CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF RIGGS NATIONAL CORPORATION
The Audit Committee (the
ďCommitteeĒ) of the Corporation is appointed by, and generally acts on behalf
of, the Board of Directors (the ďBoardĒ) of Riggs National Corporation (the
ďCorporationĒ). The role of the Committee is one of oversight, not one of
management. It is the Committeeís responsibility to oversee managementís production
of the Corporationís financial statements and the audit of those statements
undertaken by the independent auditors, as well as to oversee the creation and
maintenance of disclosure controls and procedures and internal control over
- The Committee will be composed of at least three (3)
directors, each of whom must be ďindependentĒ as defined in NASDAQ listing
standards and each of whom must satisfy the additional audit committee
independence requirements set forth in Section 10A(m)(3) of the Exchange
Act of 1934, as amended (the ďExchange ActĒ), and the rules promulgated
thereunder. No Committee member shall have participated in the preparation
of the financial statements of the Corporation or its subsidiaries within
three (3) years of his date of appointment to the Committee.
- All members of the Committee must meet the financial
literacy requirements set forth in Rule 4350(d)(2) of the NASDAQ listing
standards. At least one member should be an ďaudit committee financial expertĒ
as required by Item 401(h) of Regulation S-K.
- The membership provisions of this Charter will be
subject to the cure provisions of Rule 4350(d)(4) of the NASDAQ listing
- The members of the Committee will be nominated and
appointed by a majority of the Board for one-year terms. The Board will
designate one member of the Committee to serve as Chairperson. The members
of the Committee will serve until their resignation, retirement or removal
by the Board or until their successors have been appointed. The Board will
review the composition and independence of the Committee on an annual
III. Meetings and
- The Committee will establish its own rules of
procedure, which will be consistent with the By-laws of the Corporation and
- The Committee will meet as often as it considers
necessary and appropriate, but in no event less than four (4) times per
year, either in person or telephonically. A majority of the members of the
Committee will constitute a quorum. The Chairperson or a majority of the
members of the Committee may call a special meeting of the Committee.
- The Committee will report to the Board on the matters
discussed at each Committee meeting, including describing actions taken at
the meeting, and keep written minutes of its meetings to be maintained
with the books and records of the Corporation.
- The Committee will meet with the independent
auditors, the senior members of the Corporationís internal audit
department and management in separate meetings, as often as it deems
necessary or appropriate.
- The Committee may request that any other directors,
officers or employees of the Corporation, or other persons whose advice
and counsel are sought by the Committee, attend any meeting to provide
such information as the Committee requests.
- The Corporation will provide the Committee will full
access to the Corporationís books, records, facilities and personnel.
- The Committee may delegate authority to one or more
of its members when appropriate, but no such delegation will be permitted
if the authority is required by law, regulation or listing standard to be
exercised by the Committee as a whole.
- The Committee will have the authority to obtain
advice and assistance from internal and external legal, accounting and
other independent advisors as it determines necessary to carry out its
duties, and the Corporation will provide appropriate funding, as
determined by the Committee, for the Committee to retain such advisors.
- The Corporation will provide appropriate funding for
ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties.
IV. Duties and
The Committee will take the following actions, to the extent it deems necessary
Financial Reporting Process.
- The Committee will review and discuss with
management and the independent auditors the annual audited financial
statements to be included in the Corporationís annual report on Form 10-K
and review and consider with the independent auditors the matters
required to be discussed by the Statement of Auditing Standards (SAS) No.
61, Communications With Audit Committees.
- The Committee, as a whole or through the
Chairperson, will review with management and the independent auditors the
Corporationís quarterly financial statements to be included in the
Corporationís Form 10-Qs and, as appropriate, any other financial
disclosures to be included in SEC filings prior to their release, and, as
applicable, review and consider with the independent auditors the matters
required to be discussed by SAS No. 100, Interim Financial Information,
prior to the Corporationís filing of such disclosures with the SEC.
- The Committee will recommend to the Board
whether the audited financial statements should be included in the
Corporationís Form 10-K.
- The Committee shall review earnings press
releases prior to their release, as well as the types of financial
information and earnings guidance provided to analysts and ratings
- The General Counsel of the Corporation shall
discuss with the Committee, as necessary and appropriate, all legal
matters that could have a material impact on the Corporationís financial
statements. The Chief Compliance Officer of the Corporation shall discuss
with the Committee, as necessary and appropriate, all legal matters that
could have an impact on the Corporationís compliance policies.
- The Committee will present
the report required by the rules of the SEC to be included in the
Corporationís annual proxy statement.
Risks and Control Environment.
- The Committee will oversee the activities,
organizational structure and qualifications of the internal audit
department. The individual or entity responsible for the internal audit
department will be accountable to the Committee.
- On an annual basis, the Committee will
evaluate and, as appropriate, approve the internal audit plan submitted
by the manager of the internal audit department. The Committee will
periodically review reports from the manager of the internal audit
department describing the Corporationís actual progress against the
internal audit plan, any significant deficiencies in internal control
over financial reporting, significant operating issues or other such
material matters as may affect the implementation of the internal audit
- The Committee will evaluate the adequacy of
the Corporationís internal accounting control system, as well as
operational and compliance controls, by review of written reports from
Risk Management and the independent auditors, and monitor managementís
- The Committee will oversee and evaluate the
Corporationís disclosure controls and procedures, including applicable
internal control over financial reporting, in accordance with applicable
laws and regulations. The Committee will monitor the Corporationís
progress in addressing and correcting any identified weaknesses or
deficiencies in such policies and procedures. The Committee will review
and discuss the annual internal control report of management and the
independent auditorsí report on, and attestation of, managementís
evaluation of internal control over financial reporting, when those
reports are required by SEC rules.
- The Committee will meet periodically with the
senior members of the internal audit department and the general counselís
office to review the Corporationís policies and procedures regarding
disclosures that may impact the financial statements and compliance with
applicable laws and regulations.
- The Committee will review all regulatory
examination reports submitted to the Corporation and monitor managementís
response to them.
- The Committee may require periodic reports
from management, the independent auditors and Risk Management on any
significant proposed regulatory, accounting or reporting issue for the
purpose of assessing the potential impact upon the Corporationís
financial reporting process.
- The Committee will establish and oversee
procedures for (1) the receipt, retention and treatment of complaints
received by the Corporation regarding accounting, internal accounting
controls or auditing matters, and (2) the confidential, anonymous
submission by Corporation employees of concerns regarding questionable
accounting or auditing matters as required by Section 10A(m)(4) of the
Exchange Act and the rules promulgated thereunder.
- The Committee will review and
evaluate the recommendations of management and, as appropriate, other
committees of the Board, with respect to the appointment, compensation
and replacement of the person or entity responsible for the Corporationís
internal audit function prior to the appointment of such individual or
- The Committee has direct responsibility for
and sole authority to retain (or nominate for shareholder approval), set
compensation and retention terms for and oversee the activities of the
Corporationís independent auditors, including resolution of any
disagreements between management and the auditor regarding financial
reporting. The independent auditors will report directly to the
Committee, which shall also have the authority to terminate the auditors.
The Corporation will provide for appropriate funding, as determined by
the Committee, for payment of compensation to the independent auditors.
- The Committee will review and approve in
advance the retention of the independent auditors for the performance of
all audit and lawfully permitted non-audit services, subject to the de
minimis exception for non-audit services described in Rule 2-01(c)(7) of
Regulation S-X. Pre-approvals of audit and lawfully permitted non-audit
services may be pursuant to appropriate policies and procedures
established by the Committee, or the Committee may delegate to one or
more of its members the authority to grant pre-approvals for the
performance of non-audit services, provided that any such pre-approval be
reported to the full Committee at its next-scheduled meeting.
- Prior to initiation of the audit, the
Committee will meet with the independent auditors to discuss the planning
and staffing of the audit, including the impact of applicable rotation
requirements and other independence rules on staffing.
- The Committee will periodically review any
reports prepared by the independent auditors and provided to the
Committee relating to significant financial reporting issues and
judgments including, among other things, the Corporationís selection,
application and disclosure of critical accounting policies and practices,
all alternative treatments, assumptions, estimates or methods that have
been discussed with management, including the ramifications of such
treatments and the treatment preferred by the independent auditors, and
any other material written communications between the independent
auditors and management, such as any management letter or schedule of
- The Committee will discuss with the
independent auditors any audit problems or difficulties, including any
restrictions on the scope of the independent auditorsí activities or on
access to requested information, and managementís response, and any other
matters required to be brought to its attention under auditing standards,
and will resolve any significant disagreements between the independent
auditors and management.
- After reviewing the reports from the
independent auditors and the independent auditorsí work throughout the
audit period, the Committee will conduct an annual evaluation of the
independent auditorsí performance and independence, including considering
whether the independent auditorsí quality controls are adequate. In
making its evaluation, the Committee will take into account the opinions
of management and senior members of the Corporationís internal audit
department, and will request an annual written statement from the
independent auditors delineating all relationships between the auditors
and the Corporation consistent with Independence Standards Board Standard
No. 1. The Committee will discuss with the auditors any such disclosed
relationships and their impact on the independence of the auditors, and
will take appropriate action to oversee the independence of the outside
- The Committee will set clear policies for the
hiring by the Corporation of employees or former employees of the
independent auditors as required by Rule 2-01(c)(2) of Regulation S-X.
- The Committee will require the independent
auditors to annually certify that they are in compliance with all
applicable legal and regulatory requirements relating to the
qualifications of the independent auditors, including, but not limited
to, the relevant provisions of Rules 2-01, 2-02, 2-06 and 2-07 of
- The Committee will review
with management and the independent auditors the annual financial
statement audit report and the attestation report concerning compliance
with designated laws and regulations as required by the Federal Deposit
Insurance Corporation Improvement Act and its implementing regulations.
- The Committee will oversee the execution of
the duties of the audit committee of Riggs Bank N.A. and will, to the
extent and in the manner permitted by applicable rules and regulations,
perform the duties required by applicable rules and regulations for any
subsidiary that does not have its own audit committee.
- The Committee will review and approve all
related-party transactions that would be required to be disclosed under
Item 404 of Regulation S-K.
- The Committee will review and reassess the
adequacy of this Charter annually and recommend any proposed changes to
the Board for its approval.
- On an annual basis, the Committee will conduct
a self-evaluation of its performance and effectiveness.
- The Committee will perform
any other activities consistent with this Charter, the Corporationís
Certificate of Incorporation, By-laws and governing law, as the Committee
or the Board deems necessary or appropriate.