Audit Committee Charter
CAPTARIS, INC.
AUDIT COMMITTEE CHARTER
General
The Audit Committee (the "Committee") shall be appointed by the Board of Directors (the "Board") of Captaris, Inc.
(the "Company") on the recommendation of the Governance Committee. The primary function of the Committee is to represent and
assist the Board with the oversight of (a) the integrity of the Company's financial statements and internal controls (b) the
Company's compliance with legal and regulatory requirements, (c) the independent auditor's qualifications and independence
and (d) the performance of the audit function by the independent auditor. The Committee shall also have all authority necessary
to fulfill the duties and responsibilities assigned to the Committee in this Charter or otherwise assigned to it by the Board.
Composition and Delegation
The Committee shall be comprised of at least three members Each member of the Committee shall be a member of the
Board and meet the independence requirements established by the Board and applicable laws, regulations and listing requirements.
Each member shall in the judgment of the Board have the ability to read and understand fundamental financial statements, including
the Company's balance sheet, income statement and cash flow statement at the time of appointment. At least one member of the
Audit Committee shall in the judgment of the Board be an audit committee financial expert in accordance with the rules and
regulations of the Securities and Exchange Commission (the "SEC"), and at least one member (who may also serve as the audit
committee financial expert) shall in the judgment of the Board meet the financial sophistication standard through accounting
or related financial management experience in accordance with the requirements of the Nasdaq Stock Market. The members of
the Committee shall be appointed annually by the Board, on the recommendation of the Governance Committee, at its annual meeting
or as necessary to fill vacancies in the interim. The Board shall designate one of the Committee members as Chairperson. The
Board may remove any member from the Committee at any time with or without cause.
The Committee shall have the sole authority and responsibility to appoint, determine funding for, oversee and,
where appropriate, replace the independent auditor. As the Committee deems appropriate, it may also retain independent counsel,
accounting and other professionals to assist the Committee without seeking Board approval with respect to the selection, fees
or terms of engagement of any such advisors. The Committee when appropriate may form and delegate authority to subcommittees
and may delegate authority to one or more designated members of the Committee, the Board or Company officers.
Duties and Responsibilities
The Committee shall:
Engagement of Independent Auditor
- Select and retain, and terminate when appropriate, the independent auditor, and set and approve the independent auditor's
compensation; pre-approve all audit services to be provided by the independent auditor; and resolve disagreements between
management and the independent auditor, with the understanding that the independent auditor shall report directly to and be
overseen by the Committee.
- Pre-approve all permitted non-audit services to be performed by the independent auditor and establish policies and procedures
for the engagement of the independent auditor to provide permitted non-audit services and approve the fees for such services,
other than de minimis non-audit services allowed by relevant law.
Evaluate Independent Auditor's Qualifications, Performance and Independence
- At least annually, evaluate the independence, qualifications and performance of the independent auditor, including whether
the provision by the independent auditor of permitted non audit services is compatible with independence; obtain and review
a report, letter and/or written disclosures from the independent auditor consistent with Independence Standards Board Standard
No. 1, including a formal written statement by the independent auditor delineating all relationships between the auditor and
the Company; actively engage in dialogue with the auditor with respect to that firm's independence and any disclosed relationships
or services that may impact the objectivity and independence of the auditor; and take, or recommend that the Board take, appropriate
action to oversee the independence of the outside auditor.
- Ensure that the independent auditor's lead partner and reviewing partner are replaced at least once every five years.
Review Financial Statements and Financial Disclosures
- Review with the independent auditor: (a) the scope and result of the audit (b) any problems or difficulties that the auditor
encountered in the course of the audit work, and management's response; and (c) any question, comments or suggestions the
auditor's have relating to the internal controls, and accounting practices and procedures of the Company or its subsidiaries.
- Review with management and the independent auditor the annual and quarterly financial statements of the Company, including:
(a) the Company's disclosures under “Management's Discussion and Analysis of Financial Condition and Results of Operations,”
(b) any material changes in accounting principles or practices used in preparing the financial statements prior to the filing
of a report on Form 10-K or 10-Q with the Securities and Exchange Commission, and (c) the items required by Statement of Auditing
Standards (" SAS ") No. 61 in the case of the annual statements, and SAS No. 71 in the case of the quarterly statements, SAS No. 89 and SAS
No. 90, all as amended from time to time.
- Recommend to the Board based on the described review procedures, whether the financial statements should be included in the
annual report on Form 10K.
- Review and approve earnings press releases, press releases and reports on Form 8-K involving financial information, and earnings
guidance provided to any person outside the Company (including analysts, broker-dealers, investment advisers, institutional
investment managers and investment companies) all in advance of release.
Periodic Assessment of Accounting Practices and Policies and Risk and Risk Management
- Obtain and review timely reports from the independent auditor regarding (a) all critical accounting policies and practices
to be used, (b) all alternative treatments of financial information within GAAP 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 (c) other material written communications between the independent auditor and management, such as any management letter
or schedule of unadjusted differences.
- Review with management and the independent auditor: (a) the assessment of adequacy and effectiveness of the systems of internal
controls (including any reportable conditions, significant deficiencies and significant changes in internal controls reported
to the Audit Committee by management or the independent auditor), accounting practices, and disclosure controls and procedures
(and management reports thereon, including any reports by management regarding any fraud that involves management or other
employees who have a significant role in the Company's internal controls), of the Company and its subsidiaries; and (b) current
accounting trends and developments, and take such action with respect thereto as may be deemed appropriate.
- Review: (a) the scope and resources required by internal audit to perform the audit plan for the year; and (b) obtain and
review timely reports from internal audit along with managements response to such reports.
- Monitor Company policies with respect to risk assessment and risk management, and review contingent liabilities and risks
that may be material to the Company and major legislative and regulatory developments which could materially impact the Company's
contingent liabilities and risks.
- Review: (a) the status of compliance with laws and regulations applicable to the Company; and (b) the scope and status of
systems designed to promote Company compliance with such laws and regulations, through receiving reports from management,
legal counsel and third parties as determined by the Audit Committee.
Material and Related-Party Transactions
- Review and approve, and recommend to the Board for approval, material transactions (generally those that are in excess of
the CEO's spending limits established by the Board from time to time) that are not a normal part of the Company's business.
- Review and approve all related-party transactions, including transactions between the Company and its officers or directors
or affiliates of officers or directors.
Complaint Procedures and Ethics Compliance
- Establish, after consultation with the Governance Committee, (a) procedures for the receipt, retention and treatment of complaints
regarding the Company's accounting, internal controls and auditing matters; and (b) procedures for the confidential, anonymous
submission by employees of concerns regarding questionable accounting or auditing matters.
- Consult with and support the Governance Committee with respect to the development of, and monitoring compliance with, (a)
a code of ethics for senior financial officers pursuant to and to the extent required by regulations applicable to the Company
from time to time; and (b) a code of conduct applicable to all directors, officers and employees pursuant to and to the extent
required by regulations applicable to the Company from time to time.
Hiring Policies and Delegation
- Establish policies for the hiring of employees and former employees of the independent auditor and assist in the evaluation
of senior financial management personnel.
- Designate officers and employees who can act on behalf of the Company to execute transactions in the ordinary course of business
under previously approved banking, borrowing, and other financing agreements.
Proxy Statement Report of Audit Committee
- Prepare the audit committee report required by the rules of the SEC to be included in the Company's proxy statement
Operating Plan and Investment Policy
- Monitor progress on the Board approved annual operating plan and plans for present and future capital needs of the Company.
- Review the Company's investment policy at least annually for appropriateness and monitor compliance.
Meetings
In accordance with the applicable provisions of the Company's Bylaws, as amended from time to time, the Committee
shall meet (at least four times each year) at such times and places as the members deem advisable. When appropriate, the Audit
Committee may meet in separate executive session with other independent directors, management, employees, general counsel,
internal audit , and the independent auditor or other consultants or advisors it may retain to discuss matters that the Committee
or other groups believe warrant the Committee attention. The Committee will meet periodically in executive sessions of only
the Committee members and, if invited by the Committee in its sole discretion, other independent members of the Board.
Minutes and Budget
Minutes of each meeting shall be prepared by the Committee Chair or by his/her designee and sent to Committee members.
Following an initial review by the Committee members, the Committee will provide the minutes to the Board. The Secretary of
the Company shall archive the approved minutes. The Committee shall also report to the Board on any significant matters arising
from the Committee's work, including with respect to the quality and integrity of the Company's financial statements, the
Company's compliance with legal or regulatory requirements, the performance and independence of the independent auditors.
For corporate budgeting purposes, the Chairperson of the Committee will each year submit to the CEO an annual budget
for the Committee's activities and will review status against the budget on a periodic basis.
Evaluation
The Committee shall review and reassess this Charter at least annually and, if appropriate, propose changes to
the Board.
The Committee shall obtain or perform an annual evaluation of the Committee's performance and make applicable recommendations.
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