Management & Audit Committee Charter
The Finance, Risk Management and Audit Committee (the “Committee”) has been
appointed by the Board of Directors (the “Board”) of Administaff, Inc. (the
“Company”) to assist the Board in fulfilling its responsibility to oversee
the financial affairs, risk management, accounting and financial reporting
processes and audits of financial statements of the Company by reviewing
and monitoring (i) the financial affairs of the Company, (ii) the integrity
of the Company’s financial statements, (iii) the Company’s compliance with
legal and regulatory requirements, (iv) the independent auditor’s (the
“external auditors”) qualifications, independence and performance, (v) the
performance of the personnel responsible for the Company’s internal audit
function (the “internal auditors”) and the external auditors, and (vi) the
Company’s policies and procedures with respect to risk management, as well
as other matters which may come before it as directed by the Board.
Pursuant to the Sarbanes-Oxley Act of 2002 and the rules and regulations of
the Securities and Exchange Commission (the “Commission”), the Committee
shall be directly responsible for the appointment, compensation, retention
and oversight of the work of the Company’s external auditors.
The Committee shall have and may exercise all the powers of the Board,
except as may be prohibited by law, with respect to all matters encompassed
by this Charter, and all the power and authority required under the
Sarbanes-Oxley Act of 2002. The Committee shall prepare the report required
by the rules of the Commission to be included in the Company’s annual proxy
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company’s financial statements and disclosures are
complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. The Board and
the Committee recognize that the Company’s management is responsible for
preparing the Company’s financial statements and the external auditors are
responsible for auditing those financial statements. Therefore, the Board
and the Committee’s responsibility is one of oversight.
The Committee shall consist of the number of directors fixed from time to
time by the Board, not less than three. The members of the Committee shall
be appointed and may be removed by the Board in its discretion and upon the
recommendation of the Nominating and Corporate Governance Committee. The
Committee’s composition shall meet the independence and experience
requirements of the New York Stock Exchange (“NYSE”), Section 10A(m)(3) of
the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and
regulations of the Commission, in each case after giving effect to any
applicable phase-in requirements. At least one member of the Committee
shall be an “audit committee financial expert,” as defined by Item
401(h)(2) of Regulation S-K promulgated by the Commission.
The Committee shall meet as often as its members shall determine to be
necessary, or as meetings may be called by the Chair of the Committee, any
two members of the Committee or the Chairman of the Board, but in any event
shall meet not less frequently than quarterly. In addition, the Committee
will make itself available to the external and internal auditors of the
Company as requested. The Committee shall meet separately, periodically,
with the management, with the internal auditors and with the external
auditors. The Committee may invite members of management, other employees
of the Company, the Company’s outside counsel, the Company’s external
auditor or others to attend meetings with, and furnish pertinent
information to, the Committee. Committee shall also meet in executive
session as required. The Board shall appoint one member of the Committee as
Chair. The Chair of the Committee shall be responsible for scheduling all
meetings of the Committee, determining the agenda for each meeting (following
consultation with other members of the Committee and with management),
presiding over meetings of the Committee and coordinating reporting to the
Board. In the absence of the Chair, the majority of the members of the
Committee present at a meeting shall appoint a member to preside at the
Authority and Responsibilities
The Committee is empowered to investigate any matter relating to the
financial affairs and risk management of the Company brought to its
attention, and shall have full access to all books, records, facilities and
personnel of the Company. The Committee shall have the authority to retain
and obtain advice and assistance from independent counsel, accounting and
other advisors without seeking Board approval. The Company shall provide
for appropriate funding, as determined by the Committee, for payment of
compensation to the external auditor for the purpose of rendering or
issuing an audit report and to any advisors employed by the Committee.
The Committee has the sole responsibility and authority to select (subject
to stockholder ratification), evaluate and, where appropriate, replace the
Company’s external auditors. The Committee shall preapprove all audit,
review or attest engagements and permissible non-audit services, including
the fees and terms thereof, to be performed by the external auditors,
subject to, and in compliance with, the de minimis exception for non-audit
services described in Section 10A(i)(1)(B) of the Exchange Act and the
applicable rules and regulations of the Commission. The Committee shall be
directly responsible for the compensation and oversight of the work of the
external auditor (including resolution of disagreements between management
and the external auditor regarding financial reporting) for the purpose of
preparing or issuing an audit report or related work or performing other
audit, review or attest services. The external auditor shall report
directly to the Committee.
The Committee may form and delegate authority to subcommittees consisting
of one or more members when appropriate, including the authority to grant
preapprovals of audit and permitted non-audit services. The Committee also
may delegate such preapproval authority to any of its members. Any
decisions of such subcommittees or members to grant preapprovals shall be
presented to the full Committee at its next scheduled meeting.
In addition to the foregoing, the Committee shall:
Oversight of the External Auditors
1. Review and discuss with the external auditor the planning and staffing
of the annual audit and any other services provided by the Company’s
external auditors, and approve the terms of and any fees related to the
audit and such other services.
2. Review and evaluate the lead partner of the external auditors.
3. At least annually, obtain and review a report by the external auditors
describing (i) the external auditors’ internal quality-control procedures,
(ii) any material issues raised by the most recent internal quality-control
review, or peer review, of the external auditor, 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, and (iii)
all relationships between the external auditor and the Company as
contemplated by Independence Standards Board Standard Number 1. Evaluate
the external auditors’ qualifications, performance and independence,
including considering whether the external auditor’s quality controls are
adequate and the provision of permitted non-audit services is compatible
with maintaining the external auditor’s independence. In making this
evaluation, the Committee shall take into account the opinions of
management and the internal auditor. The Committee shall present its
conclusions with respect to the external auditors to the full Board.
4. Assure the regular rotation of the audit partners as required by law.
Consider, whether, in order to assure continuing auditor independence,
there should be regular rotation of the audit firm itself.
5. Establish hiring policies for the Company’s employment of the external
auditors’ employees or former employees.
Selection and Oversight of the Internal Auditors
6. Discuss and approve the appointment and replacement of the internal
7. Review and discuss with the internal auditors significant reports that
the internal auditors prepare for management as well as management’s
responses to those reports.
8. Discuss with management and the external auditors the responsibilities,
budget, staffing and qualifications of the internal auditors and any
recommended changes in the planned scope of the internal audit. The
internal audit function (which may be outsourced to a third-party service
provider other than the external auditor) is intended to provide management
and the Committee with ongoing assessments of the Company’s risk management
processes and system of internal control over financial reporting.
Financial Statements, Disclosure and Compliance Matters
9. Prior to the filing of the Company’s quarterly report on Form 10-Q and
annual report on Form 10-K, review and discuss with the external auditors
and management the annual audited financial statements and quarterly
financial statements, as applicable, including disclosures made in
management’s discussion and analysis of financial condition and results of
operations, the results of any annual audit or interim financial review and
any report or opinion rendered in connection therewith, as the case may be.
Recommend to the Board whether the audited financial statements and
accompanying notes should be included in the Company’s annual report on
10. Prepare and approve the audit committee report as required by the
Commission to be included in the Company’s proxy statement for the annual
meeting (or in the Company’s annual report on Form 10-K if required to be
11. Review with the external auditors any communication or consultation
between the audit team and the audit firm’s national office respecting
auditing or accounting issues presented by the engagement.
12. Review and consider with the external auditors the matters required to
be communicated by the external auditors pursuant to Statement on Auditing
Standards No. 61 relating to the conduct of the audit, including any
problems or difficulties the external auditors encountered in the course of
audit work and management’s response, any restrictions on the scope of the
auditors’ activities or access to requested information, and any
significant disagreements with management, whether satisfactorily resolved
13. Review and discuss quarterly reports from the external auditors
concerning (i) all critical accounting policies and practices to be used;
(ii) all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with management,
ramifications of the use of such alternative disclosures and treatments,
and the treatment preferred by the external auditors; and (iii) any
material written communications between the external auditors and
management such as any management letter provided by the external auditors
and management’s response to that letter, any management representation
letter, any reports on observations and recommendations on internal control
over financial reporting, any schedules of unadjusted audit differences and
a listing of adjustments and reclassifications not recorded, if any, and
any engagement or independence letters.
14. Review the disclosures that the Company’s chief executive officer and
chief financial officer make to the Committee and the external auditors in
connection with the certification process for the Company’s Form 10-K and
Form 10?Q concerning any significant deficiencies or weaknesses in the
design or operation of internal control over financial reporting and any
fraud that involves management or other employees who have a significant
role in the Company’s internal control over financial reporting.
15. Review and discuss with management any earnings press releases,
including the use of any “non-GAAP financial measure” as defined by the
rules of the Commission, as well as financial information and earnings
guidance provided to analysts and rating agencies. Such discussion may be
done generally, covering, for example the types of information to be
disclosed and the type of presentation to be made.
16. Review and discuss with management and the external auditor the effect
of regulatory and accounting initiatives as well as off-balance sheet
structures on the Company’s financial statements.
17. Meet periodically with management to review and discuss the Company’s
major risk exposures and any steps management has taken to monitor and
control such exposures, including the Company’s guidelines and policies
concerning risk assessment and management.
18. Review and discuss with management and the external auditors (i) major
issues regarding accounting principles and financial statement
presentations, including significant changes in the selection or
application of accounting principles, any major issues concerning the
adequacy of the Company’s internal control over financial reporting and any
special audit steps adopted in light of material control deficiencies; and
(ii) analyses prepared by management and/or the external auditors setting
forth significant financial reporting issues and judgments made in
connection with the preparation of the Company’s financial statements,
including analyses of the effects of alternative methods of generally
accepted accounting principles on the financial statements.
19. Review proposed changes to the Company’s financial and accounting
standards and principles and the Company’s policies and procedures with
respect to its internal accounting, auditing and control over financial
20. Obtain assurance from the external auditors that Section 10A(b) of the
Exchange Act has not been implicated.
21. Assist the Board in its oversight of the Company’s legal and regulatory
compliance by advising the Board with respect to the Company’s policies and
procedures concerning compliance with the Company’s Code of Business
Conduct and Ethics. Obtain reports from management, the internal auditors
and the external auditors addressing the Company’s and its subsidiaries’
compliance with the Company’s Code of Business Conduct and Ethics as well
as applicable laws and regulations. Review reports and disclosures of
insider and affiliated party transactions.
22. Establish procedures for (i) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters; and (ii) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
23. Review and discuss with management, including the Company’s General
Counsel, the internal auditor and the external auditors any legal matters
that may have a material impact on the financial statements or the
Company’s compliance policies and any correspondence with regulators or
governmental agencies and any published reports that raise material issues
regarding the Company’s financial statements or accounting policies.
24. Review and approve the services provided by independent accounting firms
other than the external auditors.
25. Provide a report of Committee activities to the Board at regular
intervals and review with the full Board any issues that arise with respect
to the quality or integrity of the Company’s financial statements, the Company’s
compliance with legal or regulatory requirements, the performance and
independence of the Company’s external auditors, or the performance of the
26. Perform such other functions as requested by the Board, or required by
law or NYSE rule.
Annual Review of Charter and Performance
At least annually, the Committee shall review and reassess the adequacy of
this Charter. The Committee shall report the results of the review to the
Board and, if necessary, recommend that the Board amend this Charter. The
Committee shall annually review its own performance.
As adopted by the Board of Directors on November 18, 2003.