Audit

AUDIT COMMITTEE CHARTER

PURPOSE

The Audit Committee ("Committee") is responsible for matters relating to the auditing of the Corporation and its subsidiaries. The Committee is appointed by the Board to prepare the report included in the annual proxy statement and to assist the Board in oversight of (1) the integrity of the Corporation's financial statements, (2) the Corporation's compliance with legal and regulatory requirements, (3) the independent auditors' qualifications and independence, and (4) the performance of the Corporation's internal audit function and independent auditors.

The Committee shall prepare the report that the Securities and Exchange Commission (" SEC ") rules require to be included in the Corporation's annual proxy statement.

COMMITTEE MEMBERSHIP

  • The Committee shall be made up of at least 3 members all of whom shall meet the independence and experience requirements of the New York Stock Exchange, Section 10A(m)(3) of the Securities Exchange Act of 1934 and the rules and regulations of the SEC . Committee members shall not simultaneously serve on the audit committees of more than two other public companies.
  • All Committee members must be able to read and understand fundamental financial statements, including a balance sheet, income statement and cash flow statement.
  • In addition, one member of the Committee must be a financial expert as defined by the SEC .
  • The members of the Committee shall be appointed by the Board on the recommendation of the Nominating and Governance Committee. Committee members may be replaced by the Board.

MEETINGS

  • The Committee shall meet as often as it determines, but not less frequently than quarterly.
  • The Committee shall meet periodically with management, the internal auditors and the independent auditors in separate executive sessions.
  • The Committee may request any officer or employee of the Corporation or the Corporation's outside counsel or independent auditors to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.

AUTHORITY, DUTIES AND RESPONSIBILITIES

Relationship with the Independent Auditors:

  • The Committee has the sole authority to approve all audit engagements, services, fees and terms, as well as all significant non-audit engagements with the independent auditors. The Committee may obtain the input of management, but may not delegate this responsibility to management.

    • The independent auditors report directly to the Committee.
    • The Committee must pre-approve all audit and non-audit services to be performed by the independent auditors.

  • At least annually, the Committee must obtain and review a report by the independent auditors describing: the firm's 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 any steps taken to deal with any such issues; and (to assess the auditors' independence) all relationships between the independent auditors and the Corporation.

    • After review, the Committee will be in a position to evaluate the auditors' qualifications, performance and independence. This review should include the review and evaluation of the lead partner of the independent auditors. The Committee should take into account the opinions of management and the Corporation's internal auditors.
    • In addition to assuring the regular rotation of the lead audit partner as required by law, the Committee should further consider whether, in order to assure continuing auditor independence, there should be regular rotation of the audit firm itself. Conclusions should be presented to the full Board.

  • Review with the independent auditors any audit problems or difficulties and management's response, and other material written communications between the independent auditors and management including disagreements between management and the independent auditors regarding financial reporting.

  • Review and discuss the responsibilities, budget and staffing of the Corporation's internal audit function.

  • Recommend to the Board policies for the Corporation's hiring of employees or former employees of the independent auditors who participated in any capacity in the audit of the Corporation, which prohibit an auditing firm from providing audit services to a company whose CEO, CFO or Chief Accounting Officer was employed by the auditing firm and participated in the company's audit in any capacity within one year of audit initiation.

  • Obtain from the independent auditors assurance that the independent auditors have not become aware of any illegal acts and if they have, to provide a report to the Committee regarding specified conclusions with respect to such illegal acts.

Financial Matters:
The Committee shall review and discuss:

  • The annual consolidated financial statements and quarterly consolidated financial statements with management and the independent auditors, including the narrative under "Management's Discussion and Analysis of Financial Condition and Results of Operations":

    • The Committee should review with the full board any issues that arise with respect to the quality or integrity of the Corporation's financial statements, the Corporation's compliance with legal or regulatory requirements, the performance and independence of the Corporation's independent auditors, or the performance of the internal audit.
    • Discuss with management and the independent auditors any correspondence with regulators or governmental agencies and published reports, which raise material issues regarding the Corporation's financial statements or accounting policies.
    • Discuss with the Corporation's General Counsel and other appropriate senior officers, legal matters that may have a material impact on the financial statements or the Corporation's compliance policies.

  • Earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.

  • Major issues regarding accounting principles and practices to be used and financial statement presentations including any significant changes in the Corporation's selection or application of accounting principles, and major issues as to the adequacy of the Corporation's internal controls and any special audit steps adopted in light of material control deficiencies.

  • Analyses prepared by management and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements including effects of alternative generally accepted accounting principles (GAAP) methods.
  • Disclosure of all accounting policies and practices to be used by the independent auditors, and all alternative treatments of financial information within generally accepted accounting principles discussed with management,
    • The ramifications of these alternative treatments, and
    • The treatment preferred by the independent auditors.

    The effect of regulatory and accounting initiatives as well as off-balance sheet structures on the financial statements of the Corporation.

  • Policies, procedures, and a review of the results of the Corporation's internal audit function.

  • Discuss with management the Corporation's major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Corporation's risk assessment and risk management policies.

  • Disclosures made to the Committee by the Corporation's CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Corporation's internal controls.

Other Matters:

  • The Committee shall have the authority and the appropriate funding to engage independent counsel and other advisors as necessary to carry out its duties (without seeking Board approval). This funding shall be provided by the Corporation.
  • The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Committee at its next scheduled meeting.
  • The Committee shall perform an annual performance evaluation of itself.
  • The Committee shall review the adequacy of this Charter annually.
  • The Committee shall put into place procedures for receiving accounting complaints and concerns. This includes procedures for receiving anonymous complaints from employees.

LIMITATION OF AUDIT COMMITTEE'S ROLE

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Corporation's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditors.