The purpose of this charter is to set forth the objectives, composition, and responsibilities of the Audit Committee of the Board of Directors (the Committee) of Cass Information Systems, Inc. (the Company).
The Audit Committee is appointed by the Board of Directors to assist in fulfilling its oversight responsibilities of regulatory compliance, corporate accounting and financial reporting practices of the Company and each of its subsidiaries. In addition, the Committee will:
- Oversee and appraise the quality of the internal and external audit processes;
- Maintain free and open means of communication between the Board of Directors, the independent auditors, the internal auditors, and management of the Company;
- Serve as an independent and objective party to monitor the integrity of the financial information presented by management to shareholders, regulators, and the general public;
- Review the adequacy of the Company's administrative, operating and internal accounting controls, and the Company's compliance with the letter and spirit of applicable Federal and state laws and regulations.
II. COMPOSITION AND MEETINGS
The Committee will be comprised of at least three directors who are (1) independent of the management of the Company, (2) receive no consulting, advisory or other compensatory fees from the Company, other than directors' fees, and (3) are free from any relationship that, in the opinion of the Board of Directors, would interfere with their exercise of independent judgement as a committee member.
All members of the Committee shall have a basic understanding of finance and accounting and be able to read and understand fundamental financial statements, and at least one member of the Committee shall have accounting or related financial management expertise.
The Committee will hold at least four meetings per year and such additional meetings as the Committee shall require in order to perform its designated duties.
III. RESPONSIBILITIES AND DUTIES
Financial Reporting and Review
- Review and assess the adequacy of this charter at least annually. Submit the charter to the Board of Directors for approval and have the document published at least every three years in accordance with Securities and Exchange Commission regulations.
- Review the annual audited financial statements with management and the independent auditors prior to the Company filing its annual report on Form 10-K, including any significant issues regarding accounting principles, practices and judgements.
- Review with management and the independent auditors the Company's quarterly financial results prior to the Company filing its report on Form 10-Q, or where practicable, prior to the first public release of quarterly earnings.
- Discuss any significant changes to the Company's accounting principles and any items required to be communicated by the independent auditors in accordance with Statement on Auditing Standards No. 61 (SAS 61), Communication With Audit Committees.
- Review with the independent auditors and management the Company's "critical accounting policies," as defined by the SEC, including an assessment regarding the adequacy of the Company's disclosures.
- Discuss earnings releases, as well as financial information and earnings guidance provided by the Company to analysts and ratings agencies.
- Receive and review reports from the internal auditors and the independent auditors that assess the adequacy and effectiveness of the Company's internal accounting control system; accounting policies and procedures; and, financial and accounting management.
- Review any disclosures provided by the CEO and the CFO to the Committee regarding significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize, and report financial data.
- Review legal and regulatory matters that may have a material impact on the financial statements, related Company compliance policies, and programs and reports received from regulators.
- Monitor management's response and actions taken to correct any deficiencies noted by internal auditors, independent auditors or regulatory agencies.
Independent and Internal Audit Oversight
- Exercise sole authority in the selection and appointment of the independent auditors that is ultimately accountable to the Committee and the Board of Directors.
- Exercise sole authority to approve the compensation of the independent auditors.
- Evaluate with the Board the performance and independence of the independent auditors and, if so determined in the Committee's sole authority, replace the independent auditors.
- Ensure the rotation of the lead audit partner having responsibility for the audit and the concurring review partner responsible for reviewing the audit in accordance with applicable Nasdaq rules and regulations and applicable laws, rules and regulations.
- Review and concur in the appointment, replacement, or dismissal of the internal auditors.
- Assist in oversight of the internal auditors' responsibilities, performance, and the adequacy of its resources to carry out its responsibilities
- Consider the audit scopes and plans of the internal auditors and independent auditors. Exercise sole authority to approve the terms of all audit engagements of the independent auditors.
- Review with the internal auditors and the independent auditors the coordination of audit effort to assure completeness of coverage, reduction of redundant efforts, and the effective use of audit resources.
- Annually, receive a formal, written statement from the independent auditors consistent with standards set by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees. The Committee shall discuss with the independent auditors and approve in advance any relationships or services that may affect their objectivity or independence.
- Annually prepare a report to shareholders as required by the Securities and Exchange Commission. The report will be included in the Company's annual proxy statement.
- Maintain minutes of meetings and periodically report to the Board of Directors on significant results of the foregoing activities.
- Meet with the internal auditors, independent auditors and management in private sessions to discuss any matters that the Committee or these groups believe should be discussed privately with the Committee.
- Determine that there are no management restrictions placed on the internal auditors or the independent auditors.
- Conduct or authorize investigations into any matters within the committee's scope of responsibilities, and perform such other functions as assigned by law, the Company's by-laws, or the Board of Directors.
- Obtain advice, as deemed by the Committee to be necessary and appropriate, from outside legal, accounting and other advisors.
- Review the results of monitoring compliance with the Company's code of business ethics and conduct.
- Establish procedures for: (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls and auditing matters; and (b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
- Review and approve all related-party transactions, as defined by the SEC, with the exclusion of any and all transactions subject to Regulation O issued by the Federal Reserve System.
The foregoing shall be the common activities of the Committee. These functions are set forth as a guide with the understanding that the Committee may diverge from this guide as deemed appropriate.
While the Committee has the responsibility 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 are complete and accurate and in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditors.
- Financial Expert
- Independent Director