Review Procedures
- Review the Companies’ annual audited financial statements and quarterly financial results, including disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations,” with management, the independent auditors and the internal audit function prior to filing or distribution. Review should include discussion of significant issues regarding accounting principles, practices, and judgments. Discuss any significant changes in each Company’s accounting principles and any items required to be communicated by the independent auditors in accordance with generally accepted auditing standards.
- Review with management, the independent auditors and the internal audit function, the integrity of each Company’s financial reporting processes and controls annually. Discuss policies with respect to risk assessment and risk management, significant risk exposures (whether financial, operating or otherwise) and the steps management has taken to monitor and control such exposures. Review significant findings prepared by independent auditors and internal auditors together with management’s responses.
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Independent Auditors
- The independent auditors of the Companies are ultimately accountable to the Committee and the Board. The Committee shall be solely and directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The Committee shall review the independence and performance of the independent auditors and, where appropriate, replace the independent auditors.
- Approve the annual audit fees to be paid to the independent auditors. The Committee shall have the sole authority to pre-approve all auditing services, internal control related services and all permitted non-audit services provided by the independent auditors. Approval may be made by one or more members of the Committee, as designated by the Committee. The designated member(s) shall report all approved non-audit services to the Committee at the next scheduled meeting.
- On an annual basis, the Committee should review and discuss with the independent auditors all significant relationships they have with each Company that could impair the auditors’ independence.
- Review the independent auditors’ audit plan for the current year – discuss scope, staffing, locations, reliance upon management and internal audit and general audit approach.
- Review annually with the independent auditors matters required to be discussed by Auditing Standard No. 16, as it may be modified or supplemented, or other professional standards, relating to the conduct of the audit, including any problems or difficulties encountered in the course of the audit work and management’s response, any restrictions on the scope of activities or access to requested information, any significant disagreements with management, the independent auditors’ evaluation of the quality of the Company’s financial reporting, and information relating to significant unusual transactions and the business rationale for such transactions.
- Consider the independent auditors’ judgments about the quality and appropriateness of each Company’s accounting principles as applied in its financial reporting. At least annually, obtain and review a report by the independent auditor describing: (a) the audit firm’s internal quality-control procedures; (b) 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 (c) any steps taken to deal with any such issues.
- Approve clear guidelines for the engagement or hiring by each Company of any individual either currently employed by the independent auditors or employed by the independent auditors at any time within the one year period preceding the proposed hire date.
- Receive and review reports of the independent auditors discussing (i) all critical accounting policies and practices used in the preparation of a Company’s financial statements, (ii) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors, and (iii) other material written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences.
Internal Audit and Legal Functions:
- Annually review and approve the internal audit charter of responsibilities and authority. Review the budget, audit plan, activities, organizational structure and staffing as needed.
- Review the appointment, compensation and replacement of the chief internal auditor. If a Company uses an outside professional services firm to support the entire internal audit function, review the compensation of such outside firm.
- Annually evaluate the internal audit function. Determine that the internal audit function (including any assistance provided by outside parties) has the requisite independence and objectivity to carry out its responsibilities and that the internal audit function has adequate training, skills and competencies to carry out its responsibilities.
- Review significant reports prepared by the internal audit function together with management’s response and follow-up to these reports.
- Establish and review annually the procedures for: (i) the receipt, retention, and treatment of complaints received regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
- On behalf of the Board, on an annual basis, review with the Companies’ general counsel any legal matters that could have a significant impact on the Companies’ financial statements, the Companies’ compliance with applicable laws and regulations and any material reports or inquiries received from regulators or governmental agencies.
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Other Committee Responsibilities
- Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
- Advise the Board with respect to each Company's policies and procedures regarding compliance with such Company's Code of Ethics and Business Practices.
- Review each Company’s use of derivative instruments, the purpose and risks of such use and the impact on the financial statements.
- Perform any other activities consistent with this Charter, such Company’s by-laws, and governing law, as the respective Committee or the Board deems necessary or appropriate.
- The Committee shall review with both management and the independent auditors all related party transactions or dealings between parties related to each Company and approve such transactions where appropriate.
- Maintain minutes of meetings and report on a regular basis to the Board on significant results of the foregoing activities.
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