Audit Committee of the Board of Directors Charter
The purpose of the Audit Committee (the "Committee") of the Board of Directors (the "Board") of Voxx International Corporation (the "Company") is to assist the Board in its oversight of the Company's financial statements, the Company's compliance with legal and regulatory requirements, the qualifications and independence of the Company's external public accounting firm (the "Independent Auditor"), and the Independent Auditor. The Committee shall also prepare the report of the Committee required to be included in the Company's annual report or proxy statement relating to the election of directors.
The Board recognizes that while the Committee has been given certain duties and responsibilities pursuant to this Charter, the Committee is not responsible for guaranteeing the accuracy of the Company's financial statements or the quality of the Company's accounting and financial reporting processes. The fundamental responsibility for the Company's financial statements and disclosures rest with management and the Independent Auditor.
Composition and the Committee
The Committee shall be comprised of three or more directors, each of whom meets the independence requirements of the NASDAQ Stock Market ("NASDAQ") and otherwise satisfies the applicable requirements for audit committee service imposed by the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the "Exchange Act") and NASDAQ; provided that the Board may elect to take advantage of any exception from such requirements provided by NASDAQ rules.
At least one member of the Committee shall be an "audit committee financial expert" in accordance with the rules of the Securities and Exchange Commission, and at least one member (who may also serve as the audit committee financial expert) shall have accounting or related financial management expertise, past employment experience in finance or accounting, requisite professional certification in accounting or other comparable experience, or background that leads to such financial sophistication. The designation or determination by the Board of a person as an audit committee financial expert will not impose on such person individually, on the Committee, or on the Board as a whole, any greater duties, obligations or liability than would exist in the absence of such designation or determination. All other Committee members shall be financially literate and able to read and understand fundamental financial statements, including the Company's balance sheet, income statement and cash flow statement. To effectively perform his or her role, each Committee member will obtain an understanding of the detailed responsibilities of Committee membership as well as the Company's business, operations and risks.
Committee members shall not simultaneously serve on the audit committees of more than two other public companies unless the Board determines that such simultaneous service would not impair the ability of such director to serve effectively on the Committee. No Committee member shall have participated in the preparation of the Company's or any of its subsidiaries' financial statements at any time during the past three years. Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the Board.
Committee members shall be appointed by the Board, shall serve for such terms as the Board may determine, or until their earlier resignation, death or removal, and may be removed by the Board in its discretion.
The Committee shall meet with such frequency and at such intervals as it determines necessary to carry out its duties and responsibilities, but in any case, not less than once per fiscal quarter. The Board shall designate one member of the Committee to serve as its chairperson. The chairperson will preside, when present, at all meetings of the Committee. The Committee will meet at such times as determined by its chairperson or as requested by any two of its members. Notice of all Committee meetings shall be given, and waiver thereof determined, in accordance with the notice and waiver of notice requirements applicable to the Board. The Committee may meet by telephone, video conference or similar means of remote communication.
Each member of the Committee shall have one vote. Presence by at least two-thirds of the Committee's members shall constitute a quorum. The Committee shall be authorized to take any permitted action only by the affirmative vote of a majority of the Committee members at any meeting at which a quorum is present, or by the unanimous written consent of all the Committee members. Consent by email shall constitute written consent, provided that such consent is thereafter ratified and confirmed in a signed writing.
The Committee shall maintain copies of minutes of each meeting of the Committee, and each written consent to action taken without a meeting, reflecting the actions so authorized or taken by the Committee. A copy of the minutes of each meeting and all consents shall be placed in the Company's minute book.
The Committee may 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 and tax services, provided that decisions of such subcommittee to grant pre-approvals and take any other action shall be presented to the full Committee at its next scheduled meeting.
The Committee shall have the sole authority to obtain, at the Company's expense but at funding levels determined by the Committee with notification to the full Board of Directors, advice and assistance from outside legal, accounting or other advisors to assist with the execution of its duties and responsibilities as set forth in this Charter. The Committee shall also have authority to obtain advice and assistance from any officer or employee of the Company and to require 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 advisors to, the Committee. The Committee shall have full, unrestricted access to Company records.
Duties and responsibilities
In furtherance of its purpose, the Committee shall:
- Review and discuss the annual audited financial statements and quarterly financial statements with management and the Independent Auditor, including the disclosures under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Committee shall make a recommendation as to whether the unaudited financial statements presented by management and reviewed by the Independent Auditor, or the audited financial statements presented by management and audited by the Independent Auditors, should be included in the Company's Form 10-Q or Form 10-K, respectively.
- Review and discuss earnings press releases, as well as financial information and earnings guidance, if any, provided to analysts and ratings agencies.
- Review any issues that management and the Independent Auditor propose to address through the SEC's pre-clearance process and responses to SEC comment letters.
- Review reports to management prepared by the Independent Auditor and any responses to the same by management.
- Be responsible for the appointment, compensation, retention, oversight of the work of, and termination of the Independent Auditor. The Committee shall also be responsible for the resolution of disagreements between management and the Independent Auditor regarding accounting and financial reporting. The Independent Auditor shall report directly to the Committee.
- Pre-approve all audit and permitted non-audit and tax services to be provided to the Company by the Independent Auditor, subject to the de minimis exceptions for non-audit services which are approved by the Committee prior to the completion of the audit. The Committee may delegate to one or more of its members the authority to grant such pre-approvals, provided that any decisions of such member or members to grant pre-approvals must be presented to the full Committee at its next scheduled meeting.
- Obtain and review, at least annually, a report of the Independent Auditor's internal quality control procedures detailing any material issues raised by the most recent internal quality control review, or peer review, of the Independent Auditor, 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 Independent Auditor, including any steps taken to deal with any such issues; and all relationships between the Independent Auditor and Company. Discuss with the Independent Auditor any issues or relationships disclosed in such report that, in the judgment of the Committee, may have an impact on the Independent Auditor's audit of the Company's financial statements, competence or independence.
- Obtain and review annually, prior to the completion of the Independent Auditor's annual audit of the Company's year-end financial statements (the "Annual Audit"), a report from the Independent Auditor describing all critical accounting policies and practices addressed by the Annual Audit, all alternative treatments of financial information within generally accepted accounting principles for policies and procedures related to material items that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the Independent Auditor, and other material written communications between the Independent Auditor and management, such as any management letter or schedule of unadjusted differences. Review any reports on such topics or similar topics prepared by management. Discuss with the Independent Auditor any material issues raised in such reports.
- Review and evaluate the lead audit partner of the Independent Auditor and assure the regular rotation of the lead audit partner, the concurring partner and other audit partners engaged in the Annual Audit, to the extent required by law.
- Obtain assurance from the Independent Auditor that the audit was conducted in a manner consistent with Section 10A of the Exchange Act.
- Review the Company's financial reporting processes and internal controls, based on consultation with the Independent Auditor. Such review shall include a consideration of major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles, and major issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of identified deficiencies.
- Discuss with the Independent Auditor its judgment about the quality, not just the acceptability, of the accounting principles applied in the Company's financial reporting.
- Discuss with the Independent Auditor its judgment about the competence, performance and cooperation of Management.
- Discuss with Management their views as to the competence, performance and independence of the Independent Auditor.
- Review with the Independent Auditor any audit problems or difficulties and management's response thereto. The review should include discussion of the responsibilities, budget and staffing of the accounting department.
- Review with the Independent Auditor and management the extent to which any previously-approved changes or improvements in financial or accounting practices and internal controls have been implemented.
- Review with the Company's financial management, general counsel or equivalent, and Independent Auditor the effect of accounting, legal and regulatory initiatives on the Company's financial statements.
- Review periodically with the Company's general counsel or equivalent significant pending and threatened legal matters affecting the Company.
- Review the effect of off-balance sheet arrangements, if any, on the Company's financial statements.
- Review and discuss with the Independent Auditor the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board regarding communications with audit committees.
- Discuss policies with respect to risk assessment and risk management, the Company's major litigation and financial risk exposures and the steps management has taken to monitor and control such exposures, it being understood it is the job of management to assess and manage the Company's exposure to risk and that the Committee's responsibility is to discuss guidelines and policies by which risk assessment and management are undertaken.
- Set clear hiring policies for employees or former employees of the Independent Auditor and oversee the hiring of any personnel from the Independent Auditor into positions within the Company in accordance with the hiring restrictions of the Sarbanes-Oxley Act of 2002.
- Review 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 the Company of concerns regarding questionable accounting or auditing matters. Review periodically with management these procedures and any significant complaints received.
- Meet separately, periodically, with management and other Company personnel responsible for the preparation of financial disclosures and with the Independent Auditor.
- Report regularly to the Board, both with respect to the activities of the Committee generally and with respect to any issues that arise regarding the quality or integrity of the Company's financial statements, the Company's compliance with legal and regulatory requirements, and the performance and independence of the Independent Auditor.
- Perform such other duties and responsibilities, consistent with this Charter, the Company's bylaws, governing law, the rules and regulations of the NASDAQ, the federal securities laws and such other requirements applicable to the Company, delegated to the Committee by the Board.
- Conduct an annual performance evaluation of the Committee and its members, including a review of adherence to this Charter, and discuss with the Independent Auditor its observations related to the effectiveness of the Committee.
- Review annually the Audit Committee Meeting Guide for the upcoming fiscal year and share the Committee's expectations with Management and the Independent Auditor.
- Review the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
- Review and approve the minutes of meetings of the Audit Committee.
- Review and approve the report of the Committee required to be included in the Company's annual report or proxy statement.