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The Audit Committee is appointed by the Board to assist Board oversight
of (1) the integrity of the financial statements of the Company, (2)
the compliance by the Company with legal and regulatory requirements,
(3) the independent auditor's qualifications and independence, (4)
the performance of the Company's internal and external auditors and (5) oversight over critical key risks of the Company.
The Audit Committee shall consist of no fewer than three members.
The members of the Audit Committee shall meet the independence and experience
requirements of the New York Stock Exchange, Section 10A(m)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and the rules
and regulations of the Securities and Exchange Commission (the "Commission").
In particular, the Chairman of the Audit Committee shall have accounting
or related financial management expertise. At least one member of the
Audit Committee shall be an "audit committee financial expert" as defined
by the Commission. Audit Committee members shall not simultaneously
serve on the audit committees of more than two other public companies.
The members of the Audit Committee shall be appointed by the Board on
the recommendation of the Nominating and Corporate Governance Committee.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Company
shall provide for appropriate funding, as determined by the Audit Committee,
for payment of compensation to the independent auditor for the purpose
of rendering or issuing an audit report or to any advisors employed
by the Audit Committee, and for the ordinary administrative expenses
of the Audit Committee that are necessary or appropriate in carrying
out its duties. The Audit Committee may request any officer or employee
of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of,
or consultants to, the Committee. Audit Committee members may be replaced
by the Board.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
- Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
- Annually review the Audit Committee's own performance.
- Report regularly to the Board.
- Be directly responsible for the appointment, compensation, retention
and oversight of the work of the independent public accounting firm
engaged for the purpose of preparing or issuing the audit report
or performing the audit for the Company.
- Obtain and review a report from the independent auditor at least
annually regarding (a) the audit firm's internal quality control
procedures, (b) any material issues raised by the most recent 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, (c) any steps taken to deal with any such
issues, and (d) (to assess the auditor's independence) all relationships
between the independent auditor and the Company.
- Review and discuss with management and the independent auditor
the annual audited financial statements, including disclosures made
in management's discussion and analysis, and recommend to the Board
whether the audited financial statements should be included in the
Company's Form 10-K.
- Review with management the adequacy of internal controls that
could significantly affect the Company's financial statements.
- Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with
the preparation of the Company's financial statements, and a description
of any transactions for which management obtained PCAOB Standard
- Review with management and the independent auditor the effect
of regulatory and accounting initiatives as well as off-balance
sheet structures on the Company's financial statements.
- Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing of its Form 10-Q,
including the results of the independent auditors' reviews of the
quarterly financial statements.
- Meet periodically with management to review the critical, key risks facing the Company
including the steps management has taken to monitor
and control such exposures and report periodically to the Board
on the status of the Company's management of key risk areas.
- Review and discuss with management the Company's Enterprise Risk Management process including its risk governance framework, risk management practices and key risk factors that facilitate the identification, measurement, mitigation, and reporting of risks across the Company.
- Review major changes to the Company's auditing and accounting
principles, practices, and financial statement presentations, as
suggested by the independent auditor, internal auditors or management.
- Pre-approve the retention of the independent auditor for non-audit
services and the fee for such service in accordance with the Company's
- Receive periodic reports from the independent auditor regarding
the auditor's independence, discuss such reports with the auditor,
consider whether the provision of non-audit services is compatible
with maintaining the auditor's independence and, if so determined
by the Audit Committee, recommend that the Board take appropriate
action to satisfy itself as to the independence of the auditor.
- Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend
that the Board replace the independent auditor.
- Recommend to the Board guidelines for the Company's hiring of
employees or former employees of the independent auditor who were
engaged on the Company's account.
- Review the appointment and replacement of the Chief Risk & Audit Executive.
- Approve the internal audit charter.
- Approve the annual audit plan and major changes to the plan.
Review the significant reports to management prepared by the internal
auditing department and management's responses.
- Meet with the independent auditor prior to the year-end audit
to review the scope of year-end work and coordination of efforts
between the independent auditors and the internal audit department.
- Obtain from the independent auditor assurance that Section 10A
of the Exchange Act, which pertains to an auditor's responsibility
when the auditor discovers an illegal act, has not been implicated.
- Obtain reports from management, the Company's Chief Risk & Audit Executive
and the independent auditor that the Company's subsidiary/foreign
affiliated entities are in conformity with applicable legal requirements
and the Company's Code of Business Ethics, including disclosures
of insider and affiliated party transactions.
- Discuss with the independent auditor the matters required to
be discussed by generally accepted auditing standards relating to
the conduct of the audit per the Public Company Accounting Oversight
Board (PCAOB) Auditing Standard No. 16, other standards of the PCAOB,
rules of the Securities and Exchange Commission, and other applicable
- Review with management and the independent auditor any correspondence
with regulators regarding the Company's financial statements or
- Establish procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable accounting
or auditing matters.
- Review with the independent auditor any problems or difficulties
the auditor may have encountered and any management letter provided
by the auditor and the Company's response to that letter. Such review
- Any difficulties encountered in the course of the audit
work, including any restrictions on the scope of activities
or access to required information, and any disagreements with
- Any changes required in the planned scope of the internal
- The internal audit department responsibilities, budget and
- Prepare the report required by the rules of the Commission to
be included in the Company's annual proxy statement.
- Advise the Board with respect to the Company's policies and
procedures regarding compliance with applicable laws and regulations
and with the Company's Code of Business Ethics.
- Review with the Company's General Counsel legal matters that
may have a material impact on the financial statements, the Company's
compliance policies and any material reports or inquiries received
from regulators or governmental agencies.
- Meet at least quarterly with the Chief Financial Officer, the
Corporate Controller, the Chief Risk & Audit Executive and the independent
auditor in separate executive sessions, and no less than twice a year with the General Counsel in a separate executive session.
- Review and discuss quarterly reports from the independent auditors
- All critical accounting policies and practices to be used.
- All alternative treatments of financial information within
GAAP that have been discussed with management, ramifications
of the use of such alternative disclosures and treatments, and
the treatment preferred by the independent auditor.
- Other material written communications between the independent
auditor and management, such as any management letter or schedule
of unadjusted differences.
- Discuss with management the Company's earnings press releases,
including the use of "pro forma" or "adjusted" non-GAAP information,
as well as financial information and earnings guidance provided
to analysts. Such discussion may be done generally (consisting of
discussing the types of information to be disclosed and the types
of presentations to be made).
- Review disclosures made to the Audit Committee by the Company'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 Company's internal controls.
- Review and evaluate the lead partner of the independent auditor
- Ensure the rotation of the audit partners as required by law.
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 independent auditor. Nor is it the duty of the Audit Committee
to conduct investigations or to assure compliance with laws and regulations
and the Company's Code of Business Ethics.
||Sir Michael Rake
||Charles E. Haldeman,
||Richard E. Thornburgh
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