CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF INTERNET BUSINESS TRADER (IBT) Inc.
Purpose
The primary purpose of the Audit Committee (the “Committee”) of the Board of Directors of
INTERNET BUSINESS TRADER (IBT) Inc. (the “Company”) is to have direct responsibility to:
• assist the Board in fulfilling its oversight responsibilities relating to
(1) the Company’s accounting and financial reporting processes
and the integrity of its financial statements;
(2) the audits of the Company’s financial statements and the appointment, compensation, qualifications, independence and performance of the Company’s independent auditor;
(3) the Company’s compliance with legal and regulatory requirements; and
(4) the performance of the Company’s internal audit function
and internal control over financial reporting;
• serve as an independent and objective party to monitor the Company’s financial reporting process and internal control system;
• review and appraise the audit efforts of the Company’s independent auditor;
• provide an open avenue of communication among the independent auditor, financial and senior management, the internal audit function, and the Board of Directors; and
• prepare the report required by the rules of the Securities and Exchange Commission (the “SEC”) to be included in the Company’s annual proxy statement.
In carrying out its responsibilities, the Audit Committee should pay particular attention to the
special issues posed by the unique nature of the Company’s consumer financial services business.
Composition
Members
The Committee shall consist of three (3) or more directors as determined by the Board.
The Board shall designate a Committee member as the Chair of the Committee.
Independence
Each Committee member shall meet the independence requirements as defined in
(1) the applicable SEC rules and regulations, as amended from time to time (the “SEC Rules”),
and
(2) the New York Stock Exchange listing standards, as amended from time to time (the
“Listing Standards”).
Other Requirements
Each Committee member shall meet the financial acumen and
experience requirements of the Listing Standards.
Rules
No Committee member shall simultaneously serve on the audit committees of
more than two other public companies.
Appointment
Subject to any requirements of the SEC Rules and the Listing Standards, the Board may appoint and remove Committee members in accordance with the Company’s Bylaws.
Committee members shall serve until their successors are duly elected and qualified.
Authority
The Committee shall have the authority to consult with independent legal counsel, accounting
firms or other consultants or advisors to advise the Committee as circumstances may dictate.
The Committee shall have the authority to approve the terms of engagement of, fees payable to and any agreements with such outside advisors. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
The Committee may also meet with the Company’s investment bankers or other financial advisors who represent or advise the Company.
The Company will provide for appropriate funding, as determined by the Committee, for payment of (1) compensation to the independent auditor for its audit and auditrelated review and attest services;
(2) compensation to any advisers engaged by the Committee; and
(3) ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its duties.
Meetings, Reports and Resources.
Meetings
The Committee shall hold regular meetings at least five times annually, and may also hold special meetings or act by unanimous written consent at such other times as may be required or deemed appropriate by the Committee or as may be permitted under the Company’s Bylaws.
As part of its job to foster open communication, the Committee shall meet at least annually with
management, the independent auditor, and the head of the internal audit function in separate
executive sessions to discuss any matters that the Committee or either of these groups believe
should be discussed privately.
The Committee may meet in separate executive sessions with other directors without management, or in separate sessions with the Company’s Chief Executive Officer or Chief Financial Officer, or with other Company employees, agents or representatives invited by the Committee. In consultation with other members of the Committee, the Chair of the Committee shall set the agenda to be addressed at each meeting and the length of such meeting.
The Chair of the Committee shall ensure that each meeting agenda is circulated to each Committee member in advance of the meeting.
Procedures
The Committee may establish its own procedures, including the formation and delegation of authority to subcommittees, in a manner not inconsistent with this Charter, the Company’s Bylaws and other corporate governance documents, applicable laws or regulations, or the Listing Standards.
The Chair of the Committee or a majority of the Committee members may call meetings of the Committee.
A majority of the Committee members shall constitute a quorum for the transaction of Committee business, and the vote of a majority of the Committee members present at a meeting at which a quorum is present shall be the act of the Committee, unless in either case a greater number is required by this Charter, the Company’s Bylaws or the Listing Standards.
The Committee shall keep written minutes of its meetings and deliver copies of the
minutes to the corporate secretary for inclusion in the corporate records.
Reports
The Committee shall report to the Board annually the results of the annual review by the
Committee of its own performance.
The Committee shall also provide to the Board at an appropriate time, before the preparation of the Company’s proxy statement for its annual meeting, the report of the Committee that must be included in the Company’s annual proxy statement. The Committee shall further report to the Board on the major items covered by the Committee at each Committee meeting, and provide additional reports to the Board as the Committee may determine to be appropriate.
Committee Access and Information
The Committee is at all times authorized to have direct,
independent and confidential access to the Company’s other directors, management and personnel to carry out the Committee’s purposes.
Reliance on Others
Nothing in this Charter is intended to preclude or impair any protection provided under law for good faith reliance by members of the Committee on reports or other information provided by others.
Duties and Responsibilities
Financial Reporting and Financial Statements
The Committee shall:
• Review and discuss with management and the independent auditor the Company’s
annual audited financial statements and any other financial information submitted to the Securities and Exchange Commission or the public, including any certification, report, opinion, or review rendered by the independent auditor as well as the adequacy of internal controls that could significantly affect the Company’s financial statements, and including a discussion of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
• Establish regular and separate reporting to the Committee by each of management and the independent auditor regarding any significant financial reporting issues and judgments made in management's preparation of the financial statements and the view of each as to the appropriateness of such judgments, including an analysis of the effect of alternative GAAP methods on the Company’s financial statements.
• Review with management and the independent auditor the effect of regulatory and
accounting initiatives on the Company’s financial statements.
• Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the release of quarterly earnings and prior to their filing with the Securities and Exchange Commission, including the results of the independent auditors’ reviews of the quarterly financial statements, and including a discussion of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
• Discuss the Company’s earnings press releases, as well as financial information
and earnings guidance provided to analysts and rating agencies.
• Consider and approve, if appropriate, recommended changes to the Company’s
accounting principles. Consider major changes to the Company’s accounting practices as suggested by the independent auditor, internal auditors or management, and review the extent to which such changes have been implemented.
• Solicit from the independent auditor its views, if any, about the adequacy of the scope and procedures of the Company’s internal audit function and the integrity of the Company’s financial reporting process based on the facts and circumstances it may have encountered in the course and scope of its work.
• Meet at least quarterly with the management, the senior internal auditing executive and the independent auditor in separate sessions to review, among other things, the accounting principles as applied in its financial reporting and any matters that the Audit Committee believes should be discussed privately.
Independent Auditor Relationship
The Committee shall:
• Have the sole authority to appoint or replace the independent auditor (subject to shareholder ratification) and the independent auditor shall report directly to the Audit Committee.
• Be directly responsible for the compensation and oversight of the work of the independent auditor for the purpose of preparing or issuing an audit report or performing other audit, review or attest services.
• Review the experience and qualifications of the senior members of the independent auditor team (with particular emphasis on the lead partner) and the quality control procedures of the independent auditor. For that purpose, the Committee must obtain and review, at least annually, a report by the independent auditors describing:
(a) the firm’s internal quality-control procedures; and
(b) any material issues raised by the most recent internal quality-control review, or peer review, of the auditing 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.
• Ensure the rotation of the audit partners as required by law and consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis.
• Approve the retention of the independent auditor for audit and non-audit services in accordance with the pre-approval policies and procedures established by the Committee.
• On a periodic basis, obtain from the independent auditor the letter required by the Independence Standards Board (ISB) Standard No. 1, as may be modified or supplemented, and discuss with the independent auditor all relationships between the independent auditor and the Company.
• Evaluate, together with the Board, the performance of the independent auditor and if so determined by the Audit Committee, replace.
• Review any significant disagreements between management and the independent auditor in connection with the preparation of the financial statements and promptly report any such disagreements to the Board in writing. The Audit Committee will oversee the resolution of any disagreements between Company management and the independent auditor, if any arise.
• Request the independent auditor to notify the Audit Committee of any significant issues that it has taken to its national office for consultation, and, if determined by the Audit Committee to be appropriate, discuss with the national office of the independent auditor issues on which the national office was consulted by the Company’s audit team.
• Meet with the independent auditor prior to the audit to review the planning and staffing of the audit.
• Review with the independent auditor any problems or difficulties the auditor may have encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information and any management letter provided by the auditor and the Company’s response to that letter. Such review shall also include a discussion of the responsibilities, budget and staffing of the Company’s internal audit function.
Internal Audit and Compliance
The Committee shall:
• Meet periodically with management to review the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, and discuss policies with respect to risk assessment and risk management.
• Review the appointment and replacement of the senior internal auditing officer.
• Review any significant reports to management prepared by the internal auditing department and management’s responses.
• Obtain reports from management and the Company’s senior internal auditing officer or General Counsel that the Company’s subsidiary/foreign affiliated entities are in conformity with applicable legal requirements and applicable Company compliance policies.
• Review with management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports that raise material issues regarding the Company’s financial statements or accounting policies.
• Review with the Company’s senior internal audit officer and the independent auditor the performance of the internal audit function and the proposed audit plans for the coming year.
The Committee shall also review as necessary:
(1) any changes required in the planned scope of the internal audit,
(2) the internal audit department responsibilities, budget and staffing and
(3) the integrity of the Company’s financial reporting process, both internal and external.
• Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations.
• Review with the Company’s General Counsel legal matters that may have a material impact on the financial statements, the Company’s compliance policies and any material reports or inquiries received from regulators or governmental agencies.
Administrative Policies and Procedures
The Committee shall set clear policies for the Company’s hiring of employees or former employees of the independent auditor. In addition, the Committee shall establish and maintain procedures for
(a) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and
(b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
Other Functions
The Committee may perform any other activities consistent with this Charter, the Company’s corporate governance documents, SEC Rules and applicable Listing Standards as the Committee or the Board considers appropriate.
Annual Performance Review
The Committee shall evaluate its own performance as a Committee on an annual basis.
Annual Charter Review
The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval No Duty to Audit.
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.
The Company’s financial statements are the responsibility of management.
The independent auditor is responsible for planning and conducting the audit to determine
whether the financial statements present fairly in all material respects the financial position of the Company.
It is also not the duty of the Audit Committee to ensure compliance with laws and regulations and the Company’s compliance policies.
AS ADOPTED BY THE BOARD OF DIRECTORS OF
INTERNET BUSINESS TRADER (IBT) Inc.
JULY 5TH, 2008
