") of
   The PNC Financial Services Group, Inc. ("Corporation") is established
   pursuant to Article V, Section 1.2 of the Corporation's By-Laws
   ("Bylaws"). The members of the Committee are appointed annually by the
   Board on the recommendation of the Nominating and Governance Committee and
   serve until their successors are duly elected and qualified. The Board
   determines the number of members on the Committee from time to time, but
   the number will not be fewer than the minimum number prescribed by
   applicable law, the Bylaws or New York Stock Exchange ("NYSE")
   requirements. Committee members must fully satisfy independence and
   experience requirements as prescribed by the NYSE, Section 10A(m)(3) of
   the Securities Exchange Act of 1934 ("Exchange Act") and the rules and
   regulations of the Securities and Exchange Commission ("SEC"), and the
   Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
   and applicable rules and regulations thereunder. All members of the
   Committee shall have a strong level of business or financial acumen (as
   determined in the reasonable discretion of the Board).
 
    
 
   The Board will, on the recommendation of the Nominating and Governance
   Committee, appoint one of the members of the Committee to serve as
   Committee Chairman. The Committee Chairman will, as a subcommittee, have
   the authority to act on behalf of the Committee between meetings,
   including the authority to grant preapprovals of audit and permitted
   non-audit services. The Committee may also form and delegate such
   authority to other subcommittees consisting of one or more members when
   appropriate. The decision of the Committee Chairman or other such
   subcommittee to grant preapprovals shall be presented to the full
   Committee at its next scheduled meeting.
 
    
 
   The Committee has the authority, to the extent it deems necessary or
   appropriate, to retain independent legal, accounting or other advisors.
   The Committee shall also have the authority, to the extent it deems
   necessary or appropriate, to ask the Corporation to provide the Committee
   with the support of one or more Corporation employees to assist it in
   carrying out its duties. The Committee may request any officer or employee
   of the Corporation or of the Corporation's outside counsel or independent
   auditors to attend a meeting of the Committee or to meet with any members
   of, or consultants to, the Committee.
 
    
 
   Subject to the authority of the Committee Chairman or other subcommittees
   to act on behalf of the Committee between meetings, the Committee has the
   sole authority to approve all audit engagement fees and terms, as well as
   all permitted non-audit engagements with the independent auditors. The
   Committee shall pre-approve auditing services and permitted non-audit
   services to be performed for the Corporation by the independent auditors
   in accordance with Section 10A(i) of the Exchange Act.
 
    
 
   The Corporation shall provide for appropriate funding, as determined by
   the Committee, for payment of compensation to the independent auditors
   engaged for the purpose of preparing or issuing
 
    
 
 
 
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   an audit report or performing other audit, review or attest services for
   the Corporation and to any advisors employed by the Committee and for
   payment of any administrative expenses of the Committee that are necessary
   or appropriate in carrying out its duties.
 
    
 
   The Committee, in its capacity as a Board committee, is directly
   responsible for the appointment, compensation, evaluation, retention, and
   termination of the Corporation's independent auditors. The Committee is
   directly responsible for oversight of the work of the independent auditors
   (including resolution of disagreements between management and the auditors
   regarding financial reporting) for the purpose of preparing or issuing an
   audit report or performing other audit, review or attest services for the
   Corporation. The independent auditors shall report directly to the
   Committee. The General Auditor shall also report directly to the
   Committee, which shall be responsible for preparing his or her performance
   evaluation and reviewing his or her compensation.
 
    
 
   The Committee will meet as often as the Committee or the Committee Chair
   determines, but not less frequently than quarterly.
 
    
 
   II. PURPOSES OF THE COMMITTEE
 
    
 
   The Committee's primary purposes are to:
 
    
 
     *   Provide assistance to the Board by: (1) monitoring the integrity of  
         the consolidated financial statements of the Corporation, (2)        
         monitoring compliance by the Corporation with legal and regulatory   
         requirements and with the Corporation's Code of Business Conduct and 
         Ethics, (3) evaluating and monitoring the independent auditors'      
         qualifications and independence, and (4) evaluating and monitoring   
         the performance of the Corporation's internal audit function and     
         independent auditors, with respect to the parent company and its     
         bank and non-bank subsidiaries; and                                  
 
    
 
     *   Prepare the report required by the rules of the SEC to be included   
         in the Corporation's annual proxy statement.                         
 
    
 
   The Committee will also, under applicable regulation, perform the duties
   required by law to be performed by an audit committee for any subsidiary
   bank of the Corporation that does not have its own audit committee and by
   a fiduciary audit committee for any subsidiary bank of the Corporation
   exercising fiduciary powers that does not have its own audit committee, in
   each case to the extent permitted, and in the manner required, by
   applicable laws and regulations.
 
    
 
   III. RESPONSIBILITIES OF THE COMMITTEE
 
    
 
   The following will be the common recurring activities of the Committee in
   carrying out its oversight function. These activities are set forth as a
   guide with the understanding that the Committee may diverge from this
   guide as it considers appropriate in the circumstances.
 
    
 
   Charter Review
 
    
 
     *   Review and reassess the adequacy of this charter annually and        
         recommend to the Board any proposed changes to this charter          
 
    
 
   Financial Reporting / Internal Controls
 
    
 
     *   Review and discuss with the internal auditors and the independent    
         auditors their respective annual audit plans, reports and the        
         results of their respective audits                                   
 
    
 
 
 
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     *   Review and discuss the Corporation's quarterly financial statements  
         with management and the independent auditors prior to the filing of  
         its Forms 10-Q; such review and discussion will include disclosures  
         made in management's discussion and analysis and the results of the  
         independent auditors' reviews of the quarterly financial statements  
 
    
 
     *   Review and discuss with management and the independent auditors the  
         annual audited financial statements, including disclosures made in   
         management's discussion and analysis, and recommend to the Board     
         whether the audited financial statements should be included in the   
         Corporation's Form 10-K                                              
 
    
 
     *   Discuss with management and the independent auditors any significant 
         financial reporting issues arising and any significant judgments     
         made in connection with the preparation of the Corporation's         
         financial statements, including any significant changes in the       
         Corporation's selection or application of accounting principles      
 
    
 
     *   Prior to each filing of an audit report with the SEC, review and     
         discuss with the independent auditors:                               
 
    
 
         *   All critical accounting policies and practices to be used;       
 
    
 
     *   All alternative treatments within generally accepted accounting      
         principles ("GAAP") for policies and practices related to material   
         items that have been discussed with management, including            
         ramifications of the use of such alternative disclosures and         
         treatments, and the treatment preferred by the independent auditors; 
         and                                                                  
 
    
 
     *   Summaries of other material written communications between the       
         independent auditors and management, such as any management letter   
         or schedule of unadjusted differences or uncorrected misstatements.  
 
    
 
     *   Discuss with management the Corporation's earnings press releases,   
         including the use of "pro forma" or "adjusted" non-GAAP information; 
         discuss generally with management, on a periodic basis, the types of 
         financial information to be disclosed and the types of presentations 
         to be made to analysts and rating agencies, including the            
         circumstances, if any, under which earnings guidance will be         
         provided to analysts or rating agencies                              
 
    
 
     *   Discuss with management and the independent auditors the effect of   
         regulatory and accounting initiatives as well as off-balance sheet   
         structures on the Corporation's financial statements                 
 
    
 
     *   Discuss with management the Corporation's major financial risk       
         exposures and the steps management has taken to monitor and control  
         such exposures, including policies and guidelines governing the      
         Corporation's process for operational risk assessment and management 
 
    
 
     *   Discuss with the independent auditors the matters required to be     
         discussed by Statement of Auditing Standards No. 61 relating to the  
         conduct of the audit, including any difficulties encountered in the  
         course of the audit work, any restrictions on the scope of           
         activities or access to requested information, and any significant   
         disagreements with management                                        
 
    
 
     *   Request and receive a signed Statement on Auditing Standards ("SAS") 
         No. 71 review report from the independent auditors prior to the      
         filing of each Form 10-Q and receive a SAS 71 review report with     
         respect to the fourth quarter and a signed opinion on the financial  
         statements, an opinion on management's assessment of the             
         effectiveness of the Corporation's internal control over financial   
         reporting and an opinion on the effectiveness of the                 
 
    
 
 
 
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     Corporation's internal control over financial reporting as of the end of 
     the Corporation's most recent fiscal year, prior to the filing of each   
     Form 10-K                                                                
 
    
 
     *   Discuss with the Corporation's independent auditors, internal        
         auditors and management their assessments of the adequacy of the     
         Corporation's internal controls, any significant deficiencies        
         relating to financial reporting, the design or operation of the      
         Corporation's internal and disclosure controls or other related      
         matters, and any proposals or special steps taken in order to        
         rectify such deficiencies                                            
 
    
 
     *   Review and discuss with management, including the General Auditor,   
         and the independent auditors: management's assessment that the       
         Corporation maintained effective internal control over financial     
         reporting as of the end of the Corporation's most recent fiscal      
         year; the independent auditors' opinion on management's assessment   
         of the effectiveness of the Corporation's internal control over      
         financial reporting; and the independent auditors' opinion on the    
         effectiveness of the Corporation's internal control over financial   
         reporting, as of the end of the Corporation's most recent fiscal     
         year, prior to the filing of each Form 10-K                          
 
    
 
     *   Monitor the Corporation's progress in promptly addressing and        
         correcting any significant deficiencies in financial reporting,      
         internal controls or related matters                                 
 
    
 
     *   Receive periodic reports from the independent auditors and           
         appropriate officers of the Corporation on significant accounting or 
         reporting developments proposed by the Financial Accounting          
         Standards Board, the Public Company Accounting Oversight Board, or   
         the SEC that may impact the Corporation                              
 
    
 
     *   Receive periodic reports from the independent auditors and           
         appropriate officers of the Corporation on significant financial     
         reporting and internal controls matters for non-bank subsidiaries    
 
    
 
     *   Meet with regulators when a meeting is requested by the regulators   
         or the Committee to discuss examination results and promote open     
         communication                                                        
 
    
 
     *   Review disclosures made to the Committee by the Corporation's CEO    
         and CFO during the certification process for the Form 10-K and Form  
         10-Q about any significant deficiencies or material weaknesses in    
         the design or operation of internal control over financial reporting 
         which are reasonably likely to adversely affect the Corporation's    
         ability to record, process, summarize and report financial           
         information or any fraud (whether or not material) involving         
         management or other employees who have a significant role in the     
         Corporation's internal control over financial reporting              
 
    
 
     *   Discuss with the Corporation's CEO and CFO the certifications they   
         are providing and understand the procedures they undertook           
 
    
 
   Independent Auditors
 
    
 
     *   Select the independent auditors pursuant to a well-organized process 
 
    
 
     *   Approve all audit engagement fees and terms, as well as all          
         permitted non-audit engagements with the independent auditors        
 
    
 
     *   Establish guidelines for the preapproval of auditing services and    
         permitted non-audit services to be performed for the Corporation by  
         the independent auditors                                             
 
    
 
 
 
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     *   Oversee the work of the independent auditors (including resolution   
         of disagreements between management and the auditors regarding       
         financial reporting) in preparing or issuing an audit report or      
         performing other audit, review or attest services for the            
         Corporation                                                          
 
    
 
     *   Evaluate and monitor the independence, qualifications and            
         performance of the independent auditors by, among other things:      
 
    
 
     *   Obtaining and reviewing a report from the independent auditors at    
         least annually regarding (a) the auditors' internal quality-control  
         procedures, (b) 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, (c) any steps taken to   
         deal with any such issues, and (d) to assess the auditors'           
         independence, all relationships between the independent auditors and 
         the Corporation                                                      
 
    
 
     *   Reviewing the performance of the independent auditors, including an  
         evaluation of the lead partner of the independent auditors' team,    
         and taking into account the opinions of management and the internal  
         auditors                                                             
 
    
 
     *   If so determined by the Committee, taking additional action to       
         satisfy itself of the qualifications, performance and independence   
         of the auditors                                                      
 
    
 
     *   Oversee the regular rotation of the audit partner(s) as required by  
         law and consider whether, in order to assure continuing auditor      
         independence, it is appropriate to adopt a policy of rotating the    
         auditing firm itself on a regular basis                              
 
    
 
     *   Establish policies for the Corporation's hiring of employees or      
         former employees of the independent auditors who participated in any 
         capacity in the audit of the Corporation, including in particular    
         the prohibition on employment under Section 10A(l) of the Exchange   
         Act as chief executive officer, controller, chief financial officer, 
         chief accounting officer, or any person serving in an equivalent     
         position (including a director of finance) for the Corporation,      
         during the one-year period preceding the date of the initiation of   
         the audit                                                            
 
    
 
     *   Discuss with the national office of the independent auditors         
         material issues on which it was consulted by the Corporation's audit 
         team and any material matters of audit quality and consistency       
 
    
 
     *   Ensure that the independent auditors have access to all necessary    
         Corporation resources                                                
 
    
 
   Internal Audit Function
 
    
 
     *   Review the appointment and replacement of the General Auditor, who   
         shall have supervisory responsibility for the internal audit         
         function, and review the performance and compensation of the General 
         Auditor                                                              
 
    
 
     *   Discuss with the General Auditor the significant reports to          
         management prepared by the internal auditing department and          
         management's responses                                               
 
    
 
     *   Discuss with the General Auditor and the independent auditors the    
         internal audit department responsibilities, budget and staffing, the 
         objectives of the internal audit plan and any recommended changes in 
         the planned scope of the internal audit                              
 
    
 
     *   Ensure that the internal auditors have access to all necessary       
         Corporation resources                                                
 
    
 
 
 
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   Compliance Oversight
 
    
 
     *   Discuss with the senior managers responsible for compliance and      
         regulatory relations, the General Auditor, and the Corporate         
         Ombudsman the Corporation's processes regarding compliance with      
         applicable laws and regulations and with the Corporation's Code of   
         Business Conduct and Ethics and obtain reports from these senior     
         managers, the General Auditor, and the Corporate Ombudsman regarding 
         compliance by the Corporation and its subsidiary/foreign affiliated  
         entities with applicable legal requirements and the Corporation's    
         Code of Business Conduct and Ethics                                  
 
    
 
     *   Discuss with the Corporate Ombudsman in private session the          
         effectiveness of the Corporation's ethics program                    
 
    
 
     *   Discuss with the Corporation's Chief Regulatory Officer the status   
         and results of regulatory agency examinations, any significant       
         issues arising out of such examinations, and related management or   
         Board of Directors responses                                         
 
    
 
     *   Receive from the independent auditors any assurances or reports      
         required to be furnished to the Committee under Section 10A(b) of    
         the Exchange Act                                                     
 
    
 
     *   Establish and provide appropriate oversight of procedures for (i)    
         the receipt, retention and treatment of complaints received by the   
         Corporation regarding accounting, internal accounting controls or    
         auditing matters, and (ii) the confidential, anonymous submission by 
         employees of the Corporation of concerns regarding questionable      
         accounting or auditing matters                                       
 
    
 
     *   Discuss with management and the independent auditors any             
         correspondence with regulators or governmental agencies and any      
         employee complaints or published reports which raise material issues 
         regarding the Corporation's financial statements or accounting       
         policies or compliance with the Corporation's Code of Business       
         Conduct and Ethics                                                   
 
    
 
     *   Discuss with the Corporation's General Counsel legal matters that    
         may have a material impact on the financial statements or that may   
         involve significant legal, reputational, or other risks, and discuss 
         with the senior managers responsible for compliance and regulatory   
         relations legal matters that may have an impact on the Corporation's 
         compliance policies                                                  
 
    
 
   Subsidiaries of the Corporation
 
    
 
     *   Where the Committee is performing the duties required by law to be   
         performed by an audit committee for a subsidiary bank of the         
         Corporation that does not have its own audit committee, review with  
         management and the independent auditors the basis for the reports    
         required to be filed by management and by the independent auditors   
         with the Federal Deposit Insurance Corporation or the Office of the  
         Comptroller of the Currency pursuant to 12 C.F.R. Sections 363.2(a)  
         and (b) and Sections 363.3(a) and (b), respectively, and 12 C.F.R.   
         Section 363.4.                                                       
 
    
 
     *   Perform the duties required to be performed by the fiduciary audit   
         committee for any bank subsidiary of the Corporation exercising      
         fiduciary powers that does not have its own audit committee, in each 
         case to the extent permitted, and in the manner required, by         
         applicable laws and regulations                                      
 
    
 
   General
 
    
 
     *   Meet separately, periodically, with management, with the internal    
         auditors, and with the independent auditors                          
 
    
 
 
 
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      *   Report to the Board on the Committee's activities, as appropriate   
 
    
 
     *   Maintain minutes or other records of the Committee's meetings and    
         activities                                                           
 
    
 
     *   Review and assess the quality and clarity of the information         
         provided to the Committee and make recommendations to management as  
         the Committee deems appropriate from time to time for improving such 
         materials                                                            
 
    
 
     *   Prepare the audit committee report to be included in the             
         Corporation's proxy statement when and as required by the rules of   
         the SEC                                                              
 
    
 
      *   Conduct an annual performance evaluation of the Committee           
 
    
 
   The Committee's job is one of oversight as set forth in this charter. It
   is not the duty of the Committee to prepare the Corporation's financial
   statements, to plan or conduct audits, or to determine that the
   Corporation's financial statements are complete and accurate and are in
   accordance with GAAP. The Corporation's management is responsible for
   preparing the Corporation's financial statements and for maintaining
   internal controls, and the independent auditors are responsible for
   auditing the financial statements. Nor is it the duty of the Committee to
   conduct investigations or to assure compliance with laws and regulations
   or the Corporation's Code of Business Conduct and Ethics.
 
    
 
   With respect to joint sessions of the Committee:
 
    
 
     (a)   The Committee may meet simultaneously as a committee of the        
           Corporation and of PNC Bank, National Association (the "Bank"),    
           though it should hold separate sessions if necessary to address    
           issues that are relevant to one entity but not the other or to     
           consider transactions between the two entities or other matters    
           where the Corporation and the Bank may have different interests;   
           and                                                                
 
    
 
     (b)   The Committee should consult with internal or outside counsel if,  
           in the opinion of the Committee, any matter under consideration by 
           the Committee has the potential for any conflict between the       
           interests of the Corporation and those of the Bank or the          
           Corporation's other subsidiaries in order to confirm that          
           appropriate procedures are established for addressing any such     
           potential conflict and for promoting compliance with the           
           Corporation's policies regarding Sections 23A and 23B of the       
           Federal Reserve Act.                                               
 
    
 
   In performing their duties and responsibilities, Committee members are
   entitled to rely in good faith on information, opinions, reports or
   statements prepared or presented by:
 
    
 
     *   One or more officers or employees of the Corporation whom the        
         Committee member reasonably believes to be reliable and competent in 
         the matters presented;                                               
 
    
 
     *   Counsel, independent auditors, or other persons as to matters which  
         the Committee member reasonably believes to be within the            
         professional or expert competence of such person; or                 
 
    
 
     *   Another committee of the Board as to matters within its designated   
         authority which committee the Committee member reasonably believes   
         to merit confidence.