Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit this Charter to the Board for approval and have the document published
at least every three years in accordance with regulations promulgated by
the SEC and New York Stock Exchange rules.
2. Review the Company's annual audited financial statements and quarterly
financial statements prior to filing with the SEC or distribution to stockholders
and the public. Review should include discussion with management and the
independent auditor of significant issues regarding accounting principles,
practices and judgments, including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Based on review and discussions, recommend to the Board whether the Company's
annual financial statements should be filed with the SEC.
3. Discuss earnings press releases generally, including the use of "pro
forma" or "adjusted" non-GAAP presentations, as well as financial
information and earnings guidance provided to analysts and ratings agencies.
Independent Auditor
1. Appoint and retain or replace the independent auditor (subject, if applicable,
to stockholder ratification), and approve all audit plans, engagement fees
and terms (including providing comfort letters in connection with securities
underwritings) and all significant non-audit engagements with the independent
auditor. The Audit Committee may consult with management but shall not delegate
these responsibilities. Ensure the rotation of the lead audit partner as
required by law and consider whether to rotate the audit firm itself.
2. Establish and observe pre-approval policies and procedures for the engagement
of the independent auditor to provide permitted audit and non-audit services.
3. On an annual basis, review, assess and discuss with the independent
auditor all relationships they have with the Company that could impair the
auditor's independence. Except to the extent permitted by applicable law,
the Company's independent auditor may not perform the following services
for the Company:
- accounting or bookkeeping services;
- internal audit services related to accounting controls, financial systems
or financial statements;
- financial information systems design implementation;
- broker, dealer, investment banking or investment adviser services;
- appraisal or valuation services;
- actuarial services;
- management services or human resource functions; and
- legal or other expert services.
4. Review the independent auditor's audit plan. Discuss scope, staffing, locations,
reliance upon management and general audit approach. Review with the independent
auditor any problems or difficulties the auditor may have encountered in the
conduct of the audit and resolve any disagreements between the auditors and
management.
5. Develop and recommend to the Board objective policies for the Company's
hiring of employees or former employees of the independent auditor with
due regard for the continuing independence of such auditor.
6. Obtain and review a report by the independent auditor describing the
auditor's internal quality-control procedures and all 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 all steps to deal with such issues.
Financial Reporting Process
1. Discuss matters required to be communicated to audit committees in accordance
with Statement on Auditing Standards No. 61, including such things as management
judgments and accounting estimates, significant changes in the Company's
accounting practices, significant audit adjustments, disagreements with
management and difficulties encountered in performing the audit.
2. Consider the independent auditor's judgments about the quality (not
just the acceptability) and appropriateness of the Company's accounting
principles as applied in financial accounting. Inquire as to the independent
auditor's views about whether management's choices of accounting principles
appear reasonable from the perspective of income, asset and liability recognition,
and whether those principles are common practices or minority practices.
3. In consultation with management and the independent auditor, consider
the integrity of the Company's financial reporting processes and controls,
both external and internal. Discuss significant financial risk exposures
and the steps management has take to monitor, control and report such exposures,
including the Company's risk assessment and risk management policies. Review
significant findings prepared by the independent auditor together with management's
responses, including the status of previous recommendations.
4. Review (a) the accounting treatment accorded significant transactions,
(b) any significant accounting issues, including any second opinions sought
by management on accounting issues, (c) the development, selection and disclosure
of critical accounting estimates and analyses of the effects of alternative
GAAP methods, regulatory and accounting initiatives, and off-balance sheet
structures on the financial statements of the Company and (d) the Company's
use of reserves and accruals, as reported by management and the independent
auditor.
Internal Controls and Legal Compliance
1. Review the budget, plan, changes in plan, activities, organizational
structure and qualifications of the director of the internal audit department's
office and internal audit group, as needed. Review significant reports prepared
by the director of the internal audit department's office and internal audit
group, together with management's response and follow-up to these reports.
2. Review the appointment, performance and replacement of the director
of the internal audit department and any other senior personnel responsible
for financial reporting.
3. Evaluate whether management is setting the appropriate tone at the top
by communicating the importance of internal controls and evaluate whether
the appropriate individuals possess an understanding of their roles and
responsibilities with respect to internal controls.
4. Consider and review with management, the internal audit group and the
independent auditor the effectiveness or weakness of the Company's internal
controls. Develop in consultation with management a timetable for implementing
recommendations to correct identified weaknesses.
5. Review the coordination between the independent auditor and internal
auditor; the risk assessment processes, scopes and procedures of the Company's
internal audit work; whether such risk assessment processes, scopes and
procedures are adequate to attain the internal audit objectives as determined
by the Company's management and approved by the Committee; and the standards
for determining the quality and composition of the Company's internal audit
staff.
6. Review management's monitoring of the Company's compliance with laws
and the Company's Code of Business Conduct and Ethics and ensure the management
has proper review systems in place to ensure that the Company's financial
statements, reports and other information disseminated to governmental organizations,
and the public, satisfy legal requirements.
7. On at least an annual basis, review with the Company's general counsel
the Company's compliance with applicable laws and regulations, and inquiries
received from regulators on governmental agencies.
8. Establish and maintain procedures for (a) the receipt, retention and
treatment of complaints received by the Company regarding accounting, internal
controls and auditing matters and (b) the confidential and anonymous submission
by employees of the Company of concerns with questionable accounting or
auditing matters.
9. Request and obtain from the independent auditor assurance that Section
10A (audit requirements) of the Securities Exchange Act of 1934 has not
been implicated.
10. Request and receive reports on the design and implementation of internal
controls. Monitor significant changes in internal controls and address any
known weaknesses.
Miscellaneous
1. Annually prepare and cause to be filed in the Company's annual proxy
statement a report to stockholders as required by the SEC.
2. The Audit Committee may perform any other activities consistent with
this Charter, the Company's Bylaws and governing law, as the Audit Committee
deems appropriate or necessary.
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