I-trax Board
Committee Charters - Audit
I-TRAX, INC.
AUDIT COMMITTEE CHARTER
Ratified on May 19, 2004
I.
Purposes of the Committee
The primary purpose of the
Audit Committee (the
“Committee”) is oversight. The
Committee will assist the Board
of Directors (the “Board”) in
fulfilling its responsibility to
oversee:
- Management’s conduct of
the Corporation’s financial
reporting process;
- The financial reports
and other financial
information provided by the
Corporation to the
Securities and Exchange
Commission (the “SEC”) and
the public;
- The Corporation’s system
of internal accounting and
financial controls;
- The performance of the
Corporation’s internal audit
function, if established;
- The independent
auditors’ qualifications,
performance, and
independence; and
- The annual independent
audit of the Corporation’s
financial statements.
The Committee has the
ultimate authority and
responsibility to select,
evaluate and, where appropriate,
replace the independent
auditors.
The Committee will also
prepare the report that the SEC
rules require be included in the
Corporation’s annual proxy
statement.
The Corporation’s management
is responsible for preparing the
Corporation’s financial
statements. The independent
auditors are responsible for
auditing those financial
statements. Management,
including the internal audit
function, and the independent
auditors, have more time,
knowledge, and detailed
information about the
Corporation than do Committee
members. Consequently, in
carrying out its oversight
responsibilities, the Committee
is not providing any expert or
special assurance as to the
Corporation’s financial
statements, or any professional
certification as to the
independent auditors’ work,
including with respect to
auditor independence. Each
member of the Committee is
entitled to rely on the
integrity of people and
organizations from whom the
Committee receives information
and the accuracy of such
information, including
representations by management
and the independent auditors
regarding non-audit services
provided by the independent
auditors.
II.
Committee Membership
The Committee will consist of
not less than two, nor more than
four, members who will be
appointed by the Board from
among its members. Each member
of the Committee must satisfy
such criteria of independence as
the Board may establish and such
additional regulatory or listing
requirements as the Board may
determine to be applicable or
appropriate.
Accordingly, each member of
the Committee must be
financially literate within a
reasonable period of time after
appointment to the Committee,
and at least one member of the
Committee shall be an “audit
committee financial expert” as
defined by the SEC.
The actual number of members
will be determined from time to
time by resolution of the Board.
Two members of the Committee
will constitute a quorum.
III. Committee Structure and
Operations
The Board will designate the
Chair of the Committee. The
Committee will fix its own rules
of procedure and will meet where
and as provided by such rules or
by resolution of the Committee.
In addition to the regular
meeting schedule established by
the Committee, the Chair of the
Committee may call a special
meeting at any time.
The Secretary of the
Corporation will be the
Secretary of the Audit
Committee, unless the Committee
designates otherwise.
In the absence of the Chair
during any Committee meeting,
the Committee may designate a
Chair pro tempore.
The Committee will act only
on the affirmative vote of a
majority of the members at a
meeting or by unanimous written
consent.
The Committee may establish
sub-committees to carry out such
duties as the Committee may
assign.
IV.
Committee Activities
The following will be the
common recurring activities of
the Committee in carrying out
its purposes. These activities
are set forth as a guide with
the understanding that the
Committee may diverge from this
guide as appropriate given the
circumstances.
- Appoint the independent
auditors to audit the
consolidated financial
statements of the
Corporation and its
subsidiaries for the coming
year, and recommend to the
Board ratification of that
appointment by the
shareholders.
- Pre-approve all
audit and non-audit services
to be provided by the
independent auditors to the
Corporation, and regularly
review (a) the adequacy of
the Committee’s policies and
procedures for pre-approving
the use of the independent
auditors for audit and
non-audit services with a
view to auditor
independence; (b) the audit
and non-audit services
pre-approved; and (c) fees
paid to the independent
auditors for pre-approved
audit and non-audit
services.
- Regularly review
with the independent
auditors (a) the
arrangements for and the
scope of the independent
auditors’ audit of the
Corporation’s consolidated
financial statements; (b)
the results of the audit by
the Corporation’s
independent auditors of the
Corporation’s consolidated
financial statements; (c)
any audit problems or
difficulties encountered by
the independent auditors and
management’s response; (d)
any significant deficiency
in the design or the
operation of the
Corporation’s internal
accounting controls
identified by the
independent auditors and any
resulting recommendations;
(e) all critical accounting
policies and practices used
by the Corporation; (f) all
alternative accounting
treatments of financial
information within generally
accepted accounting
principles that have been
discussed with management,
including the ramifications
of the use of such
alternative treatments and
disclosures, and the
treatment preferred by the
independent auditors; and
(g) other material written
communications between the
independent auditors and
management. The Committee
will report the foregoing to
the Board with such
recommendations as it may
deem appropriate.
- Review major changes
to the Corporation’s
auditing and accounting
principles and practices
based on advice of the
independent auditors or
management.
- The Committee will
(a) request annually from
the independent auditors a
formal written statement
delineating all
relationships between the
independent auditors and the
Corporation consistent with
Independence Standards Board
Standard Number 1; and (b)
discuss with the independent
auditors any such disclosed
relationships and their
impact on the independent
auditors’ independence.
- Evaluate, along with
the other members of the
Board and management the
performance of the
independent auditors.
- The Committee, along
with the other members of
the Board, will discuss with
management and the
independent auditors the
audited financial statements
to be included in the
Corporation’s annual report
on Form 10-K, including the
Corporation’s disclosures
under “Management’s
Discussion and Analysis of
Financial Condition and
Results of Operations.” The
Committee will review and
consider with the
independent auditors the
matters required to be
discussed by Statement of
Auditing Standards No. 61
(“SAS No. 61”), including
deficiencies in internal
controls, fraud, illegal
acts, management judgments
and estimates, audit
adjustments, audit
difficulties, and the
independent auditors’
judgments about the quality
of the Corporation’s
accounting practices.
- Discuss with the
independent auditors and
management the Corporation’s
interim financial results to
be included in each
quarterly report on Form
10-Q, including the
Corporation’s disclosures
under “Management’s
Discussion and Analysis of
Financial Condition and
Results of Operations.” Each
such review will include any
matters required to be
discussed by SAS No. 61, and
will occur prior to the
Corporation’s filing of the
related Form 10-Q with the
SEC.
- Periodically review
the Corporation’s procedures
for the receipt, retention,
and treatment of complaints
regarding accounting,
internal accounting controls
or auditing matters,
including procedures for the
confidential, anonymous
submission by employees of
the Corporation, of concerns
regarding questionable
accounting or auditing
matters.
- Confer with
management and the
independent auditors as
requested by any of them or
by the Committee, at least
annually, and review their
reports with respect to the
functioning, quality, and
adequacy of programs for
compliance with the
Corporation’s policies and
procedures regarding
business ethics, financial
controls, and internal
auditing, including
information regarding
violations or probable
violations of such policies.
The Committee will report
the foregoing to the Board
with such recommendations as
it may deem appropriate.
- Review the expenses
of officers of the
Corporation who are also
members of the Board and
such other officers as it
may deem appropriate.
- Review with the
Controller and the Chief
Financial Officer, at least
annually, the activities,
budget, staffing, and
structure of the internal
auditing function of the
Corporation and its
subsidiaries, including
their evaluations of the
performance of that function
and any recommendations with
respect to improving the
performance of or
strengthening of that
function. As appropriate,
the Committee shall review
the reports of any internal
auditor on a financial
safeguard problem that has
not resulted in corrective
action or has not otherwise
been resolved to the
auditor’s satisfaction at
any intermediate level of
audit management.
- From time to time,
meet separately with
management, internal
auditors, and independent
auditors to discuss issues
warranting attention by the
Committee.
- Prepare any report
or other disclosure by the
Committee required to be
included in any proxy
statement for the election
of the Corporation’s
directors under the rules of
the SEC.
- Review the adequacy
of this charter on an annual
basis.
- Take other such
actions and do other such
things as may be referred to
it from time to time by the
Board.
V.
Committee Evaluation
The Committee will annually
complete a self-evaluation of
the Committee’s own
effectiveness and provide a
report of that assessment to the
Board, including any recommended
changes to the Committee’s
charter.
VI.
Committee Reports
The Chair of the Committee
will report to the full Board on
the Committee’s activities,
including the results of the
Committee’s self-evaluation and
any recommended changes to the
Committee’s charter.
VII. Resources and Authority of
the Committee
The Committee has exclusive
authority with respect to the
retention of the independent
auditors described in Section IV
of this charter. 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. The Committee has
the authority to retain outside
advisors, including legal
counsel, auditors, or other
experts, as it deems
appropriate, and to approve the
fees and expenses of such
advisors.
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