I. Purpose
The Audit Committee (the "Committee") is
appointed by the Board of Directors (the "Board")
to assist the Board in fulfilling its oversight responsibilities.
The Audit Committee's primary duties and responsibilities
are to:
- Monitor the integrity of the Company's financial
reporting process and systems of internal controls regarding
finance, accounting, and legal compliance;
- Monitor the independence and performance of the Company's
independent auditors;
- Provide an avenue of communication among the independent
auditors, management and the Board.
The Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and
it has direct access to the independent auditors as
well as anyone in the organization. The Committee has
the ability to retain, at the Company's expense, special
legal, accounting, or other consultants or experts it
deems necessary in the performance of its duties.
II. Composition
The Committee shall be comprised of at least two directors.
Each committee member will be independent and have a
basic understanding of finance and accounting in order
to be able to read and understand fundamental financial
statements. At least one member of the Committee shall
have accounting or related financial management expertise.
Committee members shall be appointed by the Board.
The Board shall designate one member of the Committee
as its Chairman. If an audit committee Chairman is not
designated or present, the members of the Committee
may designate a Chairman by majority vote of the Committee
membership.
III. Meetings
The Committee shall meet at least four times annually,
or more frequently as circumstances require. The Committee
should meet privately in executive session at least
annually with management, the independent auditors,
and as a committee to discuss any matters that the Committee
or each of these groups believe should be discussed.
In addition, the Committee should communicate with management
and the independent auditors quarterly to review the
Company's financial statements and significant findings
based upon the auditors review and auditing procedures.
The Committee shall also maintain minutes of their
meetings and periodically report to the Board on significant
matters relating to the Committee.
IV. Audit Committee Responsibilities and Duties
Review of Financial Statements and Earnings Releases
The Committee shall review and reassess the adequacy
of this Charter at least every other year and recommend
any proposed changes to the Board for approval.
Prior to releasing the year-end earnings, the Committee
will discuss the results of the audit with the independent
auditors, and will discuss certain matters as required
to be communicated to audit committees in accordance
with applicable accounting standards.
The Committee shall review the Company's annual audited
financial statements. This review should include discussion
with management and independent auditors of significant
issues regarding accounting principles, practices, and
judgments.
In consultation with the management and the independent
auditors, the Committee shall consider the integrity
of the Company's financial reporting processes and controls,
and discuss significant financial risk exposures and
the steps management has taken to monitor, control,
and report such exposures. The Committee shall also
review significant findings prepared by the independent
auditors together with management's responses.
The Committee shall review with financial management
the Company's quarterly financial results prior to the
release of earnings. This review and discussion will
include any significant changes to the Company's accounting
principles.
Independent Auditors
The Committee is directly responsible for the appointment,
compensation and oversight of the work of the independent
auditors. The independent auditors will report directly
to the Committee.
The Audit Committee shall annually recommend to the
Board the appointment of the independent auditors and
approve any discharge of auditors when circumstances
warrant.
The Committee will annually review the qualifications,
performance and independence of the independent auditors.
The Committee's evaluation shall also include the review
and evaluation of the lead partner of the independent
auditors. At least annually, the Committee shall obtain
and review a report from the independent auditors regarding:
the firm's internal quality-control procedures; any
material issues raised by the most recent internal quality-control
review, or peer review, of the firm, 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, to assess
the auditor's independence, all relationships between
the independent auditor and the Company. The Committee
will also confer with management in reviewing the qualifications,
performance and independence of the independent auditors.
The Committee shall approve all audit engagement fees
and terms and all non-audit engagements with the independent
auditors. The Chairman of the Committee may approve
any proposed non-audit engagements that arise between
Committee meetings, provided that any such decision
is presented to the full Committee at its next scheduled
meeting.
The Committee will also review the independent auditors'
audit plan, including the scope, staffing and locations
of their examination, reliance upon management, and
general audit approach, and consider the independent
auditors' judgments about the quality and appropriateness
of the Company's accounting principles as applied in
its financial reporting.
Legal Compliance
On at least an annual basis, the Committee should review
with the Company's counsel any legal matters that could
have a significant impact on the organization's financial
statements, the Company's compliance with applicable
laws and regulations, and inquiries received from regulators
or governmental agencies.
Other Audit Committee Responsibilities
The Committee shall perform any other activities consistent
with this Charter, the Company's by-laws, and governing
law, as the Committee or the Board deems necessary or
appropriate.
The Committee shall annually review a summary of director
and officers' related party transactions and potential
conflicts of interest.
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