Audit Committee Charter
PURPOSES
The purpose of the Audit Committee of the Board of Directors of Introgen Therapeutics, Inc., a Delaware corporation (the "Company"), shall be to:
- Oversee the accounting and financial reporting processes of the Company and audits of the financial statements of the Company; and
- Provide the Company's Board of Directors with the results of its monitoring and recommendations derived therefrom.
MEMBERSHIP
The Audit Committee members will be appointed by, and will serve at the discretion of, the Board of Directors and will consist of at least three members of the Board of Directors, each of whom will meet the independence and experience requirements of NASDAQ and applicable federal law. The Audit Committee will select its own chairperson, who will serve at the will of the Audit Committee.
RESPONSIBILITIES
The responsibilities of the Audit Committee will include the following, to the extent that the Audit Committee finds proper or as required by law:
- Exercising its sole authority to appoint or replace the Company's independent auditors (subject, if applicable, to stockholder ratification);
- Reviewing from time to time the adequacy of the Company's system of internal controls;
- Reviewing with the independent auditors and management the Company's financial reporting and accounting and disclosure principles, policies and practices; alternative treatments within generally accepted accounting principles for material items discussed with management, including the ramifications of such alternatives and the treatment preferred by the auditors; and other written communications between the auditor and management that are material to the financial statements. The Audit Committee shall discuss generally the Company's annual audited financial statements and quarterly financial statements with management and the independent auditors, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as the Company's earnings press releases and financial information and earnings guidance provided to analysts and rating agencies;
- Discussing the Company's major financial risk exposures and its policies with respect to risk assessment and risk management.
- Reviewing the independent auditors' proposed audit scope and approach;
- Reviewing the performance of the independent auditors, who will report directly to the Audit Committee, and who shall be ultimately accountable to the Board of Directors and the Audit Committee, as representatives of the Company's shareholders;
- Reviewing fee arrangements with the independent auditors, including pre-approving audit and non-audit services provided to the Company by the independent auditors (or subsequently approving non-audit services in those circumstances where a subsequent approval is necessary and permissible) and in this regard the Audit Committee shall have the sole authority to approve all audit engagement fees and terms and all non-audit engagements, as may be permissible, with the independent auditors.
- Monitor the rotation of certain members of the independent auditors' team every five years, pursuant to applicable SEC Rules;
- Overseeing the independence of the independent auditors and the Company's compliance with SEC Rules for disclosure of auditors' services by, among other things:
- (a) Requiring the independent auditors to deliver to the Audit Committee on a periodic basis a formal written statement delineating all relationships between the auditors and the Company, consistent with Independence Standards Board Standard No. 1, and engaging in a dialogue with the auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditors;
- (b) Actively engaging in dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and recommending that the Board of Directors take appropriate action to satisfy itself with regard to the auditors' independence;
- (c) Reviewing the independent auditors' peer review conducted every three years or 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;
- (d) Discussing with the independent auditors the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and disagreements with management and any other matters described in Statement of Accounting Standards ("SAS") No. 61, as may be modified or supplemented; and
- (e) Reviewing reports submitted to the Audit Committee by the independent auditors in accordance with applicable SEC requirements;
- Reviewing with management and the independent auditors the Company's interim financial statements and the related Management Discussion and Analysis of Financial Condition and Results of Operations included in Quarterly Reports on Form 10-Q, including the results of the independent auditors' reviews of the quarterly financial statements;
- Reviewing with management and the independent auditors, before release, and recommending to the Board of Directors for inclusion in the Company's annual report on Form 10-K, the audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations;
- Reviewing with management and the independent auditors any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise material issues regarding the Company's financial statements or accounting policies;
- Reviewing and monitoring the Company's code of ethics for its senior financial officers and employees, and granting waivers to such code if deemed appropriate;
- Meeting periodically with the Chief Financial Officer and the independent auditors in separate executive sessions;
- Resolving disagreements, if any, between the Company's management and the Company's independent auditors regarding financial reporting;
- Establishing procedures for receiving, retaining and treating complaints received by the Company regarding accounting, internal accounting controls or auditing matters and procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
- Reviewing on an annual basis the adequacy of the Audit Committee's charter and submitting any recommended changes to the Board of Directors for consideration;
- Providing oversight and review of the Company's asset management policies, including periodic review of the Company's investment policies and performance for cash and short-term investments;
- If it finds necessary, securing independent expert advice, including retaining independent counsel, accountants, consultants or others, to assist the Audit Committee in fulfilling its duties and responsibilities;
- Exercising its sole discretion to determine the appropriate funding for payment of compensation to the independent auditors for the purpose of rendering or issuing an audit report, to any advisors employed by the Audit Committee and for ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties, all of which will be paid by the Company;
- Reviewing related party transactions for potential conflicts of interest and approving all appropriate related party transactions;
- Providing a report in the Company's proxy statement in accordance with the requirements of Item 306 of Regulations S-K and S-B and Item 7(d)(3) of Schedule 14A; and
- Performing such other duties as may be requested or delegated by the Board of Directors.
The Audit Committee may rely on the expertise and knowledge of management, the internal auditors, the independent auditors and counsel, advisors and experts in carrying out its oversight responsibilities. Management is responsible for determining that the Company's financial statements are complete and accurate in accordance with generally accepted accounting principles statements and that they accurately represent the financial condition of the Company. Management is also responsible for the effectiveness of disclosure controls and procedures and internal controls and procedures for financial reporting. The independent auditors are responsible for auditing the Company's financial statements. It is not the duty of the Audit Committee to plan or conduct audits, to determine that the financial statements are complete and accurate and are in accordance with generally accepted accounting principles, to conduct investigations, to assure the adequacy or effectiveness of the Company's internal controls or disclosure procedures or to assure compliance with laws and regulations or the Company's internal policies, procedures and controls. The Audit Committee may elect to form and delegate authority to subcommittees consisting of one or more members when it deems appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services.
MEETINGS
The Audit Committee will meet as often as it determines, but at least quarterly. The Audit Committee may establish its own schedule.
The Audit Committee, at its own discretion, may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. The Audit Committee will meet separately with the Company's president and chief executive officer and separately with the Company's chief financial officer at such times as it deems appropriate to review the financial affairs and controls of the Company. The Audit Committee will meet in separate executive session with the independent auditors of the Company at such times as it deems appropriate to review the independent auditors' examination and management report, to review the internal controls of the Company and to otherwise fulfill the responsibilities of the Audit Committee under this Charter. The Audit Committee may also meet with the Company's investment bankers or financial analysts who follow the Company's business.
