Audit Committee Charter
This charter governs the operation of the audit committee. The audit committee shall review and reassess this charter at least annually and obtain the approval of the board of directors. The audit committee shall be appointed by the board of directors and shall comprise at least two directors, each of whom are independent of management and enherent Corp. (the “Company”). Members of the audit committee shall be considered independent if they have no relationship that may interfere with the exercise of their independence from management and the Company and are not an affiliated person of the Company or its subsidiaries, and meet the independence requirements of the stock exchange listing standards promulgated by the American Stock Exchange or the New York Stock Exchange. Members of the audit committee shall not, except in their capacities as members of the audit committee, the board of directors or any other committee of the board of directors, directly or indirectly, accept any consulting, advisory or other compensatory fee from the Company or any affiliate of the Company. All committee members shall have accounting or financial management expertise and qualify as financially literate, and at least one member shall be a “financial expert,” as defined by applicable SEC regulations.
The audit committee shall have the authority to engage independent counsel and other advisors as it determines necessary to carry out its duties. The Company shall provide appropriate funding, as determined by the audit committee, for payment of compensation to (i) the registered public accounting firm employed by the Company for the purpose of rendering or issuing an audit report and (ii) to any advisors employed by the audit committee.
Statement of Policy
The audit committee shall provide assistance to the board of directors in fulfilling its oversight responsibility to the shareholders, potential shareholders, the investment community, and others relating to the Company’s financial statements and the financial reporting process, the Company’s systems of internal accounting and financial controls, the performance of the independent auditors, the independent auditors’ qualifications and independence, the annual independent audit of the Company’s financial statements, and the legal compliance and ethics programs as established by management and the board. In so doing, it is the responsibility of the audit committee to maintain free and open communication between the audit committee, independent auditors and management of the Company.
In discharging its oversight role, the audit committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the power to retain outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the audit committee is to oversee the Company’s financial reporting process on behalf of the board and report the results of their activities to the board. While the audit committee has the responsibilities and powers set forth in this Charter, it is not the duty of the audit committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements, and for the appropriateness of the accounting principles and reporting policies that are used by the Company. The independent auditors are responsible for auditing the Company’s financial statements and for reviewing the Company’s unaudited interim financial statements.
The audit committee in carrying out its responsibilities believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The audit committee should take the appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk practices, and ethical behavior. Any fraud or misuse of the Company’s assets will immediately be brought to the attention of management and the audit committee.
In fulfilling its general responsibilities, the audit committee shall have the following specific responsibilities:
- The audit committee shall be directly responsible for the appointment, retention, compensation and oversight of the work of any registered public accounting firm employed by the Company (including resolution of disagreements between the Company’s management and the accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work or performing other audit, review or other attestation services for the Company. Each such registered public accounting firm shall report directly to the audit committee. The audit committee shall have the ultimate authority and responsibility to evaluate and, where appropriate, replace the registered public accounting firm. The audit committee shall discuss with the registered public accounting firm its independence from management and the Company and the matters included in the written disclosures required by the Independence Standards Board.
- The audit committee must pre-approve all audit and non-audit services provided to the Company by its registered public accountants, except as otherwise provided in Section 10A of the Securities Exchange Act of 1934. The audit committee shall approve such provision of audit and non-audit services only to the extent that provision of such services is not prohibited under the Securities Exchange Act of 1934. The audit committee may delegate to one of its members the authority to grant any such pre-approvals. The decision of any member of the audit committee to whom pre-approval authority is delegated shall be presented to the full audit committee at each of its scheduled meetings.
- At least annually, the committee shall obtain and review a report by the independent auditors describing the 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. The report should include all relationships between the independent auditor and the Company.
- The audit committee shall establish 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 employees of the Company of concerns regarding questionable accounting or auditing matters.
- The audit committee shall discuss with the registered public accounting firm the overall scope and plans for their respective audits including the adequacy of staffing and compensation. Also, the audit committee shall discuss with management, the internal auditors, and the registered public accounting firm the adequacy and effectiveness of the accounting and financial controls, including the Company’s system to monitor and manage business risk, and legal and ethical compliance programs. Further, the audit committee shall meet separately with the registered public accounting firm, with and without management present, to discuss the results of their examinations.
- The audit committee shall review the interim financial statements with management and the registered public accounting firm prior to the filing of the Company’s Quarterly Report on Form 10-Q. Also, the audit committee shall discuss the results of the quarterly review and any other matters required to be communicated to the audit committee by the registered public accounting firm under generally accepted auditing standards. The chair of the audit committee may represent the entire audit committee for the purposes of this review.
- The audit committee shall review with management and the registered public accounting firm the financial statements to be included in the Company’s Annual Report on Form 10-K (or the annual report to shareholders if distributed prior to the filing of Form 10-K), including their judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. Also, the audit committee shall discuss the results of the annual audit and any other matters required to be communicated to the audit committee by the registered public accounting firm under generally accepted auditing standards.
- The committee shall receive regular reports from the independent auditor on the critical policies and practices of the Company, and all alternative treatments of financial information with generally accepted accounting principles that have been discussed with management.
- The committee shall review and discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. The committee shall also review and discuss any press releases that contain forward-looking statements.
- The committee shall also prepare its report to be included in the Company’s annual proxy statement, as required by SEC regulations.
- The committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively.