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Audit Committee Charter FINAL 4-25-04

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6 pages
OPENTV CORP. CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS (as amended and restated on April 27, 2004) PURPOSE The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of OpenTV Corp. (the “Company”) is to oversee the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements, including oversight of the Company’s internal control over financial reporting and disclosure controls and procedures, compliance with legal and regulatory requirements, internal audit function and the appointment and compensation of the Company’s independent auditors. MEMBERSHIP The members of the Committee will be nominated and appointed by the Board and shall serve at the discretion of the Board. The Committee shall consist of at least three members, meeting the following criteria (in each case to the extent that such requirement is effective from time to time): 1. Each member will be an independent member of the Board in accordance with the rules of The Nasdaq Stock Market (“Nasdaq”); 2. Each member will meet the independence requirements for audit committee members specified by the rules of the Securities and Exchange Commission (“SEC”); 3. Each member will meet such other qualifications for membership on an audit committee as Nasdaq may promulgate from time to time, including being able to read and understand fundamental financial statements at the time of ...
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OPENTV CORP.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
(as amended and restated on April 27, 2004)
PURPOSE
The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the
“Board”) of OpenTV Corp. (the “Company”) is to oversee the Company’s accounting and
financial reporting processes and the audits of the Company’s financial statements, including
oversight of the Company’s internal control over financial reporting and disclosure controls and
procedures, compliance with legal and regulatory requirements, internal audit function and the
appointment and compensation of the Company’s independent auditors.
MEMBERSHIP
The members of the Committee will be nominated and appointed by the Board and shall
serve at the discretion of the Board. The Committee shall consist of at least three members,
meeting the following criteria (in each case to the extent that such requirement is effective from
time to time):
1. Each member will be an independent member of the Board in accordance with the
rules of The Nasdaq Stock Market (“Nasdaq”);
2. Each member will meet the independence requirements for audit committee
members specified by the rules of the Securities and Exchange Commission (“SEC”);
3. Each member will meet such other qualifications for membership on an audit
committee as Nasdaq may promulgate from time to time, including being able to read and
understand fundamental financial statements at the time of appointment;
4. At least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other comparable
experience or 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, in accordance with applicable Nasdaq rules;
5. At least one member will be an “audit committee financial expert” as defined by
applicable SEC rules; and
6. No member will have participated in the preparation of the financial statements of
the Company at any time during the most recent three years.
1Unless the Board designates a chair, the members of the Committee may designate a
chair by majority vote of the Committee membership. A majority of the members of the
Committee will constitute a quorum for the transaction of the business of the Committee.
AUTHORITY AND RESPONSIBILITIES
The Committee has the authority to undertake the specific duties and responsibilities
listed below and will have the authority to undertake such other specific duties as the Board from
time to time prescribes. Specific responsibilities of the Committee include:
1. Processes, Controls and Risk Management
a. Meeting separately with management, the Company’s internal auditors and the
Company’s independent auditors at least quarterly, to discuss the adequacy and effectiveness of
the Company’s disclosure controls and procedures and its internal control over financial
reporting, the completeness and accuracy of the Company’s financial statements and such other
matters that the Committee believes should be discussed.
b. Reviewing reports prepared by management assessing the adequacy and
effectiveness of the Company’s disclosure controls and procedures and internal control over
financial reporting, prior to the inclusion of such reports in the Company’s periodic SEC filings.
c. Discussing with management the Company’s policies with respect to risk
assessment and risk management.
d. Periodically reviewing the status of pending or threatened legal proceedings that
could have a significant impact on the Company’s financial statements.
e. Reviewing the status of any inquiries or investigations by law enforcement or
regulatory agencies.
f. To the extent requested by the Board, and subject to applicable laws and
regulations, and the rules of Nasdaq, reviewing and approving all related party transactions to
ensure that they are in the Company’s best interests. Related party transactions shall include
those transactions described in Item 404(a), (b) and (c) of Regulation S-K under the federal
securities laws and those transactions with a related party (as such term is defined in Statement
of Financial Accounting Standards No. 57) that must be specifically disclosed in the Company’s
financial statements or notes thereto pursuant to GAAP. Only members of the Committee who
will derive no direct or indirect benefit from a specific related party transaction may discuss the
transaction or vote to approve it.
g. Overseeing the Company’s asset management policies, including an annual
review of the Company’s investment policies and performance for cash and short-term
investments.
22. Independent Auditors
a. Appointing, setting the compensation for, evaluating the performance and
continuing independence of and, if necessary, terminating any registered public accounting firm
engaged to render an audit report or to perform other audit, review or attest services for the
Company. The Committee shall have the sole authority to approve the hiring and firing of any
such independent auditors and the independent auditors shall report directly to the Committee.
b. Obtaining and reviewing, on an annual basis, a letter from the independent
auditors describing all relationships between the independent auditors and the Company required
to be disclosed by Independence Standards Board Standard No. 1, reviewing the nature, fees, and
proposed audit scope and evaluating and terminating, as necessary, any relationships or services
that the Committee believes could compromise the objectivity and independence of the
independent auditors.
c. Pre-approving all audit and permissible non-audit services to be provided to the
Company by the independent auditors (or subsequently approving non-audit services in those
circumstances where a subsequent approval is permissible).
d. Discussing with the Company’s independent auditors the independent auditors’
annual audit plan, including the scope of audit activities, staffing of the audit and any other
matters required to be discussed by Statement of Accounting Standard No. 61, as it may be
modified or supplemented.
e. Obtaining and reviewing at least annually a report from the independent auditors
addressing:
(i) all critical accounting policies and practices to be used;
(ii) all alternative treatments within generally accepted accounting principles of
material items that have been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the treatment preferred by the
independent auditors;
(iii) other material written communications between the independent auditors and
management, such as any management letter or schedule of unadjusted differences; and
(iv) the Company’s quality-control procedures and any material issues raised by the
most recent review of these procedures.
Discussing any comments or recommendations outlined in such report; establishing a schedule
for implementing any recommended changes and reviewing the implementation.
f. Reviewing periodically with management and the independent auditors the results
of the annual audit of the Company, discussing significant issues, events and transactions and
any significant changes regarding accounting principles, practices, judgments or estimates with
3the independent auditors and management, including any significant disagreements among
management and the independent auditors.
g. Communicating with the Company’s independent auditors regarding the
Company’s expectations with respect to its relationship with the independent auditors, including
the following:
(i) the independent auditors’ ultimate accountability to the Committee, as
representatives of the Company’s stockholders; and
(ii) the sole authority and responsibility of the Committee to select, evaluate and
determine the compensation of, the independent auditors.
h. Reviewing the performance of the Company’s internal audit function, which shall
include a review of the staffing of the internal audit department and a review of any significant
reports to management prepared by the internal auditing department.
i. Monitoring and periodically considering the rotation of the partners of the
independent auditors on the Company’s independent audit engagement team.
j. Setting hiring policies for employees or former employees of the Company’s
independent auditors.
3. SEC Reports and Other Disclosure
a. Reviewing with management and the Company’s independent auditors as
appropriate, before release:
(i) the Company’s audited financial statements and unaudited interim financial
statements;
(ii) the Company’s earnings announcements;
(iii) the Management’s Discussion and Analysis of Financial Condition and Results of
Operations in the Company’s annual report on Form 10-K and quarterly reports on
Form 10-Q; and
(iv) the results of the independent auditors’ audit of the Company’s annual financial
statements and the independent auditors’ review of the Company’s interim financial ents.
b. Recommending to the Board whether or not the Company’s audited financial
statements should be included in the annual report on Form 10-K.
c. Annually prepare a report for inclusion in the proxy statement for the Company’s
annual meeting of stockholders, in accordance with the SEC rules.
44. Other Duties and Responsibilities
a. Establishing and monitoring the procedures for:
(i) receipt, retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters; and
(ii) the confidential, anonymous submission by employees of the issuer of concerns
regarding questionable accounting or auditing matters.
b. Reviewing at least annually the performance of the Committee through self-
assessment and assessment by the Board.
c. Reviewing and reassessing the adequacy of the Committee’s charter, structure,
processes and membership requirements at least annually, and recommending changes to the
Board for approval. Including a copy of the Committee charter as an appendix to the Company’s
proxy statement as required by SEC rules (currently, once every three years).
d. Performing any other activities required by applicable law, rules or regulations,
including the rules of the SEC and the rules of the principal exchange or automated inter-dealer
quotation system of a national securities association on which the Company’s ordinary shares are
traded, and performing other activities consistent with this charter, the Company’s memorandum
of association and governing laws, as the Committee or the Board may deem necessary or
appropriate.
INVESTIGATIONS, STUDIES AND OUTSIDE ADVISORS
The Committee may conduct or authorize investigations into or studies of matters within
the Committee’s scope of responsibility with unrestricted access to all books, records, facilities
and personnel of the Company.
The Committee, at the expense of the Company, may retain outside legal counsel (who
may but need not be regular corporate counsel to the Company), accountants and other advisors
to assist it in connection with its functions, as it deems appropriate. The Committee shall have
sole authority to approve fees and retention terms for such advisors.
FUNDING
The Company shall provide for appropriate funding, as determined by the Committee for
payment of compensation to (i) the Company’s independent auditors for the purpose of rendering
or issuing an audit report or preparing any other audit, review or attest services for the Company
and (ii) any outside advisors employed by the Committee pursuant to this charter. The Company
shall pay the ordinary administrative expenses of the Committee that are necessary or
appropriate for the carrying out of its duties.
5MEETINGS
The Committee shall meet at least four times per year in connection with the regularly
scheduled meetings of the Company’s Board and, in connection therewith, shall review the
Company’s quarterly earnings releases. The Committee shall also meet separately with the
Company’s independent auditors and members of the Company’s management at such time as
the Committee deems appropriate. The Committee shall establish in advance a calendar for all
meetings. Meetings may be held telephonically. In lieu of a meeting, the Committee may also act
by unanimous written consent resolution.
MINUTES
The Committee will maintain written minutes of its meetings, which minutes (and any
action by unanimous written consent) will be filed with the minutes of the meetings of the Board.
REPORTS
The Committee shall annually prepare a report to the Company’s stockholders for
inclusion in the proxy statement for the Company’s annual meeting as required by the Rules of
the SEC.
The Committee also shall report regularly to the Board, including with respect to any
issues that arise with respect to the quality or integrity of the Company’s financial statements, the
effectiveness of the Company’s internal controls over financial reporting or disclosure controls
and procedures, the performance and independence of the Company’s independent auditors, or
any other issue that the Committee believes should be brought to the attention of the Board. Such
reports may be made orally or in writing.
COMPENSATION
Members of the Committee shall receive such fees, if any, for their services as
Committee members as may be determined by the Board. Members of the Committee may not
receive any compensation from the Company except the fees that they receive for services as a
member of the Board or any committee thereof.
DELEGATION OF AUTHORITY
The Committee may, to the extent permitted under applicable law and regulations and the
Company’s certificate of incorporation and bylaws, delegate to one or more designated members
of the Committee the authority to perform specified duties and responsibilities of the Committee.

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