Audit Committee Charter
This Charter governs the operations of the Audit Committee. The Committee shall review and reassess the charter at least annually and obtain the approval of the board of directors.
STATEMENT OF POLICY
The Audit Committee is a committee of the Board of Directors (Board). Its primary purpose is to assist the Board in fulfilling its oversight responsibility relating to the Company’s financial statements and the financial reporting process, the system of internal accounting and financial controls, the internal audit function and the annual independent audit of the Company’s financial statements. In so doing, it is the responsibility of the Committee to maintain free and open communication between the Committee, registered public accountants, the internal auditors and management of the Company. In discharging its oversight role, the Committee is empowered full access to all books, records, facilities, and personnel of the Company.
The Audit Committee shall consist of no fewer than three members appointed by the Board of Directors for a term of one (1) year. The members of the Audit Committee shall serve until successors are appointed and qualify. The Board shall designate the Chairman of the Audit Committee. The members of the Audit Committee shall meet the independence, experience and financial expertise requirements of the New York Stock Exchange and Section 10A of the Securities Exchange Act of 1934, as amended by the Sarbanes-Oxley Act of 2002 and the rules promulgated hereunder.
To effectively perform his or her role, each Committee member will obtain an understanding of the detailed responsibilities of Committee Membership as well as the Company’s business, operations and risk. Directors who are not financially literate “shall become financially literate within a reasonable period of time after his or her appointment to the Committee”. At least one member of the Audit Committee shall have accounting or related financial management expertise as the Board of Directors interprets such qualifications in its business judgment.
Committee members shall devote a sufficient amount of time to Committee activities and responsibilities. Directors’ fees (including any committee fees including equity compensation) shall be the only compensation that an Audit Committee member may receive from the Company.
The Board shall have the power at any time to change the membership of the Audit Committee and to fill vacancies in it, subject to such new member(s) satisfying the independence, experience and financial expertise requirements. Committee members should limit the number of directorships they hold to no more than two (2) public companies, other than the Company.
The Committee shall generally meet at least four (4) times per year. At least two (2) members meeting in person, telephonically or by video conferencing shall constitute a quorum; entitled to conduct business. Meetings and or business may be held, in person, telephonically or video conferencing by unanimous written consent of all Committee members. The Committee will maintain copies of minutes of each meeting of the Committee, as well as each written consent to action taken without a meeting, reflecting the actions so authorized or taken by the Committee, in the Company’s minute book.
The Audit Committee, within the scope of its responsibility has authority as follows:
- The Audit Committee shall have a clear understanding with management and the registered public accountants that the registered public accountants are ultimately accountable to the Board and the Audit Committee, as representative of the Company’s shareholders.
- The Audit Committee shall discuss with the registered public accountants their independence from management and the Company and the matters included in the written disclosures required by the Independence Standards Board, and shall obtain and review a report by the registered public accountants describing the firm’s internal quality control procedures and any material issues raised by the most recent internal quality-control review, and steps taken to deal with any such issues.
- The Audit Committee shall have the sole authority to appoint or replace the registered public accountants subject, if applicable, to shareholder ratification, and shall approve all audit engagement fees and terms, and all non-audit engagements with the firm selected to perform the financial audit.
- The Audit Committee shall consult with management, but shall not delegate their responsibilities, except that pre-approval of services may be delegated to the Chairman of the Audit Committee.
- The Audit Committee shall be directly responsible for the compensation and oversight over the work of the registered public accounting firm (including resolution of any disagreement between management and the public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The public accounting firm shall report directly to the Audit Committee.
- The Audit Committee shall have the authority to retain special legal, accounting or other consultants to advise the Committee and carry out its duties, and to conduct or authorize investigations into any matters within its scope of responsibilities. The Audit Committee shall meet with management, the internal auditors, and registered public accountants in separate executive sessions in furtherance of its purposes.
- The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or registered public accountants to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
The Audit Committee is principally responsible for reviewing the accuracy and effectiveness of the annual audit of the financial statements as conducted by the company’s internal auditors and independent registered public accounting firm. In performing its oversight function, the Audit Committee, either as a whole or through its chairman, as the committee shall authorize from time to time, shall undertake those tasks and responsibilities that, in its judgment, would most effectively contribute and implement the purposes of the Audit Committee.
The following functions are some of the common recurring activities that the Audit Committee may undertake in carrying out its oversight responsibilities:
- Review the annual audited financial statements with management, including major issues regarding accounting and auditing principles and practices including any significant changes in the Company’s selection or application of accounting principles, as well as the adequacy of internal controls that could significantly affect the Company’s financial statements, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K.
- Review any analysis prepared by management and/or the registered public accountants of significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements.
- Review with management and the registered public accountants the Company’s quarterly financial filings prior to the filing of its Form 10-Q and the Company’s Annual Report on Form 10-K, including the Company’s disclosures under “management’s discussion and analysis of financial conditions and results of operations” and the matters required to be disclosed pursuant to PCAOB Standard AU Section 380 – Communications with Audit Committees.
- In connection with the Company’s filing of form 10-Q and 10-K with the Securities and Exchange Commission, review and discuss with management and the registered public accountants the adequacy of the Company’s internal controls specifically with regard to identified significant deficiencies and/or material weaknesses in internal controls.
- Discuss, in general terms, the material content of annual earnings press releases and financial information, and other non-routine financial releases of a non-recurring nature.
- Review and approve in accordance with the rules of the Securities and Exchange Commission the Company’s annual proxy statement including the annual Committee Report, and annual certifications to the New York Stock Exchange.
- Review disclosures made by the Company’s principal executive officer or officers and principal financial officer or officers regarding compliance with their certification obligations as required under the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder, including the Company’s disclosure controls and procedures and internal controls for financial reporting and evaluations thereof.
- Discuss with management and the registered public accountants any accounting adjustments that were noted or proposed by the registered public accountants.
Discuss with management and the external auditors changes in accounting methods, off balance sheet structures and related transactions.
- Review with the registered public accountants and management the proposed scope of the annual audit, past audit experience, and other matters bearing upon the scope of the audit, and review any audit problems or difficulties and management’s response.
- Obtain and review a report from the registered public accountants at least annually regarding (a) the registered public accountants’ internal quality control procedures, (b) any material issues raised by the most recent 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 registered public accountants and the Company.
- Review the performance and independence of the registered public accountants, including the lead partner of the registered public accountants, taking into account the opinions of management and the Company’s internal auditors.
- Ensure that the lead audit partner of the registered public accountants and the audit partner responsible for reviewing the audit are rotated at least every five years as required by the Sarbanes-Oxley Act of 2002.
- Review any reports of the registered public accountants mandated by Section 10A of the Securities Exchange Act of 1934, as amended, and obtain from the registered public accountants any information with respect to illegal acts in accordance with Section 10A.
- Discuss with the registered public accountants the internal audit department and its audit plan, responsibilities, and staffing.
- Review with management the internal audit group, and the external auditors the scope of and plan of the annual audit, the results of completed internal audits, the staffing and other matters bearing upon the scope of the audit, any audit problems or difficulties encountered, and management’s response.
- Review the performance and effectiveness of the internal audit function.
- Ensure there are no unjustified restrictions or limitations on the scope of activities or access to information in the performance of internal audits.
- Discuss with Director, Internal Audit any matters that the Committee or internal audit believes should be discussed.
- 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 instance of noncompliance.
- Provide procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
- Review updates, as provided by management and company legal counsel, regarding financial reporting compliance matters.
- Be familiar with Management’s tone at the top, including communications regarding the importance of integrity and the Company’s policies for acceptable business practices.
- Be familiar with the Company’s policies with respect to risk assessment and risk management, the Company’s major financial risk exposures and the steps Management has taken to monitor and control such exposures, it being understood that it is the job of Management to assess and manage the Company’s exposure to risk and that the Committee’s responsibility is to discuss the Company’s guidelines and policies by which risk assessment and risk management is undertaken.
- The Committee should obtain information it deems appropriate, through discussion with management and from written reports, and make recommendations to the Board if the Committee determines such action is appropriate on the following: A) Management’s Assessment of the Business Risks the Company is facing and its planned response to those risks; B) The legal environment including the status of any pending lawsuits or administrative proceedings that would have a significant affect on the Company’s financial statements and related accrual; C) Controls over treasury activities including cash management, hedging and use of new or unusual financial instruments; D) Current issues effecting the retail industry; E) The effect new tax laws and other regulations may have on the Company; and F) Insurance coverage for Directors and Officers.
- The Audit Committee shall make regular reports to the Board.
- Annually review and reassess the Audit Committee’s performance and the adequacy of this Charter and recommend any proposed changes to the Charter to the Board for approval.
- Perform any other activities consistent with this Charter, the Company’s by-laws, and governing law, as the Committee or the Board deems necessary or appropriate.
- Recommend to the Board policies for the Company’s hiring of employees or former employees of the registered public accountants who were engaged on the Company’s account (recognizing that the Sarbanes-Oxley Act of 2002 does not permit the CEO, controller, CFO or chief accounting officer to have participated in the Company’s audit as an employee of the registered public accountants during the preceding one-year period).
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 Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the registered public accountants.
Finally the Board recognizes that meeting these Audit Committee responsibilities requires a degree of flexibility. To the extent that procedures included in this Charter go beyond what is required of an Audit Committee by existing Law and regulation, such procedures are meant to serve as guidelines rather than inflexible rules and the Committee is encouraged to follow such different or additional procedures as it deems necessary from time to time.
Last reviewed January 24, 2013