Eastern Light Capital
Audit Committee charter
Purpose
The Audit Committee is appointed by
the Board of Directors (“Board”) to assist the Board in its fiduciary
responsibilities to provide oversight with respect to:
1.
The integrity of the financial statements and other financial information;
2.
The Company’s system of internal controls;
3.
Compliance by the Company with legal and regulatory requirements; and
4.
Engagement and assessment of the independence and performance of the
Company's independent auditors.
Membership
The members of the Audit Committee
shall be appointed by the Board and consist of at least two directors, all of
whom shall satisfy the independence and experience requirements of the Board,
the American Stock Exchange and any additional or supplemental independence
standards applicable to committees established under any applicable law, rule
or regulation. In the judgment of the Board, all Committee members shall be
financially literate and at least one member shall be a “financial expert” as defined
by the rules and regulations of the Securities and Exchange Commission.
Meetings and Reports
The Committee shall meet at least
four times per year, generally in conjunction with the release of the Company’s
quarterly financial results, and shall meet separately and privately with the
independent auditors and with management to discuss matters warranting
attention or private consideration by the Committee. Additional meetings may
occur as the Committee or its Chairman deems advisable.
The Committee will maintain written
minutes of its proceedings and the Committee Chairman will report on its
actions and activities at the next meeting of the Board of Directors. The
Committee Chairman will be responsible for providing Committee members with
copies of the minutes of each meeting and any actions taken by unanimous
written consent. The Committee’s minutes will be filed with the minutes of the
Board of Directors.
Resources and Authority
The Audit Committee shall have the
resources and authority to retain special legal, accounting or other
consultants to advise the Committee. 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. The Company shall also provide
funding, as determined by the Committee, for payment of compensation to the
independent auditors engaged by the Committee.
Responsibilities
The responsibilities of the Committee
shall include:
1. Annually
review the adequacy of this Charter, which shall be included in the annual
proxy statement at least once every three years, and recommend any proposed
changes to the Board for approval.
2. Review
the annual audited financial statements with management, including major issues
regarding accounting and auditing principles and practices, the adequacy of
internal controls that could significantly affect the Company's financial
statements, and any alternative accounting treatments permitted under
accounting principles generally accepted in the United States that have been
discussed with management, as well as any preferred treatment.
3. Review
an analysis prepared by management and the independent auditor of significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements.
4. Review
with management and the independent auditor the Company's annual and quarterly
financial statements prior to the filing of its Form 10-K or Form 10-Q, respectively.
5. Meet
periodically with management to review the Company's major financial risk
exposures and the steps management has taken to monitor and control such
exposures.
6. Review
the effect of major changes to new or proposed auditing and accounting principles,
reporting standards and practices as suggested by the independent auditor,
internal auditor, if any, or management.
7. Have
the authority and responsibility for the appointment, compensation, retention,
and oversight of the work of the independent auditor, or any other firm engaged
by the Company for the purpose of preparing or issuing an audit or attestation
report on financial information of the Company, including resolution of
disagreements between management and the auditor regarding financial reporting.
8. Pre-approve
all audit and permitted non-audit services to be performed by the independent
auditor.
9. Receive
periodic reports from the independent auditor regarding the auditor's
independence consistent with Independence Standards Board Standard 1,
discuss such reports with the auditor, and if so determined by the Audit
Committee, take appropriate action to oversee the independence of the auditor.
10. Evaluate together with
management the performance of the independent auditor and, if so determined by
the Audit Committee, replace the independent auditor.
11. Review the adequacy of the
Company's internal controls and internal auditing function.
12. Review the responsibilities,
budget, staffing and significant reports of the internal audit department, if
any, and management's responses.
13. Meet with the independent
auditor prior to the audit to review the planning and staffing of the audit.
14. Discuss with the independent
auditor the matters required to be addressed by Statement on Auditing Standards
No. 61 and Section 204 of the Sarbanes-Oxley Act of 2002, relating to the
conduct of the audit and the quality of the Company’s financial reporting.
15. Review with the independent
auditor the management letter provided by the auditor and the Company's
response to that letter. Such review shall include:
16. Any changes required in the
planned scope of the audit.
17. Any difficulties encountered
in the course of the audit work, including any restrictions on the scope of
activities or access to required information.
18. Review the disclosures made
by the Chief Executive Officer and the Chief Financial Officer/Principal
Accounting Officer in connection with the required certifications accompanying
the Company’s reports required to be filed with the Securities and Exchange
Commission.
19. Advise the Board from time
to time with respect to the Company's policies and procedures regarding
compliance with applicable laws and regulations and with the Company's code of
conduct.
20. Meet with the Company's
legal counsel to review 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.
21. Meet at least annually with
the Chief Financial Officer, the senior internal auditing executive, if any,
and the independent auditor in separate executive sessions.
22. Review all related party
transactions, both financial and administrative, for potential conflicts of
interest on an ongoing basis and approve all such transactions.
23. Establish procedures, under
confidential and anonymous submissions, for the receipt, retention and
treatment of complaints regarding accounting, internal accounting control or
auditing matters.
24. Supervise preparation of the
Committee’s report, as required by the Securities and Exchange Commission to be
included in the Company’s annual report to shareholders.
While the Audit Committee has the
responsibilities and powers set forth in this Charter, the Audit Committee's
function is one of oversight. The Company's management is responsible for
preparing the Company's financial statements and, along with the internal
auditors, if any, for developing and maintaining systems of internal accounting
and financial controls. The independent auditors will assist the Audit
Committee and the Board in fulfilling their responsibilities for the review of
these financial statements and internal controls. The Audit Committee expects
the independent auditors to call its attention to any accounting, auditing,
internal accounting control, regulatory or other related matters that they
believe warrant consideration or action. The Audit Committee recognizes that
the financial management and the internal and independent auditors have more
knowledge and information about the Company than do Audit Committee members.
Consequently, in carrying out its oversight responsibilities, the Audit
Committee does not provide any expert or special assurance as to the Company's
financial statements or internal controls or any professional certification as
to the independent auditors' work.
Reviewed
and approved by the Audit Committee: March 11, 2007