Power of PAYBOX®
Charter of the Audit Committee
The Audit Committee (the “Committee”) of Direct Insite Corp. (the “Company”) is appointed by the Board of Directors of the Company (the “Board”) to assist the Board in fulfilling its oversight responsibilities. The Committee’s primary responsibilities and duties are to:
- Monitor the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting, and legal compliance;
- Monitor the Company’s choices of accounting policies and principles;
- Monitor the Company’s compliance with legal and regulatory requirements;
- Monitor the qualifications, independence and performance of the Company’s independent auditors;
- Discuss risk management policies and practices with management and make recommendations regarding such policies and practices; and
- Provide an avenue of communication among the independent auditors, management, the internal auditing department, and the Board.
The Committee shall also fulfill such other responsibilities as are prescribed by the United States securities laws, the rules and regulations of the Securities and Exchange Commission (the “SEC”) and the rules of any national listing exchange applicable to the Company. The Committee shall have the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it has direct access to the independent auditors as well as anyone in the organization. The independent auditors of the Company shall report directly to the Committee. The Committee shall have the ability to retain, at the Company’s expense, special legal, accounting, or other consultants or experts it deems necessary in the performance of its duties.
II. Composition and Meetings
The Committee shall be comprised of such number of directors as determined by the Board, but no less than three directors, each of whom shall be an independent director as such is defined by the independence rules of the NASDAQ Stock Market, and any rule or regulation prescribed by the SEC, free from any relationship that would interfere with the exercise of his or her independent judgment. All members of the Committee shall have an understanding of finance and accounting and be able to read and understand fundamental financial statements in accordance with the NASDAQ Audit Committee requirements. Unless otherwise determined by the Board, at least one member of the Committee shall, in the judgment of the Board, be an audit committee financial expert in accordance with the rules and regulations of the SEC.
Committee members shall be appointed by and serve at the discretion of the Board. If a Committee Chair is not designated by the Board, the members of the Committee shall designate a Chair by majority vote of its membership.
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. A majority of the members of the Committee shall constitute a quorum. If a quorum is present, a majority of the members present shall decide any matter brought before the Committee. The Committee Chair or any other member of the Committee may call a meeting of the Committee upon due notice to each other member at least 72 hours prior to the meeting, which notice period may be waived in writing by any member of the Committee. To the extent possible, the Committee Chair shall prepare and/or approve an agenda in advance of each meeting. The Committee shall meet privately in executive session at least annually with executive management, the director of the internal auditing department, the independent auditors, and as a committee to discuss any matters that the Committee or each of these groups believes should be discussed. In addition, the Committee shall communicate with management and the independent auditors quarterly to review the Company’s financial statements and significant findings based upon the auditors limited review procedures. The Committee may form and delegate any of its authority to subcommittees or to one or more designated members of the Committee.
III. Responsibilities and Duties
The Committee shall have the following specific responsibilities and duties:
1. External Audit.
a. Appointing, compensating and overseeing the work of the independent auditors (including resolving disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work.
b. Pre-approving audit and non-audit services provided to the Company by the independent auditors (or subsequently approving non-audit services in those circumstances where a subsequent approval is necessary and permissible); in this regard, the Committee shall have the sole authority to approve the hiring and firing of the independent auditors, all audit engagement fees and terms and all non-audit engagements, as may be permissible, with the independent auditors.
c. Reviewing and providing guidance with respect to the external audit and the Company’s relationship with its independent auditors by:
i. reviewing the independent auditors’ proposed audit scope, approach and independence;
ii. obtaining and reviewing annually a formal written report from the independent auditors describing: (i) the auditors’ internal quality-control procedures; (ii) any material issues raised within the preceding five years by the auditors’ internal quality-control reviews by peer reviews of the auditors or by any governmental or other inquiry or investigation relating to any audit conducted by the auditors; and (iii) any steps taken by the auditors to address any findings in the foregoing reviews;
iii. obtaining on a periodic basis a statement from the independent auditors regarding relationships and services with the Company which may impact independence and presenting this statement to the Board, and to the extent there are relationships, monitoring and investigating them;
iv. reviewing the independent auditors’ peer review conducted every three years;
v. (v) discussing with the independent auditors the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and disagreements with management and any other matters described in SAS No. 114, as may be modified or supplemented;
vi. (vi) reviewing reports submitted to the Committee by the independent auditors in accordance with the applicable SEC requirements;
vii. (vii) reviewing and discussing with management and the independent auditors any material off-balance sheet transactions, arrangements and obligations, including contingent obligations;
viii. reviewing and discussing with management and the independent auditors the annual audited financial statements and quarterly unaudited financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” prior to filing the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, respectively, with the SEC; and
ix. (ix) recommending, based on a review of the Company’s annual audited financial statements and discussions with management and the independent auditors, that the annual audited financial statements be included in the Company’s Annual Report on Form 10-K.
d. Setting clear hiring policies for employees and former employees of the independent auditors.
e. Directing the independent auditors to review before filing with the SEC the Company’s interim financial statements including the Quarterly Reports on Form 10-Q, using professional standards and procedures for conducting such reviews.
f. Conducting a post-audit review of the financial statements and audit findings, including any significant suggestions for improvements provided to management by the independent auditors.
g. Reviewing the performance of the independent auditors and ensuring that the independent auditors are accountable to the Board.
h. Ensuring receipt from the independent auditors of a formal written statement delineating between the independent auditors and the Company, consistent with PCAOB Rule 3526, as well as actively engaging in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors.
2. Internal Audit and Risk Management.
a. Overseeing the internal audit function, if such a function exists, and reviewing, on a continuing basis, the adequacy of the Company’s system of internal controls, including approving the annual internal audit plan, reviewing significant reports, including the results of internal audits, prepared by the Company’s internal audit department and executive management’s responses thereto, meeting periodically with the Company’s management and the independent auditors to review the adequacy of such controls and to review before release the disclosure regarding such system of internal controls required under SEC rules to be contained in the Company’s periodic filings and the attestations or reports by the independent auditors relating to such disclosure.
b. Reviewing management’s monitoring of compliance with the Company’s standards of business conduct and with the Foreign Corrupt Practices Act.
c. Reviewing, in conjunction with counsel, any legal matters that could have a significant impact on the Company’s financial statements.
d. Providing oversight and review at least annually of the Company’s risk management policies, including its investment policies.
e. Establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or accounting matters.
f. Reviewing, approving and monitoring the Company’s code of ethics for its employees and senior officers.
g. If necessary, instituting special investigations and, if appropriate, hiring special counsel or experts to assist.
h. Reviewing related party transactions for potential conflicts of interest.
3. SEC Reporting.
a. Reviewing before release the unaudited quarterly operating results in the Company’s quarterly earnings release, as well as financial information and earnings guidance, if any, provided to analysts and ratings agencies.
b. Overseeing compliance with the requirements of the SEC for disclosure of auditor’s services and Committee members, member qualifications and activities.
c. Annually preparing a report to shareholders as required by the SEC; Such report should be included in the Company’s annual proxy statement.
a. Performing any other activities consistent with this Charter, the Company’s by-laws, and governing law, as the Committee or the Board deems necessary or appropriate.
b. Maintaining minutes of meetings and periodically reporting to the Board on significant results of the foregoing activities.
c. Reviewing and reassessing the adequacy of its formal written charter on an annual basis.