Audit Committee Charter
Organization
This charter governs the operations of the audit committee of Pacific Sands, Inc.
The committee shall review and reassess the charter at least annually and obtain the approval of the board of directors. The committee shall be appointed by the board of directors and shall comprise at least 2 people, at least one of which will be an independent director All committee members must be financially literate, or must become financially literate within a reasonable period of time after appointment to the committee, and at least one member shall have accounting or related financial management expertise.
Statement of Policy
The audit committee shall provide assistance to the board of directors in fulfilling their oversight responsibility to the shareholders, potential shareholders, the investment community, and others relating to the Company's financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company's financial statements, and the legal compliance and ethics programs as established by management and the board. In so doing, it is the responsibility of the committee to maintain free and open communication between the committee, independent auditors, the internal auditors, and management of the Company.
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 Company and the power to retain outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the audit committee is to oversee the Company's financial reporting process on behalf of the board and report the results of their activities to the board.
The audit committee is not required to plan or conduct audits or to determine the Company's financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Management is responsible for preparing the Company's financial statements. The independent auditors are responsible for auditing financial statements. The audit committee is not required to conduct investigations, to resolve disagreements between management and the independent auditor, or to assure compliance with laws and regulations and the Company's internal policies.
The committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The committee should take appropriate actions to establish an environment that promotes quality financial reporting, sound business risk practices, and ethical behavior.
The committee shall have the following responsibilities. The committee has the power to supplement these responsibilities as it deems appropriate.
The committee shall review and recommend to the board the selection of the Company's independent auditors.
The committee shall have the ultimate authority and responsibility to evaluate and, if appropriate, recommend to the board replacing the independent auditors.
The committee shall make it clear to management and the independent auditors that the independent auditors are accountable to the board and the audit committee, as representatives of the Company's shareholders.
The committee shall discuss with the auditors their independence from management and the Company, including matters in the written disclosures required by the Independence Standards Board, and shall consider whether non-audit services provided by the auditors are consistent with the auditors' independence.
The committee shall discuss with the internal auditors and the independent auditors the overall scope and plans for their audits, including the adequacy of staffing and compensation.
The committee shall discuss with management, the internal auditors, and the independent auditors the adequacy and effectiveness of the Company's accounting and financial controls, including the Company's system to monitor and manage business risk, and legal and ethical compliance programs.
The committee shall at its discretion meet separately with the internal auditors and the independent auditors, with and without management present, to discuss the results of their examinations and will provide sufficient opportunity for the internal auditors and the independent auditors to meet and/or otherwise confer privately with the members of the committee.
The committee shall review the interim financial statements in cooperation with management and the independent auditors prior to filing each of the Company's Quarterly Reports on Form 10-Q.
The committee shall discuss the results of the quarterly review and any other matters required to be communicated to the committee by the independent auditors under generally accepted auditing standards. The chair of the committee may represent the entire committee for the purposes of this review.
The committee shall review with management and the independent auditors the financial statements to be included in the Company's Annual Report on Form 10-K (or the annual report to the shareholders if distributed prior to the filing of Form 10-K), including their judgment about the quality, not just the acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements.
The committee shall discuss the results of the annual audit and any other matters required to be communicated to the committee by the independent auditors under generally accepted auditing standards.
At least one member of the audit committee shall be a member of the board of directors of the Company, and shall otherwise be independent, as defined in applicable laws, rules and regulations governing the composition of the Company’s audit committee (Section 301). To be considered to be independent a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee (i) accept any consulting, advisory or other compensatory fee from the Company; or (ii) be an affiliated person of the Company or any subsidiary of the Company.
The audit committee shall be directly responsible for the appointment, compensation and oversight of the work of any registered public accounting firm employed by the Company (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work and the Company’s registered public accounting firm shall report directly to the audit committee.
The audit committee shall have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties as determined by the audit committee. The Company shall provide for appropriate funding as determined by the audit committee in its capacity as a committee of the board of directors, for payment of compensation (i) to the registered public accounting firm employed by the issuer for the purpose of rendering or issuing an audit report; and (ii) to any advisors employed by the audit committee.
The audit committee shall establish 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.