AGERE SYSTEMS INC.
2003 Committee Charter : AGRA
OF THE AUDIT AND FINANCE COMMITTEE
OF THE BOARD OF DIRECTORS
[ Purpose | Membership | Committee Meetings | General Principles as to Independent Auditor ]
[ Primary Responsibiliies - Audit | Scope of Responsibilities ]
1.1 The Audit and Finance Committee is appointed by the Board of Directors (the "Board") of the Company to assist the Board in its oversight of:
the adequacy of the Company's internal controls and financial reporting process and the integrity of the Company's financial statements;
2.1 The Committee shall be comprised of not less than three members of the Board.
2.2 All members of the Committee shall meet the independence requirements of the New York Stock Exchange, as interpreted by the Board in its business judgment, and of the Securities Exchange Act of 1934, applicable to members of audit committees.
2.3 Each Committee member shall be financially literate as such qualification is interpreted by the Board in its business judgment, or shall become financially literate within a reasonable period of time after appointment to the Committee.
2.4 At least one member of the Committee shall meet the accounting or related financial management expertise requirements of the New York Stock Exchange, as the Board interprets such qualification in its business judgment.
2.5 The only compensation that members of the Committee may receive from the Company are fees for service on the Board or a committee of the Board and the regular benefits received by Directors who are not members of the Committee. Such fees may be received in cash, stock of the Company, options to purchase stock of the Company or other in-kind consideration ordinarily available to Directors.
3.1 The Committee shall hold meetings at least quarterly each fiscal year, and at any additional time as either the Board or Committee deems necessary.
3.2 The Committee may request that members of management, the Company's outside counsel and/or the Company's Independent Auditor be present as needed.
3.3 Periodically, the Committee shall meet, in separate private sessions, with each of (i) management, (ii) Internal Auditing and (iii) the Independent Auditor. In addition, the Committee may meet with such other persons as the Committee deems advisable.
3.4 Minutes of each meeting will be kept and distributed to the entire Board.
General Principles as to Independent Auditor
4.1 The Committee adopts the following principles with respect to the Company's Independent Auditor:
The Committee has the sole authority and responsibility for the appointment, compensation, evaluation and, where appropriate, termination of the Company's Independent Auditor, and will review the quality control procedures, experience and qualifications of the senior members of its audit team. The Independent Auditor shall report directly to the Committee.
Ensure that the Independent Auditor submits periodically, a formal written statement, including the written disclosures required by Independence Standards Board Standard No. 1, delineating all relationships between the Independent Auditor and the Company.
5.1 The Committee shall review and discuss with management and the Independent Auditor the audited financial statements of the Company, including the disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the results of the year-end audit by the Company's Independent Auditor.
5.2 The Committee shall discuss with the Independent Auditor the matters the Independent Auditor determines are required to be discussed by Statement on Auditing Standards No. 61.
5.3 The Committee shall discuss with management and the Company's Independent Auditor (i) all critical accounting policies and practices used, (ii) any 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 accounting methods under GAAP that have been discussed with management and the treatment preferred by the Independent Auditor, (iii) the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company's financial statements and (iv) any other reports required by law to be delivered by the Independent Auditor, including any management letter or schedule of unadjusted differences.
5.4 Based on the review and discussions with management and the Independent Auditor referred to in paragraphs 4.2, 5.1, 5.2, and 5.3 above, the Committee will advise the Board whether it recommends that the audited financial statements be included in the Company's annual report on Form 10-K (or incorporated from the Annual Report to Stockholders).
5.5 The Committee shall regularly review with the Independent Auditor any audit problems or difficulties, including any restrictions on the scope or access to requested information and any significant disagreements with management and management's response, and discuss with the Independent Auditor the responsibilities, budget and staffing of the Company's Internal Auditing.
5.6 The Committee shall obtain assurance from the Independent Auditor that the audit was conducted in a manner consistent with Section 10A of the Securities Exchange Act of 1934.
5.7 The Committee shall discuss with management, the Independent Auditor and, as applicable, Internal Auditing:
The adequacy of the Company's internal accounting controls and the financial reporting process, which shall include a review of major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles, and major issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of identified deficiencies.
5.9 The Committee or the Chairman of the Committee shall discuss with management and the Company's Independent Auditor the quarterly financial statements of the Company, including the disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the matters the Independent Auditor determines are required to be discussed by Statement on Auditing Standards No. 71, prior to filing the Form 10-Q with the Securities and Exchange Commission.
5.10 The Committee shall periodically receive reports from and discuss with the Company's General Counsel any material government investigations, litigation or legal matters.
5.11 The Committee shall review reports and any disclosures of significant conflicts of interest involving directors or executive officers of the Company.
5.12 The Committee shall review with management and the Independent Auditor any material issues regarding the Company's financial statements or accounting policies raised in any correspondence with regulators or governmental agencies, any published reports or any external or employee complaints.
5.13 The Committee shall 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.
5.14 The Committee shall discuss (i) policies with respect to risk assessment and risk management, the Company's primary risk exposures and the steps management has taken to monitor and control such exposures and (ii) as and when appropriate, earnings press releases that have been issued by the Company, as well as financial information and earnings guidance that have been provided to analysts and rating agencies.
5.15 The Committee shall review the appointment and replacement of the Company's senior Internal Auditing executive.
5.16 The Committee may, when and to the extent it deems appropriate, obtain advice and assistance from outside legal, accounting or other consultants or experts.
Scope of Responsibilities
6.1 The Committee shall:
Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.