Audit Committee Charter

Audit Committee Charter

Amended and Restated (As Adopted June 14, 2004)


The Audit Committee of the Board of Directors shall be comprised of at least two  directors,  each of whom  shall be  independent  as  required  by all applicable  rules  and  regulations.  Members of the Audit Committee shall be considered independent if they have no relationship that, in the opinion of the Board of Directors, may interfere with the exercise of his or her independent judgment as a member of the Committee.

A  director  who has such a  relationship  may be  appointed  to the Audit Committee of the Board,  under  exceptional  and limited  circumstances,  if the Board  determines that membership on the Committee by the individual is required by the  best  interest  of the  company  and its  shareholders,  and  the  Board discloses,  in the next annual proxy statement subsequent to such determination, the nature of the relationship and the reasons for the determination.

All members of the Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Committee shall have accounting or related financial management expertise. Within the time frame required by applicable rules, the Committee shall have at least one audit committee financial expert. Designation of such audit committee financial expert shall be made annually by the Board of Directors.

Statement of Policy

The  Audit  Committee  shall  provide   assistance  to  the  directors  in fulfilling their responsibility to the shareholders, potential shareholders, and investment  community relating to corporate  accounting,  reporting practices of the Company,  and the quality and integrity of financial reports of the Company. In so doing, it is the responsibility of the Audit Committee to maintain free and open communication between the directors, the independent auditors, the internal auditors, and the financial management of the Company.


In carrying out its  responsibilities,  the Audit  Committee  believes its policies  and  procedures  should  remain  flexible,  in order to best  react to changing  conditions  and to ensure to the directors and  shareholders  that the corporate  accounting  and reporting  practices of the Company are in accordance with all requirements and are of the highest quality.

In carrying out these responsibilities, the Audit Committee will:

  • Obtain the full Board of Directors’ approval of this Charter and review and reassess this Charter as conditions dictate (at least annually).
  • Review and recommend to the directors the independent auditors to be selected to audit the financial statements of the Company and its divisions and subsidiaries.
  • Have a clear  understanding with the independent  auditors that they are  ultimately  accountable to the Board of Directors and the Audit Committee,  as  the  shareholders’  representatives,  who  have  the ultimate  authority  in  deciding  to  engage,   evaluate,   and  if appropriate, terminate their services.
  • Meet with the independent  auditors and financial  management of the Company to review the proposed  scope of the annual audit and timely quarterly  reviews for the  current  year and the  procedures  to be utilized,  the adequacy of the independent  auditor’s  compensation, and at the  conclusion  thereof  to  review  such  audit or  review, including  any  comments  or   recommendations  of  the  independent auditors.
  • Review with the independent auditors and the Company’s financial and accounting   personnel  the  adequacy  and   effectiveness   of  the accounting  and  financial  controls of the Company,  and elicit any recommendations  for the  improvement  of such internal  controls or particular  areas where new or more detailed  controls or procedures are desirable.  Particular emphasis should be given to the adequacy of internal controls to expose any payments, transactions, or procedures that might be deemed illegal or otherwise improper.
  • Review reports   received from regulators and other legal and regulatory matters that may have a material effect on the financial statements and related Company compliance therewith.
  • Inquire of management and the independent auditors about significant risks or exposures and assess the steps management has taken to minimize such risks to the Company.
  • Review the quarterly financial  statements with financial management and the independent  auditors prior to the filing of the Form 10-QSB (or prior to the press release of results, if possible) to determine that  the  independent   auditors  do  not  take  exception  to  the disclosure and content of the financial statements,  and discuss any other matters  required to be  communicated  to the Committee by the auditors.  The chair of the Committee may represent the entire Committee for purposes of this review.
  • Review the  financial  statements  contained in the annual report to shareholders  with  management  and  the  independent   auditors  to determine  that the  independent  auditors  are  satisfied  with the disclosure  and content of the financial  statements to be presented to the  shareholders.  Review  with  financial  management  and  the independent  auditors  the  results  of  their  timely  analysis  of significant  financial  reporting  issues and  practices,  including changes in, or adoptions of,  accounting  principles  and disclosure practices, and discuss any other matters required to be communicated to the  Committee  by  the  auditors.  Also  review  with  financial management and the  independent  auditors their  judgments about the quality,  not just acceptability,  of accounting  principles and the clarity of the financial disclosure practices used or proposed to be used, and particularly, the degree of aggressiveness or conservatism of  the   organization’s   accounting   principles   and  underlying estimates,  and other  significant  decisions  made in preparing the financial statements.
  • Provide sufficient  opportunity for the independent auditors to meet with  the  members  of  the  Audit  Committee   without  members  of management  present.  Among  the  items  to be  discussed  in  these meetings are the independent  auditors’  evaluation of the company’s financial reporting  procedures and accounting,  and the cooperation that the independent auditors received during the course of audit.
  • Review accounting and financial human resources and succession planning within the Company.
  • Report the results of the annual audit to the Board of Directors. If requested by the Board,  invite the  independent  auditors to attend the full  Board of  Directors  meeting  to assist in  reporting  the results of the annual audit or to answer other directors’  questions (alternatively,   the  other   directors,   particularly  the  other independent directors,  may be invited to attend the Audit Committee meeting during which the results of the annual audit are reviewed).
  • On an annual basis, obtain from the independent auditors a written communication delineating all their relationships and professional services as required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees.  In addition, review with the independent  auditors the nature and scope of any disclosed relationships  or professional  services and take, or recommend that the Board of  Directors  take,  appropriate  action  to  ensure  the continuing independence of the auditors.
  • Review the  report of the Audit  Committee  in the annual  report to shareholders  and  the  Annual  Report  on Form  10-KSB,  disclosing whether  or not  the  Committee  had  reviewed  and  discussed  with management and the independent auditors, as well as discussed within the  Committee  (without  management  or  the  independent  auditors present),  the  financial  statements  and the quality of accounting principles  and  significant   judgments   affecting  the  financial statements. In addition, disclose the Committee’s conclusion on the fairness of presentation of the financial statements in conformity with GAAP based on those discussions.
  • Submit the minutes of all meetings of the Audit Committee to, or discuss the matters discussed at each Committee meeting with, the Board of Directors.
  • Investigate any matter brought to its attention within the scope of its duties, with the power to retain outside counsel for this purpose if, in its judgment, that is appropriate.

Review  the  Company’s  disclosure  in the proxy  statement  for its annual meeting of shareholders that describes that the Committee has satisfied  its  responsibilities  under this  Charter  for the prior year.  In addition, include a copy of this Charter in the annual report to shareholders or the proxy statement at least triennially or the year after any significant amendment to the Charter.