AUDIT COMMITTEE CHARTER
October 11, 2017
- Statement of Purpose
The Audit Committee is a standing committee of the Board of Directors. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibility relating to (i) the integrity of the Company's financial statements and financial reporting process and the Company's systems of internal accounting and financial controls; (ii) the performance of the internal audit services function; (iii) the annual independent audit of the Company's financial statements, the engagement of the independent auditors and the evaluation of the independent auditors' qualifications, independence and performance; (iv) the compliance by the Company with legal and regulatory requirements, including the Company's disclosure controls and procedures; (v) the evaluation of enterprise risk issues; and (vi) the fulfillment of the other responsibilities set out herein.
In discharging its responsibilities, the Committee is responsible for the appointment, compensation, retention and oversight of the independent auditors but not itself responsible for the planning or conduct of audits or for any determination that the Company's financial statements are complete and accurate or in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditors.
- Charter. At least annually, this charter shall be reviewed and reassessed by the Committee and any proposed changes shall be submitted to the Board of Directors for approval..
- Members. The members of the Committee shall be appointed by the Board of Directors and shall number at least three, who meet the independence, experience and expertise requirements of the New York Stock Exchange and applicable law. The Board of Directors shall also designate a Committee Chairperson. Unless otherwise determined by the Board of Directors of the Company, no Committee Member may serve on more than three Audit Committees of companies who have issued any outstanding publicly-traded securities.
- Meetings. In order to discharge its responsibilities, the Committee shall each year establish a schedule of meetings; additional meetings may be scheduled as required. In planning the annual schedule of meetings, the Committee shall ensure that sufficient opportunities exist for its members to meet separately with the independent auditors and/or the head of internal audit (or internal audit service providers), without management present; to meet separately with management, without the independent auditors and/or the head of internal audit (or internal audit service providers) present; and to meet in private with only the Committee Members present.
- Quorum; A quorum at any Committee meeting shall be at least two members. All determinations of the Committee shall be made by a majority of its members present, however, action may be delegated to a subcommittee or single member in compliance with applicable law, such as the approval of certain services by the independent auditors as long as such action is reported to the Committee at a subsequent meeting. Any decision or determination of the Committee reduced to writing and signed by all of the members of the Committee shall be as fully effective as if it had been made at a meeting duly called and held.
- Agenda, Minutes and Reports. Minutes for all meetings of the Committee shall be prepared to document the Committee's discharge of its responsibilities which minutes shall be approved by the Committee, and distributed periodically to the full Board of Directors. The Committee shall make regular reports to the Board of Directors, in particular in regards to any issues with the quality and integrity with the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the independent auditor and performance of the internal auditor function.
- Performance Evaluation. The Committee shall evaluate its performance on an annual basis and periodically review its criteria for such evaluation.
The following shall be the principal responsibilities of the Audit Committee:
- Engagement of Independent Auditors. The Committee shall engage the independent auditors, including in connection with any non-audit services, and oversee, evaluate and, where appropriate, replace the independent auditors. The Committee shall approve the fees paid to the independent auditors, including in connection with any non-audit services.
- Oversight of Independent Auditors. The Committee shall review and evaluate the independent auditor teams. The Committee shall receive reports from the independent auditors as required by the Public Company Accounting Oversight Board (or any successor body) regarding the auditors' independence, not less frequently than annually. The Committee shall also obtain and review a report from the independent auditors at least annually regarding (a) the independent auditors’ 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, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditors and the Company. The Committee shall evaluate the qualifications, performance and independence of the independent auditors, including considering whether the auditors’ provision of permitted non-audit services is compatible with maintaining the auditors’ independence, and taking into account the opinions of management and internal auditors. In addition, the Audit Committee shall present its conclusions with respect to the independent auditors to the Board. The Audit Committee shall also ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law. In addition, the Committee shall periodically consider whether, in order to assure continuing auditor independence, there should be regular rotation of the auditor firm itself.
- Determination as to Performance of Internal Auditors. The Committee shall annually review the experience and qualifications of the senior members of the internal auditors and the performance of the internal audit function, including any contributions by internal audit service providers. In addition, the Committee annually shall discuss the responsibilities, budget and staffing of the internal audit function with the Company’s independent auditors.
- Audits by Internal and Independent Auditors. The Committee shall discuss with the internal auditor and the independent auditors the overall scope and plans for their respective audits, including the adequacy of staffing and other factors that may affect the effectiveness and timeliness of such audits. The Committee shall discuss with management, internal audit and the independent auditors the Company's major financial risk exposures, the adequacy and effectiveness of accounting and financial controls, and the steps management has taken to monitor and control such exposures. The Committee shall review with management and the independent auditors management's annual report on internal control over financial reporting, including any attestation of same by the independent auditors. Management and internal audit or the audit service providers, as the case may be, shall report periodically to the Committee regarding any significant deficiencies in the design or operation of the Company's internal control over financial reporting and other internal controls, material weaknesses in internal control over financial reporting and other internal controls and any fraud (regardless of materiality) involving persons having a significant role in the internal control over financial reporting, as well as any significant changes in internal control over financial reporting implemented by management during the most recent reporting period of the Company.
- Pre-Approval of Audit and Non-Audit Services. The Committee shall periodically review its guidelines for the retention of the independent auditors for any non-audit service. The Committee shall, in accordance with such procedures, approve in advance any audit or non-audit service provided to the Company by the independent auditors, all as required by applicable law or listing standards, and subject to the exceptions set forth in applicable law or listing standards.
- Review of Risk Assessment and Risk Management Policies. The Committee shall discuss with management the Company’s risk assessment and risk management policies, including risks relating to the financial statements and financial reporting process, and key credit risks, liquidity risks, market risks, and the steps taken by management to monitor and mitigate such risks.
- Review of Disclosure Controls and Procedures. The Committee shall annually review with representatives of the Company’s disclosure committee the Company's disclosure controls and procedures and management's conclusions about the efficacy of such disclosure controls and procedures, including any significant deficiencies in, or material non-compliance with, such controls and procedures.
- Review of Annual SEC Filings. The Committee shall review with management and the independent auditors the financial information to be included in the Company's Annual Report on Form 10-K, including the disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," their judgment about the quality, not just acceptability, of the Company’s accounting principles, the reasonableness of significant judgments and the adequacy of the Company’s internal control over financial reporting. The Committee shall also discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards, applicable law or listing standards. Based on such review and discussion, the Committee shall make a determination whether to recommend to the Board of Directors that the audited financial statements be included in the Company's Form 10-K. The Committee shall also review and approve the annual report on Form 11-K filed on behalf of the Company’s 401(k) Savings and Retirement Plan to the extent that filing is required.
- Review of Quarterly SEC Filings and Other Communications. The Committee shall review and discuss with management and the independent auditors the quarterly financial information to be included in the Company's Quarterly Reports on Form 10-Q, including the disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," and shall discuss any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards, applicable law or listing standards. The Committee shall also discuss the Company's earnings press releases and financial information and earnings guidance provided to analysts and ratings agencies. Such discussion may be done generally (consisting of the types of information to be disclosed and the types of presentations to be made) paying particular attention to the use of “adjusted” or “pro forma” non-GAAP information. The Committee shall also discuss the results of the independent auditors’ review of the Company’s quarterly financial information.
- Review of Certain Matters with Internal and Independent Auditors. The Committee shall review periodically with management, internal audit, or the audit service providers (as the case may be) and independent auditors the effect of new or proposed regulatory and accounting initiatives on the Company’s financial statements and other public disclosures.
- Consultation with Independent Auditors. The Committee shall review with the independent auditors any problems or difficulties the auditors may have encountered in connection with the annual audit or otherwise and management’s response, as well as any communication between the auditor and its national office regarding auditing or accounting issues presented by the engagement. Such review shall address any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information, any significant disagreements with management, material adjustments to the financial statements recommended by the independent auditors and adjustments that were proposed but “passed,” regardless of materiality.
- Preparation of Report for Proxy Statement. The Committee shall authorize the report of the Audit Committee to be included in the Company’s annual proxy statement, all in accordance with applicable rules and regulations.
- Policies for Employment of Former Audit Staff. The Committee shall periodically review its guidelines for the Company’s hiring of former employees of the independent auditors, which guidelines shall meet the requirements of applicable law and listing standards.
- “Whistleblowing” Procedures. The Committee shall periodically review its 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 the Company of concerns regarding questionable accounting or auditing matters.
- Review of Legal and Regulatory Compliance. The Committee shall periodically review with management, including the General Counsel, and the independent auditors any correspondence with, or other action by, regulators or governmental agencies and any employee complaints or published reports that raise concerns regarding the Company’s financial statements, accounting or auditing matters. The Committee shall also meet periodically with the General Counsel to review material legal affairs of the Company and the Company’s compliance with applicable law and listing standards.
- Review of Certain Transactions with Related Parties. The Committee shall review and approve, at least annually, the Company’s transactions with related parties, including Directors and Executive Officers, all in accordance with the Company’s policy with respect to Related Party Transactions.
- Compliance with Code of Business Conduct and Ethics Grant of Waivers. The Committee shall review annually a summary of compliance with the Company’s Code of Business Conduct and Ethics. The Committee shall be responsible for determining whether and on what terms to grant to any Director or Executive Officer a waiver from the Company's Code of Business Conduct and Ethics.
- Access to Records, Consultants and Others. The Committee shall have full authority (i) to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company; (ii) to retain outside legal, accounting or other consultants to advise the Committee; and (iii) to request any officer or employee of the Company, the Company’s outside counsel, internal auditor, internal audit service providers or independent auditors to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. The Company shall provide for appropriate funding, as determined by the Audit Committee, for the payment of compensation to the independent auditor for the purpose of rendering or issuing an audit report and to any advisors or consultants employed by the Audit Committee.