Seaboard Corporation
Charter of the Audit Committee of the Board of Directors
- Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist the Board in
fulfilling its oversight responsibilities. The Audit Committee's primary duties
and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and systems of
internal controls regarding finance, accounting, and legal compliance.
- Be responsible for the appointment, compensation, retention and oversight of the
Company's auditors, including resolution of disagreements between management and
the auditors regarding financial reporting.
- Monitor the independence and performance of the Company's independent auditors and
internal auditing department.
- Provide an avenue of communication among the independent auditors, management, the
internal auditing department, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation appropriate to
fulfilling its responsibilities, and it has direct access to the independent auditors
as well as anyone in the organization. The Audit Committee has the ability to retain,
at the Company's expense, special legal, accounting or other consultants or experts
it deems necessary in the performance of its duties.
- Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the American Stock Exchange.
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be an independent director, free from any relationship
that would interfere with the exercise of his or her independent judgment. All members
of the Committee shall be able to read and understand fundamental financial statements
including a company's balance sheet, income statement and cash flow statement, and
at least one member of the Committee shall be financially sophisticated, in that
he or she has past employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background which
results in the individual's financial sophistication, including but not limited
to being or having been a chief executive officer, chief financial officer, other
senior officer with financial oversight responsibilities.
Audit Committee members shall be appointed by the Board. If an audit committee Chair
is not designated or present, the members of the Committee may designate a Chair
by majority vote of the Committee membership.
The Committee shall meet at least four times annually, either in person or telephonically,
or more frequently as circumstances dictate. The Audit Committee Chair shall prepare
and/or approve an agenda in advance of each meeting. The Committee should meet privately
in executive session at least annually with management, the director of the internal
auditing department, the independent auditors, and as a committee to discuss any
matters that the Committee or each of these groups believes should be discussed.
In addition, the Committee should communicate with management and the independent
auditors quarterly to review the Company's financial statements and significant
findings based upon the auditors limited review procedures.
- Audit Committee Responsibilities and Duties
Review Procedures
- Review and reassess the adequacy of the Charter at least annually. Submit the charter
to the Board of Directors for approval and have the document published at least
every three years in accordance with SEC regulations.
- Review the Company's annual audited financial statements prior to filing or distribution.
Review should include discussion with management and independent auditors of significant
issues regarding accounting principles, practices, and judgments.
- In consultation with the management, the independent auditors, and the internal
auditors, consider the integrity of the Company's financial reporting processes
and controls. Discuss significant financial risk exposures and the steps management
has taken to monitor, control, and report such exposures. Review significant findings
prepared by the independent auditors and the internal auditing department together
with management's responses.
- Review with financial management and the independent auditors the Company's quarterly
financial statements prior to filing or distribution. Discuss any significant changes
to the Company's accounting principles and any items required to be communicated
by the independent auditors recommended in accordance with Statement on Auditing
Standards No. 61 (SAS 61), as amended, “Communication with Audit Committees with
Governance,” as adopted by the Public Company Accounting Oversight Board in Rule
3200T (see item 9).
Independent Auditors
- The independent auditors are ultimately accountable to the Audit Committee and the
Board of Directors. The Audit Committee shall review the independence and performance
of the auditors and annually recommend to the Board of Directors the appointment
of the independent auditors or recommend or approve any discharge of auditors when
circumstances warrant.
- Approve the audit engagement letter, pre-approve all fees and other significant
compensation to be paid to the independent auditors in accordance with the Audit
Committee Policy.
- On an annual basis, the Committee should review and discuss with the independent
auditors all significant relationships they have with the Company that could impair
the auditors' independence. The Independent Auditors shall be required to furnish
the Audit Committee, each year, with a written report of all its relationships with
the Company.
- On an annual basis, the Committee will review and approve the independent auditors
audit plan discuss scope, staffing, locations, reliance upon management, and internal
audit and general audit approach.
- Prior to releasing the year-end earnings, discuss the results of the audit with
the independent auditors. Discuss certain matters required to be communicated to
audit committees in accordance with SAS 61.
- Consider the independent auditors' judgments about the quality and appropriateness
of the Company's accounting principles as applied in its financial reporting. Discuss
certain matters required to be communicated to the audit committee regarding the
critical accounting policies with management and the independent auditors. Discuss
all material alternative accounting treatments of financial information within generally
accepted accounting principles that have been discussed with management by the independent
auditors, including the ramifications of the use of such alternative treatments
and disclosures and the treatment preferred by the independent auditors.
Internal Audit Department
- Review and approve the plan, changes in plan, activities, organizational structure,
and qualifications of the internal audit department, as needed.
- Review and approve the appointment, performance, and replacement of the senior internal
audit executive.
- Review significant reports prepared by the internal audit department together with
management's response and follow-up to these reports.
Other Audit Committee Responsibilities
- On at least an annual basis, review with the Company's counsel, any legal matters
that could have a significant impact on the organization's financial statements,
the Company's compliance with applicable laws and regulations, and inquiries received
from regulators or governmental agencies.
- The Committee shall establish procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, including confidential, anonymous submissions by employees
regarding questionable accounting or auditing matters.
- Annually prepare a report to shareholders as required by the Securities and Exchange
Commission. The report should be included in the Company's annual proxy statement.
- Perform any other activities consistent with this Charter, the Company's by-laws,
and governing law, as the Committee or the Board deems necessary or appropriate.
- Maintain minutes of meetings and periodically report to the Board of Directors on
significant results of the foregoing activities.
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