IV. KEY RESPONSIBILITIES
To fulfill its oversight role in the financial reporting and disclosure process, the Committee relies on (i) management for the preparation and accuracy of the Company's financial statements; (ii) management for establishing effective internal controls and procedures to ensure the Company's compliance with accounting standards, financial reporting procedures and applicable laws and regulations; (iii) independent and objective assessments from the Company’s global internal audit department regarding the overall effectiveness and efficiency of the Company’s control environment; and (iv) the Company's independent auditors for an unbiased, diligent audit or review, as applicable, of the Company's financial statements and the effectiveness of the Company's internal controls. The members of the Committee are not employees of the Company and are not responsible for conducting the audit or performing other accounting procedures. In carrying out its responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the independent auditors’ work.
The following functions shall be commonly recurring activities of the Committee. The Committee may carry out additional functions and adopt additional policies and procedures as may be appropriate or as delegated by the Board:
- Reviewing with management and the Company’s independent auditors prior to publication, the annual audited financial statements and the quarterly financial statements as well as the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”. Recommending to the Board whether the annual audited financial statements should be included in the Company’s annual report;
- Reviewing and discussing with the Company’s independent auditors and management the Company’s earnings releases and practices with respect to earnings releases and financial information and earnings guidance provided to analysts and rating agencies;
- Discussing with the independent auditors the auditor's responsibilities under generally accepted auditing standards, the planned scope and timing of the audit, any significant risks identified during the auditor’s risk assessment procedures, the results and significant findings from the annual audit, and such other matters as required to be discussed by the applicable auditing standards;
- Appointing, (subject to ratification by the Company’s shareholders, if required), and retaining the Company’s independent auditors for the purpose of preparing or issuing an audit report or performing other audit, review or attest services, who shall report directly to the Committee, approving (subject to authorization by the Company’s shareholders and any other legal requirements) all compensation of the independent auditors, including all audit engagement fees and terms; overseeing the work of the Company’s independent auditors; and terminating the Company’s independent auditors, if necessary;
- Establishing policies and procedures for the pre-approval of permissible audit and non-audit services that may be provided by the independent auditors in accordance with applicable rules, and pre-approving all audit and permitted non-audit services to be provided to the Company by its independent auditors. The Committee may delegate authority to one or more members of the Committee to grant pre-approvals of permissible services, provided that any such pre-approvals shall be presented to the full Committee at its next scheduled meeting;
- Reviewing at least annually, the independence, performance and qualifications of the Company’s independent auditors. The Committee shall obtain from the independent auditors at least annually a formal written statement delineating all relationships between the independent auditors and the Company or any of its subsidiaries, actively engaging in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors, and shall take, or recommend that the full Board take, appropriate action to oversee the independence of the independent auditors. In addition, the Committee shall obtain from the independent auditors at least annually and review a written statement or report outlining the independent auditors’ internal quality control procedures, and any material issues raised by the most recent internal quality control review, peer review, or PCAOB review or inspection of the firm, or by any other inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditors, and any steps taken to deal with such issues;
- Overseeing the rotation of the audit partners on the audit engagement team;
- Reviewing annually the audit plans of the independent auditors and reviewing and approving, at least annually, the audit plans, budget, and organizational structure of the internal audit function;
- Meeting with the independent auditors at the completion of their annual audit to review their evaluation of the financial reporting and internal controls of the Company and any changes required in the originally planned audit program. Receive reports from the independent auditors and management regarding the adequacy and effectiveness of the Company’s internal controls, including any significant deficiencies or material weaknesses in internal controls and significant changes in internal controls reported to the Committee by the independent auditors or management and any special audit steps adopted in light of any material control deficiencies, and any fraud involving management or other employees with a significant role in such internal controls;
- Reviewing and assessing periodically the adequacy of the Global Internal Audit Charter and approving any changes the Committee considers necessary or appropriate;
- Meeting with the internal auditors periodically to review:
- Audit results;
- Recommendations for improvements in internal controls made by internal and external auditors; and
- Any changes required in the originally planned audit program;
- Reviewing and approving the appointment or termination of the Head of Global Internal Audit;
- Reviewing the reports of examinations by regulatory authorities, if any;
- Monitoring the Company’s policies and procedures for the review of expenses and perquisites of selected members of senior management;
- Performing any special reviews, investigations or oversight responsibilities required by the Board or its Chair;
- Reviewing periodically with the Company’s Chief Legal Officer, legal and related matters that could have a significant impact on the Company’s financial statements;
- Review and discuss with the Company’s management and its independent auditors, reports from management and the independent auditors required by SEC rules and applicable professional standards, including any report regarding:
- Critical accounting policies and practices to be used by the Company;
- 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 all alternative treatments of financial information within generally accepted accounting principles related to material items that have been discussed with the Company’s management, the ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the independent auditors;
- Critical audit matters affecting the Company or its financial statements;
- Major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles; and
- Any other material written communications between the independent auditors and the Company’s management, such as any management letter or schedule of unadjusted differences.
- Perform any functions required to be performed by it or otherwise appropriate under applicable laws, rules or regulations, the Company’s Constitution or other organizational documents and the resolutions or other directives of the Board, including review of any certification required to be reviewed in accordance with applicable law or regulations of the SEC.
- To the extent it deems appropriate, review periodically the effect of regulatory and accounting initiatives, as well as off-balance sheet structures (if any), on the financial statements of the Company.
- Review with the Company’s independent auditors:
- Audit problems or other difficulties encountered by the independent auditors in the course of the review or audit process, including any restrictions on the scope of the independent auditors’ activities or on access to requested information;
- Disagreements between the independent auditors and management; and
- Management’s response to issues raised by the independent auditors.
Without excluding other possibilities, the Committee may review with the independent auditors (i) any accounting adjustments that were noted or proposed by the auditor but were “passed” (as immaterial or otherwise), (ii) any communications between the audit team and the audit firm’s national office respecting auditing or accounting issues presented by the engagement and (iii) any “management” or “internal control” letter issued, or proposed to be issued, by the independent auditors to the Company.
- To the extent it deems appropriate, review and discuss with the independent auditors the responsibilities, budget and staffing of the Company’s internal audit function.
- Review disclosures made to it by the Company’s Chief Executive Officer or Chief Financial Officer in connection with their certifications of the Company’s Form 10-K and Form 10-Q regarding significant deficiencies in the design or operation of internal controls or material weaknesses therein or fraud involving management or other employees who have a significant role in the Company’s internal controls.
- Review and approve at least on an annual basis the decision by management to enter into derivative transactions on a cleared or non-cleared basis, and the policies and processes of the Company related thereto, and review and recommend to the Board on matters pertaining to the Company’s derivative transactions and hedging strategy.