Audit Committee Purpose

The Audit Committee (the "Committee") is appointed by and reports to the Board of Directors (the "Board") to assist the Board in fulfilling its oversight responsibilities. The Committee's primary duties and responsibilities are to:

 

 

 

 

 

1.

Monitor the adequacy and integrity of the Company's financial reporting process and systems of disclosure controls and procedures and of internal controls regarding finance, accounting, and legal compliance.

 

 

2.

 

Recommend to the Board the appointment, dismissal and annual compensation of a qualified public accounting firm (the "Independent Auditor").

 

 

3.

 

Monitor the independence and performance of the Company's Independent Auditor.

 

 

4.

 

Maintain a free and open avenue of communication among the Independent Auditor, internal audit, management, the Committee and the Board.

 

 

5.

 

Perform such other assignments of a financial or non-financial nature as the Board may from time to time direct.

 

 

 

 

The Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities with full access to all books, records, facilities and personnel of the Company, as well as to the Independent Auditor and internal audit. The Committee, after discussion with the independent Board members, may retain outside legal, accounting, or other experts it deems necessary in the performance of its duties, and authorize funding by the Company of such engagements.

 

 

 

 

In carrying out its responsibilities, the Committee is not providing any expert or special assurance as to the Companyís financial statements or any professional certification as to the work of the Independent Auditor. The Committee shall make regular reports to the Board.

 

 

 

 

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Audit Committee Composition and Meetings

To serve on the Committee, individual members shall meet the requirements of regulations and governing organizations, including the relevant stock exchange, the Sarbanes-Oxley Act of 2002 (the "Act") and the rules and regulations of the Securities and Exchange Commission (the "SEC"). The Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be independent nonexecutive directors. At least one member shall qualify as a "financial expert," as defined by the aforementioned rules and regulations. The Chairperson shall be appointed by the Board.

 

 

 

 

The Committee shall hold meetings, at least quarterly, in person or telephonically as the Chair shall determine, with management and the Independent Auditor. The Committee shall meet privately in executive session periodically with the Independent Auditor, with management and with internal audit to discuss any matters that the Committee or the other parties believe should be discussed.

 

 

 

 

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Audit Committee Responsibilities and Duties

The following functions are the commonly recurring activities of the Committee in carrying out its oversight function.

 

 

 

 

1.

Review and reassess the adequacy of this Charter at least annually, submitting changes to the Charter to the Board for approval and publish the Charter publicly as required by regulations.

 

 

2.

 

Review the Company's annual audited financial statements and results of the audit, and quarterly, interim financial statements and results of the quarterly review, prior to filing or distribution. Review should include discussion with management and the Independent Auditor of significant issues and changes regarding accounting principles, practices, and judgments. Discussion should also include the Company's "MD&A" disclosures in the annual and quarterly SEC filings. Resolve any disagreements between management and the Independent Auditor. Also review and consider with the Independent Auditor matters required to be discussed by Statement of Auditing Standards ("SAS") No. 61.

 

 

3.

 

In consultation with management, the Independent Auditor, and internal audit, review:

 

 

 

 

a.

as required, but not less than annually, the adequacy and integrity of the Company's disclosure controls and procedures and internal controls,

 

 

b.

 

quarterly, any management disclosed significant deficiencies or material weaknesses in internal controls or any fraud by employees with a significant role in internal control, and

 

 

c.

 

annually, the internal audit function and audit plan.

 

 

 

 

Discuss the Company's policies with respect to risk assessment and risk management, and significant financial risk exposures and the steps management has taken to monitor, control and report exposures. Review significant findings prepared by the Independent Auditor and internal audit on these matters together with management's responses.

 

 

 

 

 

 

 

4.

Review with management and the Independent Auditor the Company's annual audited and quarterly interim financial results, its earnings press release and financial information and earnings guidance provided to analysts and ratings agencies, prior to the public release of earnings. Discuss any significant changes to the Company's accounting principles and any items required to be communicated by the Independent Auditor in accordance with SAS 61. The Chair of the Committee may represent the entire Committee for purposes of this review.

 

 

5.

 

The Committee shall establish and maintain procedures for:

 

 

 

 

a.

the receipt, retention and treatment of complaints received by the Company regarding accounting or auditing matters or controls, and

 

 

b.

 

the confidential, anonymous submission by the Companyís employees of concerns regarding accounting or auditing matters.

 

 

 

 

6.

 

The Independent Auditor is accountable to the Audit Committee of the Board of Directors. Review the independence and performance of the Independent Auditor and annually recommend to the Board the appointment of the Independent Auditor. Obtain a report from the Independent Auditor describing the firmís internal quality control procedures and any material issues raised by the peer or Private Company Accounting Oversight Board ("PCAOB") reviews, or by any inquiry or investigation by governmental or professional authorities during the preceding five years with respect to the firmís independent audits, including steps taken to deal with any such issues. The Committee may discharge the Independent Auditor with or without cause.

 

 

 

 

On an annual basis, obtain from the Independent Auditor, a written statement disclosing any and all relationships between the Independent Auditor and the Company consistent with Independence Standards Board Standard No. 1. Review and discuss with the Independent Auditor all significant relationships they have with the Company that could impair the Auditorís independence.

 

 

7.

 

Review, annually, with management and the Independent Auditor, the audit plan Ė discussing scope, staffing, locations, internal audit functions, reliance upon management, audit assistance from the Company and general audit approach, among other items. Review and approve the fees and other significant compensation to be paid to the Independent Auditor.

 

 

8.

 

Pre-approve all auditing services and fees for such services, including statutory audits and comfort letters in conjunction with securities offerings. Also pre-approve non-audit services provided by the Independent Auditor, including tax services and other services not prohibited by law or SEC rules, which exceed the de minimis exceptions of the Act. A Committee member designated by the Committee may represent the entire Committee for these approvals, up to the amount of $50,000 for each separate service provided.

 

 

9.

 

On an annual basis, request from the Independent Auditor, a written statement disclosing any and all relationships between the Independent Auditor and the Company consistent with Independence Standards Board Standard No. 1. Review and discuss with the Independent Auditor all significant relationships they have with the Company that could impair the Auditorís independence.

 

 

10.

 

Establish hiring policies which comply with rules and regulations for employees or former employees of the Independent Auditor.

 

 

11.

 

Ensure that a performance assessment of the Committee is performed annually.

 

 

12.

 

Review the effects of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements.

 

 

13.

 

Review and discuss managementís report on internal control and the Independent Auditorís attestation on Managementís required assertion.