AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
SIGMATRON INTERNATIONAL, INC.
7500 0005
CHARTER OF THE
AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
SIGMATRON INTERNATIONAL, INC.
I.
FUNCTIONS
The
functions of the Audit Committee
(the “Committee”) of SigmaTron
International, Inc. (the “Company”)
shall include: (1) review of
audits of the financial statements
of the Company and the scope of the
audit; (2) review with the
independent accountants the
corporate accounting and financial
reporting practices and policies and
recommend to whom reports should be
submitted within the Company; (3)
review with the independent
accountants their final report; (4)
review with the internal and
independent accountants overall
accounting and financial controls;
and (5) being available to the
independent accountants and
management for consultation
purposes.
II.
COMPOSITION
The
Committee shall be comprised of
three or more directors as
determined by the Board, each of
whom shall: (i) be independent as
defined under Nasdaq Stock Market,
Inc. (“Nasdaq”) Rule 5605(a)(2);
(ii) meet the criteria for
independence set forth in Rule
10A-3(b)(1) under the Securities
Exchange Act of 1934 (the “Act”),
subject to the exemptions provided
in Rule 10A-3(c) under the Act;
(iii) not have participated in the
preparation of the financial
statements of the Company at any
time during the past three (3)
years; (iv) be able to read and
understand fundamental financial
statements, including a Company’s
balance sheet, income statement, and
cash flow statement; (v) not be an
affiliated person of the Company;
and (vi) satisfy any other
independence requirements under
applicable law, rules, and
regulations, including Nasdaq rules.
In addition, the Committee
shall have at least one member who
has past employment experience in
finance or accounting, requisite
professional certification in
accounting, or any other comparable
experience background which results
in the individual’s financial
sophistication, including being or
having been a chief executive
officer, chief financial officer, or
other senior officer with financial
oversight responsibilities.
A director who qualifies as
an audit committee financial expert
under Item 401(h) of Regulation S-K
or Item 401(e) of Regulation S-B is
presumed to qualify as a financially
sophisticated audit committee
member.
Notwithstanding
the foregoing, one director who: (a)
is not independent as defined in
Rule 5605(a)(2), as may be modified
or supplemented; (b) meets the
criteria set forth in Section 10A(m)(3)
under the Act and the rules
thereunder; and (c) is not a current
officer or employee or a Family
Member, as defined by Nasdaq, of
such officer or employee, may be
appointed to the Committee, if the
Board, under exception and limited
circumstances, determines that
membership on the Committee by the
individual is required by the best
interest of the Company and its
Shareholders, and the Board
discloses, in the next annual proxy
statement subsequent to such
determination (or, if the Company
does not file a proxy, in its Form
10-K or 20-F), the nature of the
relationship and the reasons for
that determination.
A member appointed under this
exception may not serve longer than
two years and may not chair the
Committee.
The
members of the Committee shall be
elected by the Board at the annual
organizational meeting of the Board
and shall serve in such capacity
until the next annual organizational
meeting of the Board or until their
successors shall be duly elected and
qualified.
Unless a Chair is elected by
the full Board, the members of the
Committee may designate a Chair by
majority vote of the full committee
membership.
III.
MEETINGS
The
Committee shall meet at least four
times annually, and more frequently
as circumstances dictate.
As part of its job to foster
open communication, the Committee
should meet at least annually with
the chief financial officer and the
independent accountants to discuss
any matters that the Committee or
either of these groups believe
should be discussed privately.
In addition, the Committee or
its Chair should meet in person or
by telephone conference call
with the independent accountants and
management quarterly to review the
Company’s financials consistent with
IV.3 below.
IV.
RESPONSIBILITIES
The Audit
Committee shall have the following
responsibilities:
Documents/Reports
Review
1.
Review this Charter annually
and update it as conditions dictate.
2.
Review the Company’s annual
financial reports and other
financial information submitted to
the Securities and Exchange
Commission (the “SEC”), or the
public, including any certification,
attestation, report, opinion or
review rendered by the independent
accountants, and the independent
accountants’ judgment as to the
quality of the Company’s accounting
principles.
3.
Review with the chief
financial officer or his/her
delegate and, if the Committee
believes it to be advisable, the
independent accountants, quarterly
reports on Form 10-Q prior to its
filing or prior to the release of
earnings.
The Chair of the Committee
may represent the entire Committee
for purposes of this review.
4.
Issue a report to the Board
disclosing whether (a) the Committee
has reviewed and discussed the
audited financial statements with
management; (b) the Committee has
discussed with the independent
accountants the matters required to
be discussed by SAS 61, as may be
modified or supplemented; (c) the
Committee has received the written
disclosures and the letter from the
independent accountants required by
ISB Standard No. 1, as may be
modified or supplemented, and has
discussed with the accountants the
accountants’ independence; and (d)
whether, based on the review and
discussions referred to in (a) - (c)
above, the Committee recommended to
the Board that the financial
statements be included in the Annual
Report on Form 10-K or 10-KSB for
the last fiscal year for filing with
the SEC.
These disclosures shall
appear over the printed names of
each member of the Committee, and
shall be included in the Company’s
proxy statement, if said proxy
statement relates to an annual
meeting of shareholders at which
directors are to be elected (or
special meeting or written consents
in lieu of such meeting).
The disclosures shall be made
at least once a year.
Independent
Accountants
5.
Select, evaluate, oversee the
work (including resolution of
disagreements between management and
the auditor regarding financial
reporting), and, where appropriate,
replace the independent accountants,
and, if appropriate, nominate the
independent accountants to be
proposed for shareholder
ratification or approval in any
proxy statement.
The independent accountants
must report directly to and are
ultimately accountable to the
Committee, which has the sole
authority and responsibility to
select, evaluate and, where
appropriate, replace the independent
accountants.
6.
Pre-approve all audit and
permitted non-audit services to be
performed by the independent
accountants (subject to the de
minimis exceptions under applicable
law, rules and regulations).
However, the Committee may
delegate to one or more designated
members of the Committee the
authority to grant such
pre-approvals, and the decisions of
any member to whom such authority is
delegated shall be presented to the
full Committee at its next regularly
scheduled meeting.
In determining whether to
pre-approve permitted non-audit
services, the Committee (or the
members with authority to
pre-approve) shall consider whether
the independent accountants’
performance of such services is
compatible with independence.
7.
Approve the fees and other
compensation to be paid to the
independent accountants.
On at least an annual basis,
to determine the accountants’
independence, the Committee shall
ensure its receipt from the outside
auditors of a formal written
statement delineating all
relationships between the auditor
and the Company, consistent with
Independence Standards Board
Standard 1, and shall actively
engage in a dialogue with the
auditor with respect to any
disclosed relationships or services
that may impact the objectivity and
independence of the auditor.
8.
Review the performance of the
independent accountants and
discharge the independent
accountants when circumstances
warrant.
9.
Receive copies of the annual
comments from the independent
accountants on accounting practices
and policies and systems of control
of the Company, and review with them
any questions, comments or
suggestions they may have relating
thereto.
10.
Oversee regular rotation of the lead
audit partner, as required by applicable
law, rules and regulations, and consider
whether rotation of the independent
accountants or their lead audit partner is
necessary to ensure independence.
11.
Take, or recommend the full board to
take other appropriate action to oversee the
independence of the independent accountants
and outside auditor.
Financial
Reporting Processes
12.
Review with management and the
independent accountants not less than
annually the internal controls, disclosure
controls and procedures, and accounting and
audit activities of the Company.
13.
Review with management and the
independent accountants significant exposure
risks and the plans to appropriately control
such risks.
14.
Consider and approve, if appropriate,
major changes to the Company’s auditing and
accounting principles and practices as
suggested by the independent accountants,
management, or the internal accounting
department.
15.
Review with management and the
independent accountants accounting policies
which may be viewed as critical, and review
significant changes in the accounting
policies of the Company and accounting and
financial reporting proposals that may have
a significant impact on the Company’s
financial reports.
Review with management accounting
estimates in the event (a) an estimate
requires the Company to make assumptions
about matters that are highly uncertain at
the time the accounting estimate is made,
and (b) different estimates that the Company
reasonably could have used in the current
period, or changes in the accounting
estimates that are reasonably likely to
occur from period to period, would have a
material impact on the presentation of the
Company’s financial condition, changes in
financial condition or results of
operations.
16.
Make or cause to be made, from time
to time, such other examinations or reviews
as the Committee may deem advisable with
respect to the adequacy of the systems of
internal controls, accounting practices,
internal audit procedures, and disclosure
controls and procedures of the Company,
taking into account current accounting and
regulatory trends and developments, and take
such action with respect thereto as may be
deemed appropriate by the Committee.
The Committee shall have the
authority to retain outside advisors to
assist it in the conduct of any
investigation, examination or review.
17.
Review with management and the
independent accountants any material
financial or non-financial arrangements of
the Company which do not appear on the
financial statements of the Company.
18.
Review communications required to be
submitted by the independent accountants
concerning (a) critical accounting policies
and practices used, (b) alternative
treatments of financial information within
generally accepted accounting principles
(“GAAP”) that have been discussed with
management and the ramifications of such
alternatives and the accounting treatment
preferred by the independent accountants,
and (c) any other material written
communications with management.
19.
Review with the independent
accountants any problems encountered in the
course of their audit, including any change
in the scope of the planned audit work and
any restrictions placed on the scope of such
work and any management letter provided by
the independent accountants and management’s
response to any such letter.
Internal
Controls and Process Improvement
20.
Evaluate whether senior management is
setting the appropriate tone at the top by
reviewing their communication with other
personnel of the Company regarding the
importance of internal controls and evaluate
whether the members of senior management
possess an understanding of their roles and
responsibilities.
21.
Establish a regular system of
reporting to the Committee and internally
within the Company by management, the
independent accountants and the internal
accounting department.
22.
Review the scope of the audit to be
performed, and the audit procedures to be
used, by the independent accountants, as a
part of the annual audit process.
23.
Review and attempt to resolve
disagreements between management and the
independent accountants regarding financial
reporting.
24.
Review, at least annually, the then
current and future programs of the internal
accounting department, including the
procedure for assuring implementation of
accepted recommendations made by the
independent accountants, and review the
implementation of any accepted
recommendations.
25.
Consider and approve, upon the
recommendation of management or upon its own
motion, any non-audit services to be
performed by providers other than the
independent accountants relating to internal
controls or current or future programs,
functions, or services that are the
responsibility of the internal accounting
department.
26.
Establish procedures in accordance
with applicable law, rules and regulations
for (a) 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.
Other
Responsibilities
27.
Review and make approval decisions
regarding all related-party transactions, as
required by applicable law, rules and
regulations.
28.
If appropriate, and if it determines
necessary to carry out its duties, obtain
advice and assistance from independent
legal, accounting or other advisors and
determine the compensation to be paid for
such advice and assistance which shall be
paid by the Company.
29.
If necessary, institute special
investigations and, if appropriate, hire
special counsel or experts to assist.
30.
Perform any other activities consistent with
this Charter, the Company’s By-laws and
governing law, rules or regulations as the
Committee or the Board deems necessary or
appropriate.
31. Determine the appropriate funding, to
be provided by the Company, for the payment
of ordinary administrative expenses of the
Committee necessary or appropriate in
carrying out its duties.
However, a member of the Committee
shall not accept any consulting, advisory,
or other compensatory fee from the Company
other than for board service.
While the Audit
Committee has the responsibilities and
powers set forth in this Charter, it is not
the duty of the Audit Committee to prepare
financial statements, plan or conduct audits
or determine that the Company’s financial
statements are complete and accurate and are
in accordance with GAAP.
This is the responsibility of
management and the independent accountants.
Approved:
7/10/09
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