The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial reports and other financial information provided by the Company to any governmental body or to the public; the Company’s internal controls regarding finance, accounting, legal, compliance and ethics that management and the Board have established; and the Company’s auditing, accounting and financial reporting processes generally. Consistent with this function, the Audit Committee should encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels. The Audit Committee’s primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the Company’s financial reporting process and internal control system.
- Review and appraise the independence and the audit efforts of the Company’s independent accountants and internal auditing department.
- Provide an open avenue of communication amongst the independent accountants, financial and senior management, the internal audit department and the Board of Directors.
- Monitor the Company’s compliance with legal and regulatory requirements.
The Audit Committee shall be comprised of at least three or more directors as determined by the Board, each of whom shall be independent directors and free from any relationship that, in our opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. All members of the Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Committee shall have accounting or related financial management expertise.
The members of the Committee shall be elected annually by the Board. Unless a chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership.
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its function to foster open communication, the Committee should meet at least annually with management, the director of internal auditing department and the outside independent accountants in separate executive sessions to discuss any matters that the Committee or each of these groups believe should be discussed.
RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
Review and update this Charter periodically, as conditions dictate.
Review the organization’s annual financial statements and any reports or other financial information submitted to any governmental body, or the public, including any certification, report, opinion, or review rendered by the independent accountants.
Review the regular internal reports to management prepared by the internal auditing department and management’s response.
Recommend to the Board of Directors the selection of the independent accountants, considering independence and effectiveness and approve the fees and other compensation to be paid to the independent accountants. On an annual basis, the Committee should review and discuss with the accountants all significant relationships the accountants have with the Company to determine the accountants’ independence.
Review the performance of the independent accountants and approve any proposed discharge of the independent accountants when circumstances warrant.
Periodically consult with the independent accountants and approve any proposed changes regarding internal controls and the fullness and accuracy of the organization’s financial statements.
Financial Reporting Process
In consultation with the independent accountants and the internal auditors, review the integrity of the organization’s financial reporting processes, both internal and external.
Consider the independent accountants’ judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.
Consider and approve, if appropriate, major changes to the Company’s auditing and accounting principles and practices as suggested by the independent accountants, management, or the internal auditing department.
Establish regular and separate systems of reporting to the Audit Committee by each of management, the independent accountants and the internal auditors regarding any significant judgments made in management’s preparation of the financial statements and the view of each as to appropriateness of such judgments.
Following completion of the annual audit, review separately with each of management, the independent accountants and the internal auditing department any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.
Review any significant disagreement among management and the independent accountants or the internal auditing department in connection with the preparation of financial statements.
Review with the independent accountants, the internal auditing department and management the extent to which changes or improvements in financial or accounting practices, as approved by the Audit Committee, have been implemented. (This review should be conducted at an appropriate of time subsequent to implementation of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
Review management’s monitoring of the Company’s compliance with the organization’s Ethical Code, and ensure that management has the proper review system in place to ensure that Corporation’s financial statements, reports and other financial information disseminated to governmental organizations and the public, satisfy legal requirements.
Perform any other activities consistent with this Charter, the Corporation’s By-laws and governing law, as the Committee or the Board deems necessary or appropriate.