Audit Committee Charter
The Audit Committee shall provide assistance to the Board of Directors in its oversight of:
The quality and integrity of the Company’s consolidated financial statements and its internal control over financial reporting;
The Company’s compliance with legal and regulatory requirements affecting financial reporting;
The qualifications, independence and performance of the independent auditors;
The audits of the Company and its subsidiaries; and
The performance of the Company’s internal audit function.
Structure and Operations
Composition and Qualifications
The Committee shall consist of a minimum of three members, each of whom is determined by the Board to be “independent” under the rules of the New York Stock Exchange. All members of the Committee shall have sufficient financial experience and ability to discharge their responsibilities, and at least one member of the Committee shall be an “audit committee financial expert” as defined by the SEC.
No member of the Committee may serve simultaneously on the Audit Committee of more than two other public companies.
No member of the Committee shall receive compensation other than fees and regular benefits for service as a director of the Company, including reasonable compensation for serving on the Committee.
Appointment and Removal
The members of the Committee shall be appointed by the Board and may be removed, with or without cause, by the Board at its discretion.
The Committee shall meet with the independent auditors and senior management of the Company at least twice a year to review the scope of the annual audit, the audit plan and audit results and to review and discuss risk management and such other matters as the Committee, in consultation with senior management of the Company, deems to be necessary and appropriate. The Committee shall also meet with the independent auditors and senior management on a quarterly basis to review the Company’s quarterly earnings press releases, including the press release reporting full year results, and financial statements related thereto. At each meeting the Committee shall meet privately with the independent auditors and separately in executive session. The Committee shall meet more frequently as circumstances dictate. Members of the Committee shall meet separately as necessary and appropriate with senior management, including employees responsible for the internal audit function, financial reporting, treasury, risk management, taxes and information technology and the independent auditors of the Company.
Responsibilities and Duties
The Committee shall carry out its responsibilities and duties as delegated to it by the Board from time to time. The Committee shall perform its functions as required by applicable laws, rules and regulations including, without limitation, the SarbanesOxley Act and the rules and regulations of the SEC, the New York Stock Exchange and the Public Company Accounting Oversight Board. In the performance of its duties, the Committee shall have the authority to retain and authorize payment of outside legal, accounting and/or other advisors.
The Committee shall review with management and the independent auditors, reports on the evaluation of the Company’s internal control over financial reporting and, prior to public dissemination, the Company’s annual audited financial statements and unaudited quarterly financial statements to be included in the Company’s Form 10-K and 10-Q filings and the related disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Committee shall recommend to the Board whether the Company’s annual audited financial statements should be included in the Company’s Annual Report on Form 10-K.
The Committee shall review with management and the independent auditors, prior to public dissemination, the Company’s earnings press releases, including supporting financial information, and shall review any financial information and earnings guidance to be provided to analysts and rating agencies not previously included in earnings press releases or otherwise disclosed to the Committee or to the full Board of Directors of the Company. The Committee’s review of earnings press releases shall specifically include, as necessary, review of the use of any “pro-forma” or “adjusted” non-GAAP information.
The Committee shall select, engage, evaluate and replace, if deemed necessary, the independent auditors. The Committee shall approve all audit engagement fees and terms. The Committee shall also pre-approve all permissible tax and other non-audit services, including fees and terms for such services, provided in each case that such services are permissible under the rules of the PCAOB and the Audit Committee’s Pre-Approval Policy.
The Committee shall review, at least annually, the qualifications, performance and independence of the independent auditors. In conducting its review, the Committee shall:
Take into account the opinions of senior management and other personnel responsible for internal control over financial reporting and internal audit functions of the Company;
Review a report by the independent auditors describing: (i) the firm’s internal qualitycontrol procedures; (ii) any material issues raised by the internal quality control review or peer review of the independent auditor within the five preceding years, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years and any steps taken by the independent auditors to deal with any such issues; and (iii) all relationships between the independent auditors and the Company and any other relationships that may affect the auditors’ independence;
Ensure the rotation of the lead audit partner at least every five (5) years as well as the rotation of other partners as required.
The Committee shall review and approve the proposed scope of the annual audit of the Company’s financial statements, any material changes in the actual scope of the audit and the evaluation of the Company’s internal controls for financial reporting.
The Committee shall review and discuss with the Company’s independent auditors any other matters, as required and appropriate, to sustain a constructive dialogue about significant matters relevant to the audit of the financial statements of the Company and of internal control over financial reporting.
Internal Audit Function
The Committee shall review with the Chief Financial Officer and/or such others as the Committee deems appropriate, the Company’s internal system of audit of financial controls, the results of internal audits and the procedures for maintaining the adequacy and effectiveness of internal controls.
Financial Reporting Process and Accounting Principles
The Committee shall review with senior management and the independent auditors, at least annually, the integrity of the Company’s financial reporting processes, both internal and external, and the selection and quality of the Company’s accounting principles.
The Committee shall review with the independent auditors and senior management as necessary and appropriate (i) the effect of critical accounting policies and practices; (ii) significant estimates and judgments; and (iii) applicable regulatory and accounting standards and principles, as well as any off-balance sheet structures, on the financial statements of the Company.
The Committee shall review with the independent auditors (i) any audit problems or other difficulties encountered by the auditors in the course of the audit process, and (ii) management’s responses to such matters. The Committee shall also review with the independent auditors (i) accounting adjustments that were noted or proposed by the auditors but were determined by management to be immaterial, (ii) material alternative treatments of financial information within GAAP that have been discussed with management, the ramifications of the use of such alternative disclosure and treatments and the treatment preferred by the independent auditors, (iii) reports on the evaluation of the Company’s internal controls for financial reporting, (iv) material written communications between the independent auditors and management; including, but not limited to any “management” or “internal control” letter issued by the independent auditors to the Company; and (v) the responsibilities, budget and staffing of the Company’s internal audit function.
Legal Compliance / General
The Committee shall discuss with senior management and the independent auditors the Company’s guidelines and policies with respect to risk assessment and risk management, including major financial risk exposures, as well as the steps taken by management to monitor and mitigate any known risk. Senior management remains primarily responsible for assessing and managing the Company’s exposure risk.
The Committee shall set clear hiring policies for employees or former employees of the Company’s independent auditors.
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.
The Committee shall prepare a Report of the Audit Committee on an annual basis for inclusion in the Company’s Proxy Statement.
Reports To Board, Annual Performance Evaluation and Review of Charter
The Committee shall report its recommendations to the Board as necessary and appropriate. The Committee shall report to the Board the results of an annual performance self-evaluation. The Committee shall also conduct an annual review of the adequacy of this Charter and recommend any proposed changes to the Board for approval.
2015 Audit Committee Pre-approval Policy
The Audit Committee permits the engagement of the Company’s independent accountants for engagements related to audit, audit-related, tax and other non-audit services. The Audit Committee has pre-approved the following permissible scope of audit and non-audit services (not to exceed $25,000 plus reimbursable expenses):
Audit of the Company’s annual financial statements, including reviews of quarterly financials and related comfort letters, statutory audits, consents, SEC Comment letters and other services provided in connection with the audit
Employee benefit plan audit(s)
Internal control reviews or attestation services
Merger and acquisition related due diligence
Agreed-upon procedure engagements
Technical, planning and other assistance related to transfer pricing
Tax consulting and advice related to ad–hoc questions, technical advice and research
Various educational information on comprehensive authoritative accounting regulatory literature including webcast, podcasts, websites, database subscriptions, checklists, research reports and similar tools
The Audit Committee has elected to delegate pre-approval authority to the Chairman of the Audit Committee. The Audit Committee cannot delegate its responsibility to pre-approve services to management. However, management can assist in facilitating the pre-approval process.
Any services by the Company’s independent accountants which are not specifically listed in the scope of services above must be pre-approved by the Chairman of the Audit Committee or the Audit Committee prior to the engagement of the Company’s independent accountants. In addition, engagements of the Company’s independent accountants for permitted services listed above where the estimated cost of such services is expected to exceed $25,000 plus reimbursable expenses on a project-by-project basis are to be pre-approved by the Chairman of the Audit Committee or the Audit Committee. Engagement of the Company’s independent accountants for the services listed above, where the estimated cost of such services is expected to be less than $25,000 on a pre-approved basis, shall be reported to the Audit Committee at its next regularly scheduled meeting.
The fee arrangements for all engagements are to be either fixed fee or a fee based on time and materials. All engagements performed by the Company’s independent accountants are to be reported to the Audit Committee on no less frequently than a quarterly basis.