Board of Directors
Audit and Finance Committee Charter
Effective 28 January 2016
- The Committee is responsible for assisting the Board of Directors (the “Board”) in the Board’s oversight responsibilities relating to the integrity of the Company’s financial statements, financial reporting process and systems of internal accounting and financial controls; the qualifications, independence and performance of the independent auditor and the performance of the Company’s internal audit department; and the Company’s legal and regulatory compliance.
Committee Structure; Member Qualifications, Appointment and Removal
- The Committee shall consist of at least three directors who, along with the chair of the Committee, are appointed by the Board upon recommendation of the Corporate Governance and Nominating Committee (the “Governance Committee”), and may be removed by the Board in its discretion.
- All members of the Committee shall be independent directors under the standards adopted by the New York Stock Exchange and shall also satisfy the New York Stock Exchange’s more rigorous independence and financial literacy requirements for members of audit committees. All Committee members shall have sufficient financial experience and ability to enable them to discharge their responsibilities and at least one member shall have accounting and related financial management expertise within the meaning of the New York Stock Exchange listing standards and qualify as an “audit committee financial expert” under applicable law.
Authority and Responsibilities
The Committee shall have the
authority to take any and all actions that it deems necessary to carry out its oversight
functions, including but not limited to:
Financial Statements, Financial Reporting Process, and Systems of Internal Accounting and Financial Controls
- Review and discuss with management and the independent auditor the annual audited financial statements and other information to be included in the Company’s Annual Report on Form 10-K and the Company’s quarterly financial statements and other information to be included in the Company’s Quarterly Reports on Form 10-Q, including Management’s Discussion and Analysis of Financial Conditions and Results of Operations.
- Discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditor under generally accepted auditing standards, applicable law, listing standards, or professional standards.
- Recommend to the Board, based on the reviews and discussions with management and the independent auditor described above, whether the annual audited financial statements should be included in the Company’s Form 10-K Annual Report.
- Review and discuss with management and the
- major issues regarding accounting principles and financial statement presentations;
- the quality, not just acceptability, of the Company’s accounting principles, the reasonableness of its significant judgments, and the clarity of the disclosures in its financial statements;
- material changes in the Company’s accounting policies and practices and significant judgments that may affect the financial results;
- the nature of any unusual or significant commitments or contingent liabilities together with the underlying assumptions and estimates of management;
- the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company’s financial statements; and
- the effect of changes in accounting standards that may materially affect the Company’s financial reporting practices.
- Review analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues or judgments made in connection with the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
- Review and discuss with the independent auditor any accounting or auditing issues on which the national office of the independent auditor was consulted.
- Review and discuss with management and the independent auditor management’s reports evaluating the adequacy and effectiveness of the Company’s internal control over financial reporting, including any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting that could adversely affect the Company’s ability to record, process, summarize, and report financial information.
- Receive and discuss any disclosure from the Company’s Chief Executive Officer and Chief Financial Officer in their certification for Form 10-K and Form 10-Q, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as to the existence of any significant deficiencies and/or material weaknesses in the design or operation of internal controls over financial reporting that could adversely affect the Company’s ability to record, process, summarize, and report financial data, and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls.
- Annually review and discuss with management and the independent auditor the independent auditor’s report on the effectiveness of the Company’s internal control over financial reporting related to Section 404 of the Sarbanes-Oxley Act.
- Review and discuss with management the types of information to be discussed and the type of presentation to be made in the Company’s earnings press releases, as well as the types of financial information and earnings guidance to be provided to analysts and rating agencies, including the use of "pro forma" or "adjusted" information not consistent with GAAP.
Oversight of Independent Auditor and Internal
- Recommend for shareholder approval appointment of the independent auditor to examine the Company’s accounts, controls, and financial statements, nevertheless having sole authority to appoint or replace the independent auditor, who shall report directly to the Committee.
- Be directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor (including resolution of disagreements between management and the auditor regarding financial reporting).
- Preapprove all auditing services and permitted nonaudit services (including the fees and terms thereof) to be performed for the Company by the independent auditor, and consider whether the provision of permitted nonaudit services by the independent auditor is compatible with maintaining the auditor’s independence.
- Review and evaluate, with the input of management and senior internal audit personnel, the qualifications, performance, and independence of the Company’s independent auditor at least annually, including review and evaluation of the lead partner; and receive periodic reports from the independent auditor regarding the auditor’s independence, discuss such reports with the independent auditor, and, if so determined by the Committee, take appropriate action to satisfy itself of the independence of the auditor.
- Obtain and review at least annually a written report by the independent auditor describing such auditor’s internal quality-control procedures, material issues raised by its most recent internal quality control review, or peer review (if applicable), or by any inquiry or investigation by governmental or professional authorities for the preceding five years and the response of the independent auditor; and review all relationships between the independent auditor and the Company.
- Assure the regular rotation of the lead audit partner and the reviewing partner of the independent auditor as required by law, and consider whether, in order to assure continuing audit independence, there should be regular rotation of the independent auditor.
- Review with the independent auditor any audit problems or difficulties and management’s response.
- Approve guidelines for the Company’s hiring of former employees of the independent auditor who participated in any capacity in the audit of the Company.
- Review and concur in the appointment and replacement of the Company’s senior internal audit executive and review the responsibilities, budget, and staffing of the internal audit department.
- Review the reports to management prepared by the internal audit department, or summaries thereof, and management’s responses, and periodically review the experience and qualifications of the members of the internal audit department and the quality control procedures of the internal audit department.
- Discuss with the senior internal audit executive and the independent auditor 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.
- Meet separately, periodically, with the Company’s senior internal audit executive and the independent auditor.
Compliance and Risk Management Oversight
- Review with the Company’s General Counsel any significant litigation, investigations, proceedings, or actions involving the Company or its affiliates, and other legal matters that may have a material impact on the consolidated financial statements and any material reports or inquiries received from regulators or governmental agencies regarding compliance.
- Review referrals, investigations, findings, and resolutions with regard to alleged violations of the Company’s Code of Conduct. Review processes and results for certification of employees’ understanding of, and compliance with, the Code of Conduct.
- At least annually receive a report on and meet with the General Counsel and the Chief Compliance Officer to discuss the Company’s key compliance risks and its compliance program, including that program’s design, implementation and effectiveness.
- At least annually receive a report on and meet with the General Counsel and the Chief Compliance Officer to discuss the Company’s systems for monitoring compliance with laws, regulations, and the Company’s business conduct policies and the results of management’s investigation and follow-up on any fraudulent acts or accounting irregularities.
- Review and approve the Audit Committee report required to be included in the Company’s annual proxy statement for shareholders.
- Discuss with management, the senior internal audit executive and the independent auditor the Company’s major risk exposures, including information technology security, and guidelines and policies to govern the processes by which risk assessment and risk management is undertaken by the Company, conferring with other committees of the Board about risk exposures and policies within the scope of such other committees’ oversight.
- Discuss with management the Company’s major financial risk exposures and steps taken by management to monitor and mitigate such exposures, including the Company’s capital management policies, capital needs and financing arrangements, financial risk management, liquidity and cash position, ability to access capital markets (including credit ratings), policies and strategies for managing currency and interest rate exposure, use of derivatives, sources and uses of cash, and pension plan funding obligations
- Appoint the members of management who shall serve on the Pension Investment Committee which serves as a named fiduciary of the Company’s employee benefit plans subject to the Employee Retirement Income Security Act of 1974 as amended from time to time (“ERISA”), and is responsible for supervising, monitoring and reviewing the management, custody, control and investment performance of the assets of such ERISA plans. The Committee will also periodically receive reports on the activities of the Pension Investment Committee.
- Establish 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 the Company of concerns regarding questionable accounting or auditing matters.
- Review and approve transactions between the Company and related persons.
- Financial Statements, Financial Reporting Process, and Systems of Internal Accounting and Financial Controls
- The Committee shall have the authority to take any and all actions that it deems necessary to carry out its oversight functions, including but not limited to:
Committee Operations: Meetings, Agendas, Reporting, Delegation, and Performance Evaluation
- The Committee may adopt procedural rules for its meetings and the conduct of its business, not inconsistent with this Charter, the Company’s bylaws, or applicable law. The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. Adequate provision will be made for notice to members of all meetings. One-third of the members, but not less than two, shall constitute a quorum and all matters will be determined by a majority vote of the members present. The Committee may delegate all or a portion of the authority granted to it by the Board to one or more of the Committee members, senior xecutives, or subcommittees, subject to applicable law, regulation, and listing standards.
- The Board approves the regular meeting schedule for the Committee each year. Additional meetings may occur, as the Committee or the Chair deem advisable. The Chairman of the Board, the Corporate Secretary, and the Committee Chair agree on the length of regular meetings and the need to schedule additional special meetings. The Committee shall meet at least four times per year, or more frequently as circumstances require.
- The annual Committee agenda and individual meeting agendas are developed by the Chairman of the Board and Corporate Secretary in consultation with the Committee Chair, with input from appropriate members of management and staff.
- When present, the Chair will preside at Committee meetings. In his or her absence, Committee members present may appoint a chair pro temp. The Committee Chair reports to the Board on Committee meetings and actions, and the Corporate Secretary or an Assistant Corporate Secretary keeps minutes of all Committee meetings, which are distributed to Committee members for review and approval.
- The Committee evaluates its performance annually and discusses the outcome of the evaluation with the full Board.
- The Committee will have the resources and authority necessary to discharge its duties and responsibilities. The Committee has sole authority to retain and terminate outside counsel or other experts or consultants, as it deems appropriate, including sole authority to approve the firms’ fees and other retention terms. The Company will provide the Committee with appropriate funding, as the Committee determines, for the payment of compensation to the Company’s independent auditor, outside counsel, and other advisors as it deems appropriate, and administrative expenses of the Committee that are necessary or appropriate in carrying out its duties. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention. The Committee will have access to the Company’s books, records, facilities, and personnel. Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company, and the Committee will take all necessary steps to preserve the privileged nature of those communications.