April 28, 2015
Statement of Purpose
To assist the board of directors in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, and the company's process for monitoring compliance with laws and regulations and the code of conduct.
The audit committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:
· Appoint, compensate, and oversee the work of any registered public accounting firm employed by the organization.
· Resolve any disagreements between management and the auditor regarding financial reporting.
· Pre-approve all audit and non-audit services.
· Retain independent counsel, accountants, or others to advise the committee or assist in the conduct of an investigation.
· Seek any information it requires from employees (all of whom are directed to cooperate with the committee's requests) or external parties.
· Meet with company officers, external auditors, or outside counsel, as necessary.
· The committee may delegate authority to subcommittees, including authority to pre-approve all auditing and permitted non-audit services, providing that such decisions are presented to the full committee at its next scheduled meeting.
The audit committee will consist of at least three and no more than six members of the board of directors. The board or its nominating committee will appoint committee members and the committee chair.
Each committee member will be both independent and financially literate. At least one member shall be designated as the "financial expert," as defined by applicable legislation and regulation. Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the company or an outside consultant.
The committee will meet at least four times a year, with authority to convene additional meetings, as circumstances require. All committee members are expected to attend each meeting, in person or via tele- or video-conference; however, a majority of the committee members in attendance is required. The committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. It will meet separately, periodically with management, with internal auditors, and with external auditors. It will also meet periodically in executive session. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Minutes will be prepared.
The committee will carry out the following responsibilities:
· Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
· Review with management and the external auditors the results of the audit, including any difficulties encountered.
· Review the annual financial statements, and consider whether they are complete, consistent with information known to committee members, and reflect appropriate accounting principles.
· Review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information.
· Review with management and the external auditors all matters required to be communicated to the committee under generally accepted auditing Standards.
· Understand how management develops interim financial information, and the nature and extent of internal and external auditor involvement.
· Review interim financial reports with management and the external auditors before filing with regulators, and consider whether they are complete and consistent with the information known to committee members.
· Consider the effectiveness of the company's internal control system, including information technology security and control.
· Understand the scope of internal and external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.
· Discuss periodically with management the Company’s policies and guidelines regarding risk assessment and risk management and inquire of management, the SVP/Risk Management, and the external auditors about significant risks or exposures facing the organization; assess the steps management has taken or proposes to take to minimize such risks to the organization; and periodically review compliance with such steps.
· Provide oversight over and review the effectiveness of management’s antifraud programs and controls.
· Review with management and the SVP/Risk Management the charter, activities, staffing, internal audit budget, and organizational structure of the internal audit function.
· Review and approve the annual audit plan and all major changes to the plan. Review the internal audit activity’s performance relative to its plan.
· Ensure there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement, or dismissal of the SVP/Risk Management.
· At least once per year, review the performance of the risk management function and concur with the annual compensation and salary adjustment.
· Review the effectiveness of the internal audit function, including compliance with The Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing.
· On a regular basis, meet separately with the SVP/Risk Management to discuss any matters that the committee or internal audit believes should be discussed privately.
· Review the external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit.
· Review the performance of the external auditors, and exercise final approval on the appointment or discharge of the auditors.
· Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the company, including non-audit services, and by maintaining an active dialogue with the auditors about relationships or services that might affect auditor independence.
· Ensure the rotation of the lead audit partner every five years and other audit partners every seven years, and consider whether there should be regular rotation of the audit firm itself.
· On a regular basis, meet separately with the external auditors to discuss any matters that the committee or auditors believe should be discussed privately.
· Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) of any instances of noncompliance.
· Review the findings of any examinations by regulatory agencies, and any auditor observations.
· Review the process for communicating the code of conduct to company personnel, and for monitoring compliance therewith.
· Obtain regular updates from management and company legal counsel regarding compliance matters.
· Regularly report to the board of directors about committee activities issues, and related recommendations.
· Review and discuss with management and the external auditors the annual report of management affirming management’s responsibility for establishing and maintaining internal controls over financial reporting and assessing the effectiveness of the internal control structure over financial reporting.
· Provide an open avenue of communication between internal audit, the external auditors, and the board of directors.
· Report annually to the shareholders, describing the committee's composition, responsibilities and how they were discharged, and any other information required by rule, including approval of non-audit services.
· Provide the Company and the Board with the report of the Committee with respect to the audited financial statements for inclusion in the Company’s annual proxy statement as required by SEC rules.
· Review any other reports the company issues that relate to committee responsibilities.
· Perform other activities related to this charter as requested by the board of directors.
· Institute and oversee special investigations as needed.
· Review and assess the adequacy of the committee charter annually, requesting board approval for proposed changes, and ensure appropriate disclosure as may be required by law or regulation.
· Confirm annually that all responsibilities outlined in this charter have been carried out.
· Evaluate the committee's and individual members' performance on a regular basis.
· Establish formal procedures for receiving and handling complaints received regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
Limitations of Roles
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Corporation’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent accountants. Nor is it the duty of the Audit Committee to assure compliance with applicable laws, regulations, or the Corporation’s policies.