Example audit committee charter - EY - United States

1 Example audit committee charter Note: This audit committee Organization charter Example considers the audit committee requirements This charter governs the operations of the audit committee . The Board of Directors shall appoint adopted by the SEC in Exchange an audit committee (the committee ) of at least three members, consisting entirely of independent Act Rule 10A-3, according to directors of the Board, and shall designate one member as chairperson or delegate the authority Section 301 of the Sarbanes- to designate a chairperson to the committee . For purposes hereof, members shall be considered Oxley Act of 2002 and the listing independent as long as they satisfy all of the independence requirements for Board Members as set standards of the NYSE and forth in the applicable stock exchange listing standards and Rule 10A-3 of the Exchange Act.

2 NASDAQ. The listing standards of the Each member of the committee shall be financially literate, or become financially literate within a securities exchanges require reasonable period of time, and at least one member shall be an audit committee financial expert, . that audit committees have a as defined by SEC rules. written charter . This Example charter addresses the significant Members shall not serve on more than three public company audit committees simultaneously unless duties and responsibilities of the the Board of Directors determines that such simultaneous service would not impair the member's committee , and incorporates ability to serve effectively on the committee .

3 Elements of the audit committee responsibilities and requirements The committee shall meet separately and periodically with management, the personnel responsible for included in the listing standards the internal audit function and the independent auditor. The committee shall report regularly to the of the various exchanges. This Board of Directors about its activities. Example charter is for illustrative purposes only. We encourage Purpose companies to obtain the advice and input of their legal counsel when developing and reviewing the audit committee charter and The committee will have the following purpose: to tailor the charter as necessary.

4 The committee will provide assistance to the Board of Directors in fulfilling its oversight responsibility Detailed tasks that the audit to the shareholders, potential shareholders, the investment community and others relating to: committee performs may be (1) the integrity of the Company's financial statements, (2) the effectiveness of the Company's internal addressed in another document, control over financial reporting, (3) the Company's compliance with legal and regulatory requirements, such as the audit committee (4) the independent auditor's qualifications and independence, and (5) the performance of the meeting planner.

5 In addition, Company's internal audit function and independent auditor. overall policies for corporate governance may be described The committee will prepare the audit committee report that SEC proxy rules require to be included in the company's corporate governance guidelines. in the Company's annual proxy statement. In fulfilling its purpose, the committee is responsible for maintaining free and open communication between itself, independent auditor, the internal auditors and management of the Company, and for determining that all parties are aware of their responsibilities. Example audit committee charter Duties and responsibilities Financial reporting and The committee has the responsibilities and powers set forth in disclosure matters this charter .

6 Management is responsible for the preparation, presentation and integrity of the Company's financial The committee shall meet to review and discuss the quarterly statements; for the appropriateness of the accounting principles financial statements, including Management's Discussion and and reporting policies that are used by the Company; and for Analysis of Financial Condition and Results of Operations, with establishing and maintaining internal control over financial management and the independent auditor prior to the filing reporting. The independent auditor is responsible for auditing of the Company's Quarterly Report on Form 10-Q.

7 Also, the the Company's financial statements and the effectiveness of committee shall discuss the results of the quarterly review internal control over financial reporting, and for reviewing the and any other matters required to be communicated to the Company's unaudited interim financial statements. committee by the independent auditor under the standards of the Public Company Accounting Oversight Board (PCAOB). The committee , in carrying out its responsibilities, believes its ( United States ). policies and procedures should remain flexible in order to best react to changing conditions and circumstances.

8 The committee The committee shall meet to review and discuss the annual will take appropriate actions to monitor the overall corporate audited financial statements, including Management's tone for quality financial reporting, sound business risk Discussion and Analysis of Financial Condition and Results of practices and ethical behavior. Operations, with management and the independent auditor prior to the filing of the Company's Annual Report on Form 10-K (or The following shall be the principal duties and responsibilities of the annual report to shareholders if distributed prior to the filing the committee .)

9 These matters are set forth as a guide with the of Form 10-K). Also, the committee shall discuss the results of understanding that the committee may supplement them as the annual audit and any matters required to be communicated appropriate. to the committee by the independent auditor under professional standards. Risk management and controls The committee 's review of the financial statements shall include: (1) major issues regarding accounting principles and financial The committee shall discuss the Company's policies on risk statement presentations, including any significant changes in assessment and risk management, including the risk of fraud.

10 The Company's selection or application of accounting principles, The committee also shall discuss the Company's major financial and major issues as to the adequacy and effectiveness of risk exposures and the steps management has taken to monitor the Company's internal control over financial reporting and and control such exposures. any specific remedial actions adopted in light of significant deficiencies or material weaknesses; (2) discussions with The committee shall review with senior management the management and the independent auditor regarding significant Company's overall antifraud programs and controls.