In accordance with the By-Laws of M & F Worldwide Corp. (the “Company”) and applicable laws, rules and regulations, there will be a standing committee of the Board of Directors of the Company (the “Board”) known as the Audit Committee (the “Committee”).
I. PURPOSE
The primary objective of the Committee is to assist the Board in fulfilling the Board’s oversight responsibilities with respect to (a) the integrity of the financial statements and other financial information provided by the Company to its stockholders and the public, (b) the Company’s financial reporting process, (c) its systems of internal accounting and financial controls, (d) its compliance with legal and regulatory requirements, (e) the independent auditors’ qualifications, independence and performance, (f) the performance of the Company’s internal audit function and (g) any other matter required of the Committee pursuant to the listing standards of the New York Stock Exchange (the “NYSE”) or under applicable law. Although the Committee has the powers and responsibilities set forth in this Charter, the role of the Committee is oversight. Consequently, it is not the duty of the Committee to plan or conduct audits; to otherwise investigate the Company’s affairs; to assure compliance with law or Company policy; or to determine that the Company’s financial statements and disclosures are complete and accurate, fairly present the Company’s financial condition, results of operations or cash flows, or are in accordance with those accounting principles generally accepted in the United States (“GAAP”) or applicable laws, rules and regulations. These are the responsibilities of management and the independent auditors.
II. ORGANIZATION
1. Generally.
a. Composition. The Committee will consist of three or more Directors of the Company as set by the Board from time to time, each of whom should satisfy the qualifications discussed in Paragraph 2 below. The Board will appoint the members of the Committee as needed to fill any vacancy, upon the recommendation of the Nominating/Governance Committee. Unless removed by the Board, each member may serve for as long as he or she is a Director.
b. Committee Chair. The Committee will have a Chairman, who may be any member of the Committee that the Board shall from time to time select. The Chairman may resign the chair without resigning from the Committee.
c. Quorum. Unless otherwise provided in the By-Laws of the Company, a quorum of the Committee will consist of two members, whether or not the Chairman of the Com-mittee shall be present.
d. Delegation of Authority. The Committee may form subcommittees and delegate authority to subcommittees or its Chairman when appropriate. In particular, the Committee shall permit the Chairman to “pre-approve” certain audit-related and non-audit-related matters pursuant to Sections 10A(h) and (i) of the Securities Exchange Act of 1934 (as amended by the Sarbanes-Oxley Act of 2002) to the extent permitted by law or applicable SEC regulation. The Chairman shall report to the Committee any action he or she may have taken since a Committee meeting pursuant to any grant of delegated authority at the Committee’s next meeting.
2.
Qualifications of Members of the Committee. Each member of the Committee, and where applicable the Committee as a whole, should, at the time being considered for appointment and at all times thereafter, satisfy the following criteria:
a. Independence. Each member of the Committee must be “independent” within the meaning of the NYSE listing standards and the rules of the Securities and Exchange Commission (the “SEC”) pertaining to audit committees.
b. Financial Literacy. To the extent required by applicable laws or the NYSE listing standards, each member of the Committee must be financially literate, as such qualification is determined from time to time by the Company’s Board in the exercise of its business judgment, or must become financially literate within a reasonable period of time after his or her appointment to the Committee.
c. Accounting or Related Financial Management Expertise. To the extent required by applicable laws or the NYSE listing standards, at least one member of the Committee must have accounting or related financial management expertise, as such qualification is determined from time to time by the Company’s Board in the exercise of its business judgment, provided that the Board may presume that a member who qualifies as an “audit committee financial expert,” as discussed below, has the requisite accounting or related financial management expertise.
d. Audit Committee Financial Expert. While not a requirement for membership on the Committee, it is the Board’s view that, if possible, it is desirable to have at least one “audit committee financial expert” serving on the Committee, as such term is defined in the applicable SEC rules.
e. Membership on Other Audit Committees. In selecting members of the Committee, the Board should consider whether a potential member serves on the audit committee of more than two other public companies and, if so, whether such simultaneous service would impair the ability of the Director to serve effectively on the Committee. Service under these circumstances must be disclosed in the Company’s annual proxy statement to the extent required by applicable laws or the NYSE listing standards.
III. MEETINGS
The Committee will meet as often as it determines is necessary or desirable, but not less frequently than quarterly. To foster open communication, the Committee will endeavor to meet with management, the head of the internal audit function and the senior independent auditors in separate executive sessions to discuss any matter that the Committee or each of these groups believe should be discussed privately. The 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 member of, or consultant to, the Committee. The Committee may from time to time decide to act by unanimous written consent in lieu of a meeting.
The Chairman of the Committee will (a) in consultation with the Company’s Secretary, set the time and place of Committee meetings and notify members of meetings, (b) preside at meetings and (c) in consultation with the other members of the Committee and the Company's Secretary, set the agenda of items to be addressed at each upcoming meeting. Each member of the Committee may suggest the inclusion of items on such agenda, and may raise at any Committee meeting appropriate and relevant business subjects that are not on the agenda for that meeting. The Chairman of the Committee and the Company’s Secretary will endeavor to ensure, to the extent feasible, that the agenda for each upcoming meeting of the Committee is circulated to each member of the Audit Committee in advance of the meeting.
IV. AUTHORITY AND RESPONSIBILITIES
The Committee will, to the extent consistent with applicable law or the NYSE listing standards, have the following authority and principal responsibilities:
1. Independent Auditor. With respect to the independent auditor, the Committee will:
a. Be directly and solely responsible for the appointment, compensation, retention and oversight of the work of any public accounting firm registered with the Public Company Accounting Oversight Board (the “PCAOB”), including the Company's independent auditor for the purpose of preparing and issuing its audit report or performing other audit, review or attest services for the Company. Such registered public accounting firms will report directly to the Committee, and the Committee will be directly responsible for resolving any disagreement between management and the independent auditor regarding financial reporting.
b. Review in advance, and grant any appropriate pre-approval of, (i) all proposed auditing services to be provided by the independent auditor and (ii) all proposed non-audit services to be provided by the independent auditor as permitted by applicable law, and in connection therewith to approve all fees and other terms of engagement, as required by applicable law and subject to the exemptions provided in the SEC’s or PCAOB’s rules.
c. At least annually, obtain and review a report from the independent auditor describing (i) the independent auditor's internal quality control procedures, (ii) any material issue raised by the most recent internal quality control review, or peer review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities within the preceding five years concerning one or more independent audits carried out by the independent auditor, and any step taken to deal with any such issue, and (iii) all relationships between the independent auditor and the Company.
d. Periodically review with the independent auditor any problem or difficulty encountered during the course of the audit, including any restriction on the scope of work or access to required information, and management’s response.
2. Review of Financial Statements and Other Financial Oversight.
The Committee will:
a. Discuss with management and the independent auditor the Company’s annual audited and quarterly unaudited financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
b. Render the audit committee report required by the SEC’s proxy rules to be included in the Company’s annual proxy statement and any other report of the Committee required by applicable law or the NYSE listing standards.
c. Discuss generally the Company’s earnings press releases, as well as the type of financial information and earnings guidance provided to analysts or rating agencies.
d. Review major issues regarding accounting principles and financial statement presentations, including any significant change in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit step adopted in light of any material control deficiency.
e. Review analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues, if any, and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
f. Review the effect of regulatory and accounting initiatives, as well as any off-balance sheet structure, on the Company’s financial statements.
g. Meet separately, periodically, with the Company’s management, with the personnel implementing the Company’s internal audit function and with the Company’s independent auditor.
3. Internal Controls. With respect to the internal audit function and internal controls, the Committee will:
a. Review on an annual basis the composition, functions, staffing, budget and performance of the internal audit function.
b. Discuss the Company’s risk assessment and risk management guidelines and policies.
4. Complaint Procedures. The Committee will:
a. Establish and maintain procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.
b. Have the power to investigate any matter brought to its attention and the right to obtain full access to all books, records, facilities and personnel of the Company.
5. Other Responsibilities. The Committee will:
a. (i) Review and advise the Board with respect to the Company’s policies and procedures regarding compliance with the Company’s Code of Business Conduct (the “Code”); (ii) obtain reports from management, the head of the Company’s internal audit function and the independent auditor concerning any issue of which they are aware concerning compliance with the Code; (iii) approve, if the Board has not done so, any appropriate waiver of the Code for (A) the Company’s executive officers and directors or (B) in the case of the portion of the Code entitled “Code of Ethics for Senior Financial Officers,” the Company’s Senior Financial Officers (as defined in the Code); provided, however, that any such waiver shall be promptly disclosed as required by law or any listing standard of the NYSE.
b. Establish policies with respect to the hiring of employees or former employees of the independent auditor who have participated in any capacity in the Company’s audit.
c. Endeavor to evaluate at least annually whether any change to this Charter is necessary or appropriate.
d. Report orally or in writing to the Board concerning each meeting of the Committee as it deems necessary or appropriate.
e. Review its own performance annually.
f. Perform any other activity consistent with this Charter and the Company’s By-Laws or as are required under applicable law or the NYSE listing standards, as in effect from time to time.
V. RESOURCES
The Committee will have the authority to retain independent legal, accounting and other advisors and consultants, as appropriate, to advise the Committee or its subcommittees as they determine necessary to carry out their duties, without seeking Board or management approval. The Committee will determine the extent of funding necessary for payment of compensation by the Company to the independent auditor for its work in preparing or issuing the annual audit report or for providing any other permissible audit-related or non-audit service and to any independent legal, accounting and other advisor or consultant retained to advise the Committee or its subcommittees, which funds will be provided by the Company. The Company will also reimburse ordinary administrative expenses of the Committee.
Publication Date: January 2, 2004
