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Audit Committee Charter
Organization
There shall be a committee appointed by the Board of Directors of Xenomics, Inc., a Florida
corporation (the “Corporation”) of members of the Board of Directors all of which shall
be independent non-employee directors to be known as the audit committee (the “Committee”).
The number of Committee members shall be as determined by the Board of Directors consistent
with the Corporation’s certificate of incorporation and by-laws as the same may be
amended from time to time. The Committee shall be composed of directors who are independent
of the management of the Corporation and are free of any relationship that, in the
opinion of the Board of Directors, would interfere with their exercise of independent
judgment as a Committee member. 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 be a “financial expert” as defined by the Securities and Exchange Commission
in its rules. The Committee Chair and members shall be designated annually by a majority
of the full Board, and may be removed, at any time, with or without cause, by a majority
of the full Board. Vacancies shall be filled by a majority of the full Board.
Statement
of Purpose
The Committee shall provide assistance to the Board of Directors in fulfilling their
responsibility to the shareholders, potential shareholders and investment community
relating to corporate accounting, reporting practices of the Corporation, the quality
and integrity of the financial reports of the Corporation and the Corporation’s compliance
with legal and regulatory requirements. In so doing, it is the responsibility of the
Committee to maintain free and open means of communication between the directors, the
independent auditors and the financial management to the Corporation.
Responsibilities
In carrying out its responsibilities, the 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 Corporation are in accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the Committee will:
- Serve as an independent and
objective party to monitor the Corporation’s financial reporting process and internal
control system and complaints or concerns relating thereto.
- To
recommend, for shareholder approval, the independent auditor to examine the Corporation’s
accounts, controls and financial statements. The Committee shall have the sole authority
and responsibility to select, evaluate and if necessary replace the independent auditor.
The Committee shall have the sole authority to approve all audit engagement fees and
terms and the Committee, or a member of the Committee, must pre-approve any non-audit
service provided to the Corporation by the Corporation’s independent auditor.
- Meet
with the independent auditors and financial management of the Corporation to review
the scope of the proposed audit for the current year and the audit procedures to be
utilized, and at the conclusion thereof review such audit, including any comments or
recommendations of the independent auditors.
- Obtain and review
at least annually, a formal written report from the independent auditor setting forth
its internal quality–control procedures; material issues raised in the prior five years
by its internal quality–control reviews and their resolution. The Committee will review
at least annually all relationships between the independent auditor and the Corporation.
- Ensure
that the lead audit partner assigned by the independent auditor as well as the audit
partner responsible for reviewing the audit of the corporation’s financial statements
shall be changed at least every five years.
- Review
and appraise the audit efforts of independent auditors of the Corporation and, where
appropriate, recommend the replacement of the independent accountants.
- Consider
and approve, if appropriate, major changes to the Corporation’s accounting principles
and practices as suggested by the independent auditors or management.
- Establish
regular and separate systems of reporting to the Committee by management and the independent
auditors regarding any significant judgements made in management’s preparation of the
financial statements and the view of each as to appropriateness of such judgments and
additional items as required under the Sarbanes-Oxley Act including critical accounting
policies.
- Review
with the independent auditors and financial accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the Corporation, and elicit
any recommendations for the improvement of such internal control procedures or particular
areas where new or more detailed controls or procedures are desirable. Particular emphasis
should be given to the adequacy of such internal controls to assess and manage financial
risk exposure and to expose any payments, transactions or procedures that might be
deemed illegal or otherwise improper.
- Review and
approve the internal corporate audit staff functions, including (i) purpose, authority
and organizational reporting lines; (ii) annual audit plan, budget and staffing; (iii)
concurrence in the appointment, compensation and rotation of the internal audit management
function; and (iv) results of internal audits.
- Review
the financial statements contained in the annual report and quarterly 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. Any changes in accounting principles should be reviewed.
- Prepare
and publish an annual Committee report in the proxy statement of the Corporation.
- Review
with management of the Corporation any financial information, earnings press releases
and earnings guidance filed with the Securities and Exchange Commission or disseminated
to the public, including any certification, report, opinion or review rendered by the
independent auditors.
- Provide sufficient
opportunity for the independent auditors to meet with the members of the Committee
without members of management present. Among the items to be discussed in these meetings
are the independent auditors’ evaluation of the Corporation’s financial, accounting
and auditing personnel, and the cooperation that the independent auditors received
during the course of the audit.
- Establish procedures
for receiving and treating complaints received by the Corporation regarding accounting,
internal accounting controls and auditing matters, and the confidential anonymous submission
by employees of concerns regarding questionable accounting or auditing matters.
- Submit
the minutes of all meetings of the Committee to, or discuss the matters discussed at
each Committee meeting with, the board of directors.
- Review
matters relating to waivers of the Corporation’s codes of conduct and conflict of interest
matters.
- Investigate any matter brought
to its attention within the scope of its duties, with the power to retain outside advisors
for this purpose if, in its judgment, that is appropriate.
Committee Performance Evaluation
The Committee shall annually conduct an evaluation of
its performance in fulfilling its responsibilities and meeting its goals, as outlined
above.
Meetings
A majority of Committee members shall constitute a quorum for the transaction
of business. The action of a majority of those present at a meeting at which a quorum
is attained, shall be the act of the Committee. The Committee may delegate matters within
its responsibility to subcommittees composed of certain of its members. The Committee
shall meet in executive session without the presence of any members of management as
often as it deems appropriate. The Committee shall meet as required, keep a record of
its proceedings, if appropriate or needed, and report thereon from time to time to the
Board of Directors.
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