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Charter of the Audit Committee
The Audit Committee shall provide assistance to the directors of The Ark in fulfilling their responsibility relating to accounting matters, the financial reporting practices of The Ark, and the quality and integrity of the financial reports of The Ark. The Audit Committee’s purpose is to:
(1) Assist the Board’s oversight of:
- The reliability and integrity of The Ark’s accounting policies and financial reporting practices.
- The establishment and maintenance of processes to assure compliance with all relevant laws, regulations and Ark policies.
- The independent auditor’s qualifications and independence.
(2) Prepare any reports of the Audit Committee to be included in any Ark annual or other report.
II. Structure and Operations
Composition and Qualifications:
The Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be an "independent" director for purposes of Audit Committee membership.
All members of the Audit Committee shall, in the judgment of the Board, be financially literate, which at a minimum means possessing a working familiarity with basic finance and accounting practices, and at least one member of the Audit Committee shall, in the judgment of the Board, have accounting or related financial management expertise.
Appointment and Removal:
The members of the Audit Committee shall be designated by the Board annually and shall serve until such member's successor is duly designated or until such member's earlier resignation or removal. Any member of the Audit Committee may be removed, with or without cause, by a majority vote of the Board. Unless a Chair is designated by the full Board, the members of the Audit Committee shall designate a Chair by majority vote of the full Audit Committee membership. The Chair will chair all regular sessions of the Audit Committee and set the agenda for Audit Committee meetings.
The Audit Committee shall ordinarily meet at least four times annually, or more frequently as circumstances dictate. Any member of the Audit Committee may call meetings of the Audit Committee.
The Audit Committee shall meet periodically with each member of management, and the independent auditor, separately, to discuss any matters that the Audit Committee or these activities believe should be discussed privately. In addition, the Audit Committee (or at minimum its Chair) should receive periodic communications from the independent auditor and management regarding financial results.
Any director of The Ark who is not a member of the Audit Committee may attend meetings of the Audit Committee provided, however, that any director who is not a member of the Audit Committee may not vote on any matter coming before the Audit Committee for a vote. The Audit Committee also may invite to its meetings any member of management of The Ark and such other persons as it deems appropriate in order to carry out its responsibilities. The Audit Committee may meet in executive session, as the Audit Committee deems necessary or appropriate.
IV. Responsibilities and Duties
The following functions shall be common recurring activities of the Audit Committee in carrying out its purpose set forth in Section I of this Charter. These functions should serve as a guide with the understanding that the Audit Committee may carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal or other conditions.
The Audit Committee, in discharging its oversight role, is empowered to study or investigate any matter of interest or concern within the purpose of the Audit Committee that the Audit Committee deems appropriate or necessary and shall have the sole authority to retain and terminate outside counsel or other experts for this purpose, including the authority to approve the fees payable to such counselor experts and any other terms of retention.
To fulfill its responsibilities and duties, the Audit Committee shall:
(1) Review and discuss with management and the independent auditor the annual and other financial statements prior to their filing.
(2) Review with the independent auditor all critical accounting policies and practices to be used; all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
The Independent Auditor:
(3) Have the sole authority and responsibility to select, evaluate, determine the compensation of and, where appropriate, replace the independent auditor. The Audit Committee shall review the performance of the independent auditor and make determinations regarding the appointment or termination of the independent auditor. The independent auditor is ultimately accountable to the Audit Committee for such auditor's review of the financial statements and controls of The Ark. On an annual basis, the Audit Committee will review and discuss with the independent auditor all significant relationships the auditor has with The Ark to determine the auditor's independence.
(4) At least annually, obtain and review a report by the independent auditor describing: the independent auditing firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and all relationships between the independent auditor and The Ark.
(5) Oversee the independence of the auditor by:
Receiving from the independent auditor, on a periodic basis, a formal written statement delineating all relationships between the independent auditor and The Ark consistent with Independence Standards Board Standards and with all applicable laws. roles and regulations.
Reviewing, and actively discussing with the Board, if necessary, and the independent auditor, on a periodic basis, any disclosed relationships or services that may impact the objectivity and independence of the auditor and to pre¬approve any non-audit engagement between The Ark and the independent auditor consistent with regulatory requirements and disclose any such engagements in the periodic reports of The Ark.
Developing clear hiring policies for employees or former employees of the independent auditor by The Ark.
Recommending, if necessary, that the Board take certain action to satisfy itself of the auditor's independence.
Ensuring that the lead audit partner, the concurring review partner, the client service partner and other partners directly involved in the performance of the audit, of the independent auditor are rotated at least every five years.
Financial Reporting Process:
(6) In consultation with the independent auditor, review the integrity of the financial reporting processes, both internal and external.
(7) Review, with The Ark's Board: (i) The Ark's disclosure controls and procedures; (ii) any significant deficiencies in the design or operation of internal controls of The Ark which could adversely affect The Ark's ability to record, process, summarize and report financial data; and (iii) any fraud, material or otherwise, that involves management or other employees who have a significant role in The Ark's internal controls.
(8) Consider and approve, if appropriate, major changes to auditing and accounting principles and practices as suggested by the independent auditor, or management.
(9) Establish regular systems for review with the Audit Committee by finance management and the independent auditor reports regarding any significant judgments made, or significant disagreements, in management's preparation of the financial statements. As a part thereof, the Audit Committee shall review any problems or difficulties encountered during the course of the review or audit, including any restrictions on the scope of work or access to required information and management's response.
Ethical and Legal Compliance/General:
(10) Review, with the Ark’s counsel, any legal or regulatory matter that could have a significant impact on the financial statements.
(11) Establish procedures for the receipt, retention and treatment of complaints and concerns (including a procedure for submitting such complaints and concerns on a confidential and anonymous basis) received by The Ark regarding accounting, internal accounting controls, or auditing or related matters.
(12) Ensure management has a proper review system in place to ensure that financial statements, reports, and other financial information disseminated to governmental organizations and the public satisfy legal requirements.
(13) Review, at least annually, policies with respect to risk assessment and risk management.
(14) Establish a code of ethics for the senior financial personnel of The Ark in accordance with applicable law, rules and regulations.
(15) Perform any other activities consistent with this Charter, the By-Laws of The Ark, and any other applicable law, rules or regulations as the Audit Committee or the Board deems necessary or appropriate.
(16) Review and discuss with management and the independent auditor: (a) the adequacy and effectiveness of The Ark's internal controls over financial reporting (including any significant deficiencies or material weaknesses therein and any significant or material changes thereto); (b) management's assessment of the effectiveness of its internal controls and the basis therefor; and (c) the independent auditor's attestation of management's assessment, and its audit of The Ark's internal controls over financial reporting.
(17) Report regularly to the Board (i) following meetings of the Audit Committee, (ii) with respect to such other matters as are relevant to the Audit Committee's discharge of its responsibilities, (iii) with respect to such recommendations as the Audit Committee may deem appropriate, and (iv) the Audit Committee's conclusions with respect to the independent auditor. The report to the Board may take the form of an oral report by the Chair or any other member of the Audit Committee designated by the Audit Committee to make such report.
(18) Prepare an annual report of the Audit Committee that can be included in Ark Reports, if needed.
(19) Maintain minutes and other records of meetings and activities of the Audit Committee, as appropriate.
V. Annual Performance Evaluation
The Audit Committee shall perform a review and evaluation, at least annually, of the performance of the Audit Committee and its members, including a review of adherence of the Audit Committee to this Charter. In addition, the Audit Committee shall review and reassess, at least annually, the adequacy of this Charter and recommend to the Board any improvements to this Charter that the Audit Committee considers necessary or appropriate. The Audit Committee shall conduct such evaluation and reviews in such manner as it deems appropriate.
Approved in Executive Session of the Board March 29, 2010