The Audit Committee shall perform the following functions:
1. Authority of Committee. The
Board of Directors hereby delegates to the Committee, in its capacity
as a committee of the Board, the sole authority to engage, determine
the compensation of, and provide oversight to the independent
accounting firm engaged to prepare and issue an audit report (and
related work) for the Company, which firm shall report directly
to the Committee. The Committee shall approve in advance any permissible
non-audit services provided by the independent accountants. The
Committee may delegate to the Chair and/or one or more other designated
members of the Committee the authority to grant preapprovals of
permissible non-audit services. Any such preapprovals shall be
presented to the full Committee at its next scheduled meeting.
The Committee shall have the authority to engage independent counsel
and other advisors, as the Committee determines necessary to perform
its functions. The Committee shall also resolve disagreements,
if any, between management and the independent auditor to assure
compliance with laws and regulations.
2 . Plan of Audit. Consult with the independent
accountants regarding the plan of audit. The Committee also shall
review with the independent accountants their report on the audit
and review with management the independent accountants’
suggested changes or improvements in the Company’s accounting
practices or controls.
3 . Accounting Principles and Disclosure. Review
significant developments in accounting rules. The Committee shall
review with management recommended changes in the Company’s
methods of accounting or financial statements. The Committee also
shall review with the independent accountants any significant
proposed changes in accounting principles and financial statements.
4. Internal Accounting Controls. Consult
with the independent accountants regarding the adequacy of internal
accounting controls. Where appropriate, consultation with the
independent accountants regarding internal controls shall be conducted
out of management’s presence. In connection with this function,
the Committee may require the Company’s counsel to circulate
a questionnaire to evaluate the Company’s compliance with
banking, financial disclosure and accounting laws.
5. Financial Disclosure Documents.
Review with management and the independent accountants the Company’s
financial disclosure documents, including all financial statements
and reports filed with the Securities and Exchange Commission
(or the Company’s primary Federal securities regulator),
or sent to stockholders and, following the satisfactory completion
of each year-end review, recommend to the Board the inclusion
of the audited financial statements in the Company’s filing
on Form 10-K (or Form 10-KSB). The review shall include any significant
problems and material disputes between management and the independent
accountants and a discussion with the independent accountants
out of management’s presence of the quality of the Company’s
accounting principles as applied in its financial reporting, the
clarity of the Company’s financial disclosures and degree
of aggressiveness or conservatism of the Company’s accounting
principles and underlying estimates, and a frank and open discussion
of other significant decisions made by management in preparing
the financial disclosure.
6. Internal Control Systems.
Review with management and internal auditors the Company’s
internal control systems intended to ensure the reliability of
financial reporting and compliance with applicable codes of conduct,
laws, and regulations. The review shall include any significant
problems and regulatory concerns. The Committee also shall review
internal audit plans in significant compliance areas.
7. Ethical Environment. Consult
with management on the establishment and maintenance of an environment
that promotes ethical behavior, including the establishment, communication,
and enforcement of codes of conduct to guard against dishonest,
unethical, or illegal activities.
8. Oversight of Executive Officers and
Directors and Conflicts of Interst. Review significant
conflicts of interest involving directors or executive officers.
The Committee shall review compliance with Company policies and
procedures with respect to officers’ expense accounts and
perquisites, including their use of corporate assets, and consider
the results of any review of these areas by the internal auditor
or the independent accountant. The Committee shall review executive
officers’ and directors’ loan and deposit relationships
and consider the results of any review of these areas by the internal
auditor or the independent accountant. The Committee also shall
review significant questionable or illegal payments.
9. Oversight of Independent Accountants.
Evaluate the independent accountants on an annual basis and, where
appropriate, replace for the independent accountants. In such
evaluation, the Committee shall ensure that the independent accountants
deliver to the Committee a formal written statement delineating
all relationships between the accountants and the Company. The
Committee also shall engage in a dialogue with the accountants
with respect to any disclosed relationships or services that may
impact the objectivity and independence of the independent accountants
and in response to the independent accountant’s report take
appropriate action to satisfy itself of the independent accountant’s
independence.
10. Adequacy of Personnel. Review
periodically the adequacy of the Company’s accounting, financial,
and auditing personnel resources.
11. Risk Management. Review
and evaluate risk management policies in light of the Company’s
business strategy, capital strength, and overall risk tolerance.
The Committee also shall evaluate on a periodic basis the Company’s
investment and derivatives risk management policies, including
the internal system to review operational risks, credit risks,
interest rate risks, procedures for derivatives investment and
trading, and safeguards to ensure compliance with procedures.
12. Tax Policies. Review periodically
the Company’s tax policies and any pending audits or assessments.
13. Offerings of Securities.
Perform appropriate due diligence on behalf of the Board of Directors
with respect to the Company’s offerings of securities.
14. Charter Amendments. Review
this Charter annually, assess its adequacy and propose appropriate
amendments to the Board.
15. Complaint Procedures. Establish
procedures to receive complaints or concerns regarding accounting
or auditing matters and investigate any matter brought to its
attention within the scope of its duties.
The Committee’s function is one of oversight and review, and
it is not expected to audit the Company, to define the scope of the
audit, to control the Company’s accounting practices, or to
define the standards to be used in preparation of the Company’s
financial statements.
The Committee shall consist of not less than three independent members,
who shall be appointed by the Board of Directors. Members of the
Committee shall be financially literate and at least one member
of the committee shall be qualified as a financial expert or have
accounting, related financial management expertise, or any other
comparable experience or background that results in the individual’s
financial sophistication, all as stated in the rules of The Nasdaq
Stock Market, Inc. No member of the Committee shall be employed
or otherwise affiliated with the Company’s independent accountants.
In the event that a Committee member faces a potential
or actual conflict of interest with respect to a matter before the
Committee, that Committee member shall be responsible for alerting
the Committee Chairman, and in the case where the Committee Chairman
faces a potential or actual conflict of interest, the Committee
Chairman shall advise the Chairman of the Board of Directors. In
the event that the Committee Chairman, or the Chairman of the Board
of Directors, concurs that a potential or actual conflict of interest
exists, an independent substitute Director shall be appointed as
a Committee member until the matter posing the potential or actual
conflict of interest is resolved.
A quorum of the committee shall be declared when a majority of the
appointed members of the Committee are in attendance, except for
receiving the quarterly review report of the independent accountants
relating to the interim financial statements included in the Company’s
Form 10-Q (or Form 10-QSB). This report may be received on behalf
of the Committee by the Committee Chair (as permitted by SEC regulations)
and reported to the full Committee at its next scheduled meeting.
The Committee shall meet on an annual basis and otherwise as called
by the Chairman. Meetings shall be scheduled at the direction of
the Chairman. Except in emergency situations, notice of the meetings
shall be provided at least three days in advance. The Committee
may ask members of management or others to attend the meeting and
provide pertinent information as necessary.
The Committee will report to the Board from time to time with respect
to its activities and its recommendations. When presenting any recommendation
or advice to the Board, the Committee will provide such background
and supporting information as may be necessary for the Board to
make an informed decision. The Committee will keep minutes of its
meetings and will make such minutes available to the full Board
for its review.
The Committee shall report to shareholders in the
Company’s proxy statement for its annual meeting whether the
Committee has satisfied its responsibilities under this Charter.
The Committee is authorized to confer with Company management and
other employees to the extent it may deem necessary or appropriate
to fulfill its duties. The Committee is authorized to conduct or
authorize investigations into any matters within the Committee’s
scope of responsibilities.
The Committee will perform such other functions
as are authorized for this Committee by the Board of Directors.
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