I. Audit Committee Purpose
The Audit Committee (the "Committee") is appointed by the Board of Directors of Uroplasty, Inc. (the "Company") to:
- oversee the integrity of the Company's financial statements and reporting process and systems of internal controls regarding finance, accounting and legal compliance;
- determine, monitor and evaluate the qualifications, independence and performance of the Company's independent registered public accounting firm;
- oversee the Company's ethics compliance program; and
- provide an avenue of communication among the independent registered public accounting firm, management and the Board of Directors.
The Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it has direct access to the independent registered public accounting firm as well as anyone in the organization. The 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. The Company shall also provide appropriate funding, as determined by the Committee, so that the Committee may retain and compensate directly such special legal, accounting or other consultants, and for ordinary administrative expenses that the Committee incurs to carry out its duties.
II. Audit Committee Composition and Meetings
The Committee shall be comprised of three or more directors as determined by the Company's Board of Directors. Each Committee member must satisfy the "independence" and experience standards specified in the rules of the principal exchange upon which shares of the Company's Common Stock are traded, and Rule 10A-3 under the Securities Exchange Act of 1934, as amended. At least one member of the Committee shall be an individual who qualifies as an "audit committee financial expert" (within the meaning of Item 407(d)(5) of SEC Regulation S-K).
Committee members shall be appointed by the Board on recommendation of the Nominating Committee. If a 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, or more frequently as circumstances dictate. The Committee Chair shall prepare and/or approve an agenda in advance of each meeting. The Committee shall meet privately in executive session at least annually with management, the independent auditors and as a committee to discuss any matters that Committee or each of these groups believe should be discussed. The Committee, or at least its Chair, shall communicate with management and the independent registered public accounting firm quarterly to review the Company's financial statements and significant findings based upon the independent registered public accounting firm's limited review procedures. These meetings should be performed in advance of quarterly earnings releases and Securities and Exchange Commission quarterly financial filings.
III. Audit Committee Responsibilities and Duties
The Committee shall:
- review and reassess the adequacy of this Charter at least annually, including submitting any proposed amendments to the Board of Directors for approval and arranging for the Charter's publication at least every three years (or on the Company's website) in accordance with SEC regulations;
- review the Company's annual audited financial statements and SEC filings prior to filing or distribution, including discussion with management and the independent registered public accounting firm of significant issues regarding accounting principles, practices and judgments;
- in consultation with the management and the independent registered public accounting firm, consider the integrity of the Company's financial reporting processes and controls, to include discussion of significant financial risk exposures and the steps management has taken to monitor, control, and report such exposures and review of any significant findings prepared by the independent registered public accounting firm together with management's responses; and
- review with financial management and the independent registered public accounting firm the Company's quarterly financial results prior to the release of earnings and/or the Company's quarterly financial statements prior to filing or distribution, to include discussion of any significant changes to the Company's accounting principles and any items required to be communicated by the independent auditors in accordance with SAS 61 (the Chair of the Committee may represent the entire Committee for purposes of this review).
Independent Registered Public Accounting Firm
The independent registered public accounting firm is ultimately accountable to the Committee. The Committee is directly responsible for the appointment, retention, compensation, evaluation, termination and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and such firm regarding financial reporting). The Committee has the sole authority to approve all audit engagement fees and terms of any non-audit engagements of the independent registered public accounting firm (the Committee Chair also may pre-approve non-audit engagements). The Company shall provide appropriate funding, as determined by the Committee, for payment of compensation to such firm.
Without limiting the foregoing, the Committee shall:
- review the independence (including a formal written statement consistent with PCAOB No. 3520 and 3526) and performance of the independent registered public accounting firm and annually engage the independent registered public accounting firm and approve any discharge of such firm when circumstances warrant;
- promptly and thoroughly consider and respond to independent registered public accounting firm inquiries relating to significant relationships such firm may have with the Company that could impair such firm's independence;
- review and approve the independent registered public accounting firm's annual engagement letter, and discuss as deemed necessary, the scope, staffing, locations, reliance upon management and general audit approach;
- prior to releasing the year-end earnings, discuss the results of the audit with the independent registered public accounting firm;
- discuss the matters required to be communicated to audit committees in accordance with Generally Accepted Auditing Standards;
- consider the independent registered public accounting firm's judgments about the quality and appropriateness of the Company's accounting principles as applied in its financial reporting; and
- on at least an annual basis, review with the Company's management and counsel any legal matters that could have a significant impact on the Company's financial statements, the Company's compliance with applicable laws and regulations and inquiries received from regulators or governmental agencies.
The Committee shall oversee the Company's ethics compliance program. To this end, the Committee shall make recommendations to management regarding program enhancements, resolve ethical issues brought to its attention and approve any waivers of the Company's ethics policy as applied to the Company's executive officers or directors. In addition, 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 and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
Other Audit Committee Responsibilities
The Committee shall also:
- annually prepare a report to shareholders as required by the SEC for inclusion in the Company's annual proxy statement;
- perform any other activities consistent with this Charter, the Company's bylaws and governing law, as the Committee deems necessary or appropriate; and
- maintain minutes of meetings and periodically report to the Board of Directors on significant results of the foregoing activities.
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements or disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. This is the responsibility of management and, to the extent described in their engagement letter and in their opinion with respect to the financial statements, the independent auditors.