2009 Charter of the Audit Committee of the Board of Governors of Financial Industry Regulatory Authority, Inc. (“FINRA”)
1.1 The Audit Committee (the “Committee”) was appointed by FINRA’s Board of Governors (the “Board”) in accordance with Article VII, Section 1(c) and Article IX, Sections 1(a) and 5 of FINRA’s By-Laws (the “Corporation’s By-Laws”).
1.2 This Charter and the “Preamble to the Charters of Each Committee of the Board of Governors of Financial Industry Regulatory Authority, Inc. (“FINRA”)” (see Exhibit 1) govern the operations of the Committee.
2.1 The Committee shall consist of four or five members of the Board, with a majority being Public Governors,and none of whom shall be officers or employees of FINRA (see Article IX, Section 5(a) of the Corporation’s By-Laws and The Report Issued by the Securities and Exchange Commission, Pursuant to Section 21(a) of the Securities Exchange Act of 1934, Regarding NASD and The Nasdaq Stock Market (Securities Exchange Act Release No. 37542, August 8, 1996) (the “21(a) Report”)).
2.2 Each member of the Committee will meet the independence and experience requirements of Rule 10A-3 under the Securities Exchange Act of 1934.
2.3 Each member of the Committee will be financially literate, as such qualification is interpreted by the Board in its business judgment, or become financially literate within a reasonable time after appointment to the Committee. The Committee shall designate, subject to Board approval, at least one of its members as an “audit committee financial expert” in accordance with applicable SEC regulations. The designation or determination by the Board of a person as an Audit Committee Financial Expert will not impose on such person individually, on the Committee, or on the Board as a whole, any greater duties, obligations or liability than would exist in the absence of such designation or determination.
2.4 A Public Governor shall serve as Chair of the Committee (see Article IX, Section 5(a) of the Corporation’s By-Laws and the 21(a) Report).
3. Duties and Responsibilities
3.1 The Committee shall have the following duties and responsibilities: (i) discuss with management and monitor the existence of adequate controls over the integrity of the financial reporting process of the Corporation; (ii) recommend to the Board, and monitor the independence and performance of, the certified public accountants retained as outside auditors by the Corporation; (iii) direct and oversee all the activities of the Corporation’s internal audit function, including but not limited to management’s responses to the internal audit function; and (iv) review and discuss with management its policies and procedures relating to monitoring the Company’s compliance with applicable legal and regulatory requirements and the Company’s policies, including the Company’s Code of Conduct and Ethics. In fulfilling these responsibilities, the Committee shall perform the following recurring activities:
3.2.1 Oversee and Monitor the Existence of Adequate Controls and the Integrity of the Financial Reporting Process of the Corporation
3.2.2 Recommend to the Board, and Monitor the Independence and Performance of, the Certified Public Accountants Retained as Outside Auditors by the Corporation
3.2.3 Review and Oversee All the Activities of the Corporation’s Internal Audit Function, Including But Not Limited to Management’s Responses to the Internal Audit Function
3.2.4 Oversee and Monitoring Compliance with Legal and Regulatory Programs, and Ethics Programs Established by Management and the Board
3.3 It is the responsibility of the Committee to maintain free and open communication among the Committee, independent auditors, internal auditors and management of the Corporation.
3.4 In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Corporation.
4. Limitation of Powers and Allocation of Responsibilities
4.1 While the Committee has the responsibilities and powers set forth in this Charter, the role of the Committee is assisting the Board in its oversight responsibilities. Management of the Company is responsible for the preparation, presentation and integrity of the Company's financial statements and for the effectiveness of internal controls over financial reporting. Management also is responsible for maintaining appropriate accounting and financial reporting principles and policies, as well as internal controls and procedures designed to provide reasonable assurance of compliance with accounting standards and related laws and regulations. The Internal Audit department is responsible for providing reliable and timely information to the Committee and senior management concerning the quality and effectiveness of, and the level of adherence to, the Company's control and compliance procedures and risk management systems. The independent auditor is responsible for planning and carrying out an audit in accordance with generally accepted auditing standards, reviewing the Company's quarterly financial statements prior to the filing of each quarterly report on Form 10-Q, and attesting to management's assertion of the effectiveness of internal control over financial reporting.
4.2 In fulfilling their duties and responsibilities set forth herein, it is recognized that members of the Committee are not full-time employees of the Company and even though one or more may be designated as an "audit committee financial expert" as defined in rules of the SEC, members of the Committee are not, and do not represent themselves to be, performing the functions of accountants or auditors, or providing expert or special assurance as to the Company’s financial statements. Moreover, it is not the duty or responsibility of the Committee or its members to plan or conduct audits, to conduct "field work" or other types of auditing or accounting reviews or procedures, to determine that the Corporation’s financial statements and disclosures are complete and accurate and in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) or international financial reporting standards (“IFRS”) and applicable rules and regulations, or to set auditor independence standards. Likewise, it is not the Committee’s responsibility to conduct investigations or to assure that the Corporation complies with specific legal requirements or the Corporation’s code of conduct. Each member of the Committee will be entitled to rely, to the fullest extent permitted by law, upon the integrity of those persons or organizations within and outside the Corporation from whom it receives information, and the accuracy of the information.
4.3 No member of the Committee shall participate in the consideration or decision of any matter relating to a particular member, company or individual if such Audit Committee member has a material interest in, or a professional, business or personal relationship with, that member, company or individual, or if such participation shall create an appearance of impropriety. An Audit Committee member shall consult with the General Counsel of the Corporation to determine if recusal is necessary. If a member of the Committee is recused from consideration of a matter, any decision on the matter shall be by a vote of a majority of the remaining members of the Committee (see Article IX, Section 5(c)).
Amended February 2009.