Audit Committee Charter
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing:
financial reports and other financial information provided by the University
of Maryland Medical System, Inc. and/or any of its subsidiaries ("the
Corporation") to any governmental body or the public.
- The Corporation's
systems of internal controls regarding finance, accounting, legal compliance
and ethics that management and the Board have established.
- The Corporation's
auditing, accounting and financial reporting processes generally.
with this function, the Audit Committee should encourage continuous improvement
of, and should foster adherence to, the corporation's policies, procedures
and practices at all levels.
The Audit Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
- Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
- Provide an open avenue of communication among the independent accountants,
financial and senior management, the internal auditing department, and
the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of
the Committee shall have accounting or related financial management expertise.
Committee members may enhance their familiarity with finance and accounting
by participating in educational programs conducted by the Corporation
or an outside consultant.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication,
the Committee should meet at least annually with management, the director
of the internal auditing department and the independent accountants in
separate executive sessions to discuss any matters that the Committee
or each of these groups believe should be discussed privately. In addition,
the Committee or at least its Chair should meet with the independent accountants
and management semi-annually to review the Corporations financials consistent
with IV.4 below.
IV. Responsibilities and Duties
To fulfill its responsibilities and duties the Audit Committee shall:
- Review and update this Charter periodically, at least annually, as
- Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants.
- Review the regular internal reports to management prepared by the
internal auditing department and management's response.
- Review with financial management and the independent accountants financial
statements and/or pro forma reports issued in regard to Corporate financing
activities prior to its filing. The Chair of the Committee may represent the
entire Committee for purposes of this review.
- Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve
the fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with
the Corporation to determine the accountants' independence.
- Review the performance of the independent accountants and approve
any proposed discharge of the independent accountants when circumstances
- Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy of the
organization's financial statements.
Financial Reporting Processes
- In consultation with the independent accountants and the internal
auditors, review the integrity of the organization's financial reporting
processes, both internal and external.
- Consider the independent accountants' judgments about the quality
and appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
- Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the independent
accountants, management, or the internal auditing department.
- Establish regular and separate systems of reporting to the Audit Committee
by each of management, the independent accountants and the internal
auditors regarding any significant judgments made in management's preparation
of the financial statements and the view of each as to appropriateness
of such judgments.
- Following completion of the annual audit, review separately with each
of management, the independent accountants and the internal auditing
department any significant difficulties encountered during the course
of the audit, including any restrictions on the scope of work or access
to required information.
- Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
- Review with the independent accountants, the internal auditing department
and management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been implemented.
(This review should be conducted at an appropriate time subsequent to implementation
of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
- Establish, review and update periodically a Code of Ethical Conduct
and ensure that management has established a system to enforce this
- Review management's monitoring of the Corporation's compliance with
the organization's Ethical Code, and ensure that management has the
proper review system in place to ensure that Corporation's financial
statements, reports and other financial information disseminated to
governmental organizations, and the public satisfy legal requirements.
- Review activities, organizational structure, and qualifications of
the internal audit department.
- Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
- Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
- Perform any other activities consistent with this Charter, the Corporation's
By-laws and governing law, as the Committee or the Board deems necessary