The purposes of Board of Directors Audit Committee are to manage the Company’s relationship with its independent public accounting firm and to represent the Board in its oversight of the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. Management is responsible for (a) the preparation, presentation and integrity of the Company’s financial statements; (b) accounting and financial reporting principles; and (c) establishing, implementing, and maintaining the Company’s internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations. The Company’s independent public accounting firm is responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards.
The Audit Committee shall consist of not less than three members who shall be appointed by the Board of Directors. Each member shall be an independent director as defined under listing standards of The NASDAQ Stock Market, Inc. (“NASDAQ”) and applicable laws and regulations. In addition each member shall satisfy the independence and other requirements for audit committee membership under NASDAQ listing standards.
Responsibilities and Authority
- The appointment, compensation, retention and oversight of the work (including resolution of disagreements between management and the independent public accountants regarding financial reporting) of any independent public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. Any such independent auditing firm shall report directly to the Audit Committee.
- Obtain and review a written statement from the Company’s independent public accounting firm delineating all relationships between the firm and the Company, consistent with applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee shall actively engage in a dialogue with the independent public accountants with respect to any disclosed relationships or services that may impact their objectivity and independence, and take action to oversee the independence of the Company’s independent public accounting firm.
- Obtain and review annually a report by the Company’s independent public accounting firm describing the firm’s internal quality control procedures and any issues raised by the most recent internal quality control review, peer review, or regulatory inquiry within the preceding five years.
- Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
- Shall have the authority to engage independent legal, accounting and other advisors, as it determines necessary to carry out its duties. The Audit Committee shall have sole authority to approve related fees and retention terms.
- Shall be entitled to appropriate funding, as determined by the Audit Committee, from the Company for payment of: (a) compensation to any independent public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (b) compensation to any advisers engaged by the Audit Committee pursuant to the authority set forth above; and (c) ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.
- Review and reassess the adequacy of this charter on an annual basis.
- Issue the report of the Committee required by the rules of the Securities and Exchange Commission to be included in the annual proxy statement.
- Establish policies and procedures for the review and pre-approval by the Committee of audit and permissible non-audit services, including fees and terms, to be performed by the Company’s independent public accounting firm.
- Establish policies for the Company’s hiring of employees and former employees of the Company’s independent public accounting firm.
- Unless another independent committee of the Board has been specifically created for such purpose, the Audit Committee shall review and approve in advance all transactions that the Company enters into with related parties that would require disclosure under Item 404 of Regulation S-K promulgated by the Securities and Exchange Commission (“SEC”).
In addition, in connection with its oversight of the Company’s accounting and financial reporting processes and audits of the Company’s financial statements, the Audit Committee shall, as appropriate:
- Consult with the Company’s independent public accounting firm regarding: (a) its audit plans and procedures, including scope, fees and timing of the audit; (b) the results of the annual audit along with any accompanying management suggestions; and (c) the results of its procedures with respect to interim periods;
- Review and discuss with the independent public accountants all material accounting issues, including alternative accounting treatments within GAAP, which have been discussed with management or may have a significant impact on the Company;
- Review with the Company’s independent public accounting firm its judgment as to the quality and appropriateness of the Company’s accounting principles and the adequacy of the Company’s financial statement disclosures;
- Discuss with management and the independent public accountants quarterly earnings press releases, quarterly financial statements, and the annual financial statements prior to filing, including Managements’ Discussion and Analysis of Financial Condition and Results of Operations;
- Review and discuss with management and the independent public accountants the adequacy and the effectiveness of the Company’s internal controls, including any significant deficiencies and significant changes in internal controls reported to the Committee by the independent public accountants or management, and the adequacy and effectiveness of the Company’s disclosure controls and procedures;
- Review and discuss with management the Company’s major financial risk exposures and the steps management had taken to monitor and control such exposures;
- Review the effectiveness of the Company’s system for monitoring compliance with laws, regulations and the Company’s business conduct policies and the results of management’s investigation and follow-up on any fraudulent acts or accounting irregularities;
- Obtain periodic reports from management regarding legal and regulatory compliance; and
- Review with the Company’s outside counsel legal matters that may have a material impact on the consolidated financial statements and any material reports or inquiries received from regulators or governmental agencies regarding financial reporting compliance.
When appropriate, the Audit Committee may designate one or more of its members to perform certain of its duties on its behalf, subject to such reporting to or ratification by the Committee as the Committee shall direct.
The Audit Committee shall meet at such times and places as the Audit Committee shall determine. The Audit Committee shall meet in executive session with the independent public accountants and management periodically. The Chairman of the Audit Committee shall report on the Audit Committee activities to the full Board.