Attached files
Exhibit
99.1
CHARTER
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF
HOME
SYSTEM GROUP
ADOPTED
AS OF NOVEMBER 30, 2009
The audit Committee’s responsibilities
and powers as delegated by the board of directors are set forth in this Charter.
Whenever the Committee takes an action, it shall exercise its independent
judgment on an informed basis that the action is in the best interests of the
company and its stockholders.
I.
PURPOSE AND AUTHORITY OF THE COMMITTEE
The Audit Committee (the “Committee”)
of Home System Group (the “Company”) is appointed by the Board of Directors
(“Board”) to assist the Board in (1) monitoring the quality, reliability and
integrity of the accounting policies and financial statements of the Company;
(2) overseeing the Company’s compliance with legal and regulatory requirements;
(3) reviewing the independence, qualifications and performance of the Company’s
internal and external auditors, (4) overseeing the performance of the Company’s
internal audit function and independent auditors and (5) preparing an Committee
report as required by the Securities and Exchange Commission (the “SEC”) to b3e
included in the Company’s annual proxy statement.
II.
COMPOSITION OF THE COMMITTEE
The Committee shall be comprised of
three or more members of the Board. The members of the Committee shall satisfy
all applicable requirements then in effect of the NYSE Amex., or any stock
exchange or national securities association on which the Company’s securities
are listed or quoted and any other applicable regulatory requirements, including
without limitation requirements relating to director independence, financial
literacy, nomination and size of the Committee, as well as the independence and
experience requirements of Section 10A(m)(3) of the Securities Exchange Act of
1934 (the “Exchange Act”) and the rules and regulations of the SEC. No member of
the Committee may serve on the Committee of more than three public companies,
including the Company, unless the Board (i) determines that such simultaneous
service would not impair the ability of such member to effectively serve on the
Committee and (ii) discloses such determination in the annual proxy
statement.
All members of the Committee shall have
a working familiarity with basic finance and accounting practices (or acquire
such familiarity within a reasonable period after his or her appointment) and at
least one member must be an “audit committee financial expert” under the
requirements of the Sarbanes-Oxley Act. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Company or by a third party.
The members of the Committee shall
appointed annually to one-year terms by majority vote of the Board, upon
recommendation of the Nominating Committee, at the first meeting of the Board
following the annual meeting of the Company’s stockholders and shall serve until
such member’s successor is duly elected and qualified or until such member’s
earlier resignation, retirement, removal from office or death. The members of
the Committee may be removed, with or without cause, by a majority vote of the
Board. Vacancies on the Committee shall be filled by majority vote of the Board
at the next Board meeting following the occurrence of the vacancy or as soon as
practicable thereafter.
Unless a Chair is elected by the full
Board, the members of the Committee shall designate a Chair by majority vote of
the full Committee membership. The Chair will chair all meetings of the
Committee and set the agendas for Committee meetings. The Chair shall establish
an annual calendar with a proposed agenda of the audit, financial and other
related matters to be addressed at each of the committee’s scheduled meetings
during the year. Committee members are expected to make suggestions for agenda
items. A vacancy in the position of Committee Chair shall be filled by majority
vote of the committee at the next Committee meeting following the occurrence of
the vacancy or as soon as practicable thereafter.
III.
MEETINGS AND PROCEDURES OF THE COMMITTEE
The Committee shall meet as often as
its members deem necessary to fulfill the Committee’s responsibilities, but not
less frequently than quarterly. A majority of the Committee members shall
constitute a quorum for the transaction of the Committee’s business. The
Committee shall act upon the vote of a majority of its members at a duly called
meeting ate which a quorum is present. Any action of the Committee may be taken
by a written instrument signed by all of the members of the Committee. The
Committee shall have the authority to establish other rules and procedures for
notice and conduct of its meetings consistent with the Company’s bylaws and this
Charter. A majority of the members of the Committee present in person or by
means of a conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other shall
constitute a quorum.
The Committee may form subcommittees
for any purpose that the Committee deems appropriate and may delegate to such
subcommittees such poser and authority within the scope of the Committee’s
authority as the Committee deems appropriate; provided, however, that no
subcommittee shall consist of fewer than two members; and provided further that
the Committee shall not delegate to subcommittee any power or authority required
by any applicable law, regulation or listing standard to be exercised by the
Committee as a whole.
All non-management directors that are
not members of the Committee may attend meetings of the Committee but may not
vote. Additionally, the Committee may invite to its meetings any director,
member of management of the Company and such other persons as it deems
appropriate in order to carry out its responsibilities. However, when necessary,
the Committee may meet in executive session without such other persons present,
and in all cases such officers shall not be present at meetings at which their
performance and compensation are being discussed and determined.
Following each of its meetings, the
Committee shall report its deliberations at the next meeting of the Board,
including a description of all actions taken by the Committee at the meeting and
an identification of any matters that require action by the Board. The Committee
shall keep written minutes of its meetings which shall be maintained with the
books and records of the Company.
IV.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Committee shall have the sole
authority to appoint or replace the independent auditor. The Committee shall be
directly responsible for determining the compensation and oversight of the work
of the independent auditor (including resolution of disagreements between
management and the independent auditor regarding financial reporting) for the
purpose of preparing or issuing an audit report or related work. The independent
auditor shall report directly to the Committee.
The Committee shall pre-approve all
auditing services and permitted non-audit services to be performed for the
Company by its independent auditor, including the fees and terms thereof
(subject to the de minimus exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Exchange Act which are approved by Committee prior
to the completion of the audit). The Committee may form and delegate authority
to subcommittees of the Committee consisting of one or more members when
appropriate, including the authority to grant pre-approvals of audit and
permitted non-audit services, provided that decisions of such subcommittee to
grant pre-approvals shall be presented to the full Committee at its next
scheduled meeting.
The Committee shall have the authority,
to the extent it deems necessary or appropriate, to retain independent legal,
accounting or other advisors. The Company shall provide for appropriate funding,
as determined by the Committee, for payment of compensation to (i) the
independent auditor for the purpose or rendering or issuing an audit report and
(ii) any advisors employed by the Committee.
The Committee shall make regular
reports to the Board. The Committee shall review and reassess the adequacy of
this Charter annually and recommend any proposed changes to the Board for
approval. The committee annually shall review the Committee’s own
performance.
The
Committee shall:
A.
Financial Statement and Disclosure Matters
1. Meet
with the independent auditor prior to the audit to review the scope, planning
and staffing of the audit.
2. Review
and discuss with management and the independent auditor the annual audited
financial statements, and recommend to the Board whether the audited financial
statements should be included in the Company’s Form 10-K.
3. Review
and discuss with management and the independent auditor the Company’s quarterly
financial statements prior to the filing of its Form 10-Q including the results
of the independent auditor’s review of the quarterly financial
statements.
4.
Discuss with management and the independent auditor, as appropriate, significant
financial reporting issues and judgments made in connection with the preparation
of the Company’s financial statements, including:
(a) any
significant changes in the Company’s selection or application of accounting
principles;
(b) the Company’s critical accounting
policies and practices;
(c) all alternative treatments of
financial information within US generally accepted accounting principles
(“GAAP”) that have been discussed with management and the ramifications of the
use of such alternative accounting principles;
(d) any major issues as to the adequacy
of the Company’s internal controls and any special steps adopted in light of
material control deficiencies; and
(e) any material written communications
between the independent auditor and management, such as any management letter or
schedule of unadjusted differences.
5.
Discuss with management the Company’s earnings press releases generally,
including the use of “pro forma” or “adjusted” non-GAAP information, and any
financial information and earnings guidance provided to analysts and rating
agencies. Such discussion may be general and include the types of information to
be disclosed and the types of presentations to be made.
6.
Discuss with management and the independent auditor the effect on the Company’s
financial statements of (i) regulatory and accounting initiatives and (ii)
off-balance sheet structures.
7.
Discuss with management the Company’s major financial risk exposures and the
steps management has taken to monitor and control such exposures, including the
Company’s risk assessment and risk management policies.
8.
Discuss with the independent auditor the matters required to be discussed by
Statement on Auditing Standards No. 114 relating to the conduct of the audit,
including any difficulties encountered in the course of the audit work, any
restrictions on the scope of activities or access to requested information, and
any significant disagreements with management.
9. Review
disclosures made to the Committee by the Company’s President and CFO (or
individuals performing similar functions) during their certification process for
the Form 10-K and Form 10-Q about any significant deficiencies and material
weaknesses in the design or operation of internal control over financial
reporting and any fraud involving management or other employees who have a
significant role in the Company’s internal control over financial
reporting.
B.
Oversight of the Company’s Relationship with the independent
Auditor
1. At
least annually, obtain and review a report from the independent auditor,
consistent Independence Standards Board Standard 1, regarding (a) the
independent auditor’s internal quality-control procedures, (b) any material
issues raised by the most recent internal quality-control review, or peer
review, of the firm, 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 firm, (c) any steps taken to deal with any
such issues and (d) all relationships between the independent auditor and the
Company. Evaluate the qualifications, performance and independence of the
independent auditor, including whether the auditor’s quality controls are
adequate and the provision of permitted non-audit services is compatible with
maintaining the auditor’s independence and taking into account the opinions of
management and the internal auditor. The Committee shall present its conclusions
with respect to the independent auditor to the Board.
2. Verify
the rotation of the lead (or coordinating) audit partner having primary
responsibility for the audit and the audit partner responsible for reviewing the
audit as required by law. Consider whether, in order to assure continuing
auditor independence, it is appropriate to adopt a policy of rotating the
independent auditing firm on a regular basis.
3.
Oversee the Company’s hiring of employees or former employees of the independent
auditor who participated in any capacity in the audit of the
Company.
4. Be
available to the independent auditor during the year for consultation
purposes.
C.
Compliance Oversight Responsibilities
1. Obtain
assurance from the independent auditor that Section 10A(b) of the Exchange Act
has not been implicated.
2. Review
and approve all related-party transactions, including analyzing the shareholder
base of each target business so as to ensure that the Company does not
consummate a business combination with an entity that is affiliated with the
Company’s management.
3.
Inquire and discuss with management the Company’s compliance with applicable
laws and regulations and with the Company’s Code of Ethics in effect at such
time, if any, and, where applicable, recommend policies and procedures for
future compliance.
4.
Establish procedures (which may be incorporated in the Company’s Code of Ethics,
in effect at such time, if any) for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or reports which raise material issues regarding the Company’s
financial statements or accounting policies.
5.
Discuss with management and the independent auditor any correspondence with
regulators or governmental agencies and any published reports that raise
material issues regarding the Company’s financial statements or accounting
policies.
6.
Discuss with the Company’s legal counsel legal matters that may have a material
impact on the financial statements or the Company’s compliance
policies.
7. Review
proxy disclosure to ensure that it is in compliance with SEC rules and
regulations.
V.
COMMITTEE RESOURCES
The Committee, in discharging its
oversight role, is empowered to study or investigate any matter of interest or
concern that the Committee deems appropriate. The Committee shall have the
authority to retain special legal, accounting or other advisers to advise the
Committee, including without limitation the sole authority to determine the fees
payable and other terms of retention of the independent auditor for the purpose
of rendering or issuing the annual audit reports and any independent legal,
accounting or other advisers retained to advise the Committee. The Company shall
provide for appropriate funding for (i) compensation to the Company’s
independent auditors for the purpose of preparing or issuing audit reports or
performing other work, (ii) compensation to any independent legal, accounting or
other advisers employed by the Committee and (iii) ordinary administrative
expenses of the Committee that are necessary or appropriate in carrying out its
duties.
VI.
UNDERSTANDING AS TO THE COMMITTEE’S ROLE
Management of the Company is
responsible for the day-to-day operation of the Company’s business. In addition,
the independent auditors and management have the fundamental responsibility for
the Company’s financial statements and disclosures. As a result, the Company’s
officers and employees and other persons who may be engaged by the Committee may
have more time, knowledge and detailed information about the Company than do the
Committee members. The Committee will review information, opinions, reports or
statements presented to the Committee by the Company’s officers or employees or
other persons as to matters the Committee members reasonably believe are within
such other person’s professional or expert competence and who has been selected
with reasonable care by or on behalf of the Company. While the Committee has the
responsibilities and powers set forth in this charter, each member of the
committee, in the performance of his or her duties, will be entitled to rely in
good faith upon reports presented to the Committee by these experts. The
Committee is not responsible for certifying the Company’s financial statements
or the auditor’s report. Accordingly, the Committee’s role does not provide any
special assurances with regard to matters that are outside the Committee’s area
of expertise or that are the traditional responsibility of management and the
auditors.