Audit Committee Charter
Purposes
The Audit Committee is appointed by the Board of Directors of CAS medical Systems, Inc.
(the "Company") to assist the Board in fulfilling it oversight responsibilities with respect to
financial reporting and the other matters listed below. The Audit Committee's primary
purposes are to:
• Assist Board oversight of the integrity of the Company's financial statements.
• Assist Board oversight of the Company's compliance with legal and regulatory
requirements, including monitoring the integrity of the Company's reporting
standards and systems of internal controls regarding finance, accounting and
legal matters.
• Recommend to the Board of Directors for stockholder approval independent
auditors to conduct the annual audit.
• Assist Board oversight by monitoring the qualifications, independence,
performance and scope of examination of the Company's independent
external auditors.
• Provide an avenue of communication among the company's independent
external auditors, management and the Board of Directors.
• Review the quarterly and annual financial statements and the annual audit
report.
• Annually prepare a report for inclusion in the Company's proxy statement, in
accordance with applicable rules and regulations.
The Company's independent external auditors should promptly consult with the Chair of
the Audit Committee if, at any time, any material concern or matter arises which has not
been promptly or appropriately addressed by the management of the Company or which
involves any illegal act or conflict of interest or self-dealing on the part of the Company's
senior management.
The Company's independent external auditors are directly accountable to the Audit
Committee. The Audit Committee has the authority to conduct any investigation appropriate
to fulfill its responsibilities and has direct access to the independent external auditors as
well as anyone in the organization.
While the Audit Committee has the responsibilities and powers set forth in the Charter, it is
not the duty of the Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and the independent external
auditors. Nor is it the duty of the Audit Committee to conduct investigations or to assure
compliance with laws and regulations. Members of the Audit Committee shall not be
deemed to have accepted a duty of care that is greater than the duty of the directors generally.
The Chairman of the Board and the Chief Executive Officer shall provide the Audit Committee
with all of the resources, both internal and external, which the Audit Committee deems
necessary or advisable to meet its duties and responsibilities and carry out its function.
Without limiting the foregoing, the Audit Committee may retain, at the Company's expense
and without seeking approval from the Board of Directors, such special legal, accounting
or other consultants or experts as it deems necessary in the performance of its duties. The
Audit Committee shall inform an executive officer of the Company promptly of any actions by
the Audit Committee, of which an executive officer of the Company is not otherwise aware,
that would result in the commitment or payment of Company funds.
Composition and Meetings
The Audit Committee shall be comprised of three or more directors as determined by the
Board of Directors, each of whom shall meet the independence criteria set forth in Rule
10A-3 of the Securities Exchange Act of 1934 and the independence and understanding
of fundamental financial statements requirements of the Nasdaq Stock Market. At least one
member of the Audit Committee shall be financially sophisticated as required by the Nasdaq
Stock Market. No member of the Audit Committee shall have participated in the preparation
of the financial statements of the Company at any time during the prior three years.
Audit Committee members shall be appointed by the Board of Directors, shall serve at the will
of the Board of Directors, and may be removed with or without cause by the affirmative vote of
a majority of the members of the Board of Directors. No Audit Committee member may
simultaneously serve on the audit committees of more than three public companies unless
the Board of Directors affirmatively determines that such service would not impair the ability
of such member to effectively serve on the Audit Committee. The Audit Committee Chair may
be rotated among members periodically at the discretion of the Board of Directors. If practicable,
the immediate past chair will continue as a member of the Audit Committee for at least one year
to ensure an orderly transition. If an Audit Committee Chair is not designated or present at a
meeting, the members of the Audit Committee may designate a Chair for such meeting by
majority vote.
The Audit Committee shall meet on at least a quarterly basis, or more frequently as
circumstances dictate. The Audit Committee Chair shall prepare and/or approve an agenda in
advance of each meeting.
The Chair of the Audit Committee will regularly report the Audit Committee's findings, conclusions
and recommendations to the Board of Directors.
Responsibilities and Duties In discharging its duties, the Audit Committee shall:
Review Procedures
1. Review and reassess the adequacy of this Charter on at least an annual basis and have the Charter published in accordance with SEC regulations.
2. Review and discuss with management and the independent auditors the Company’s annual audited financial statements and related footnotes, quarterly financial statements, and the Company’s disclosures under “Management’s Discussion and analysis of Financial Condition and Results of Operations.”
3. Periodically meet separately with management, with internal auditors (or other personnel responsible for the internal audit function) and with the independent external auditors to discuss any matters that the Audit Committee or each of these groups believe should be discussed.
4. Discuss with management and the independent external auditors any significant issues regarding accounting principles, practices and judgments reflected therein prior to any public release, filing or distribution.
5. In consultation with management and the independent external auditors, consider the integrity of the Company’s financial reporting processes and controls. Review significant findings prepared by the independent external auditors together with management’s responses and the status of management’s response to previous recommendations.
6. The Audit Committee shall review with management and independent external auditors the Company’s quarterly financial results prior to the public release thereof and/or the Company’s quarterly financial statements prior to any public release, filing or distribution.
7. Discuss generally the types of information to be disclosed in earnings press releases, as well as the manner of presentation and the types of financial information and earnings guidance provided to analysts and rating agencies.
8. Review and discuss any significant changes in the Company’s accounting principles and practices and any items required to be communicated by the independent external auditors in accordance with Statements of Auditing Standards 61 and 71, as amended from time to time.
9. Review annually the financial and accounting organizational structure.
Independent Auditors
10. Retain the Company’s independent external auditors, who shall report directly to the Audit Committee, and approve any discharge of independent external auditors when circumstances warrant.
11. Review the qualifications, independence and performance of the independent external auditors and annually recommended to the Board of Directors the appointment of the independent external auditors.
12. Review and evaluate the lead audit partner of the independent auditor and assure that the lead audit partner is rotated as required by applicable law.
13. Pre-approve all audit engagement fees and terms, as well as all non-audit engagements with the independent external auditors. The Audit Committee shall have sole authority to approve such matters.
14. On at least an annual basis, ensure that the independent external auditors submit a formal written statement delineating all of their relationships with the Company consistent with Independent Standards Board No. 1. Review and discuss with the independent external auditors all significant relationships they have with the Company that could impair their independence and, when warranted, recommend appropriate action to the Board of Directors.
15. Review and discuss the independent external auditors’ audit plan with regard to its scope, staffing, locations, reliance upon management and general audit approach.
16. Obtain and review, at least annually, a report by the independent auditor describing: the firm’s internal quality-control procedures; any material issues raised by the most recent 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 independent audits carried out by the firm, and any steps taken to deal with any such issues.
17. Consider and discuss with management the independent external auditors’ judgments about the quality and appropriateness of the Company’s accounting principles and underlying estimates used to prepare the Company’s financial statements, the clarity of the Company’s financial disclosure and whether the Company’s accounting principles are common practices or minority practices.
18. Consider whether, in order to assure continuing auditor independence, there should be regular rotation of the audit firm itself.
19. Monitor hiring practices with respect to employees or former employees of the Company’s independent external auditors.
Legal Compliance
20. Review corporate policies relating to compliance with laws and regulations, ethics, conflicts of interest and the investigation of misconduct or fraud.
21. Establish 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 submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
22. Review significant cases of employee conflict of interest, misconduct or fraud.
23. Review in-house procedures for oversight of officers’ expenses and perquisites.
24. On at least an annual basis, meet with the Company’s management and, if necessary, the Company’s outside counsel, to discuss any legal matters that could have a significant impact on the financial statements, the Company’s compliance with applicable laws and regulations, and inquiries received from regulators or governmental agencies.
Other Audit Committee Responsibilities
25. Annually prepare a report to shareholders as required by the SEC, to be included in the Company’s annual proxy statement.
26. Monitor the Company’s risk assessment and risk management. Discuss significant financial risk exposures and the steps managements taken to monitor, control and report such exposures.
27. Perform any other activities consistent with this Charter, the company’s by-laws, and governing law, as the Audit Committee or the Board of Directors deems necessary or appropriate.
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