Audit & Risk Management Committee Pre-Approval Policy
Review/Issue Date: May 3, 2021
Previous Review/Issue Date: April 30, 2020
I. Statement of Principles
The Audit & Risk Management Committee is required, pursuant to its Charter and applicable law, to pre-approve the audit and non-audit services performed by the outside auditing firm in order to assure that the provision of such services do not impair the outside auditing firm’s (as defined in the Charter) independence. Unless a type of service to be provided by the outside auditing firm has received general pre-approval in accordance with Section 10A of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated thereunder, it will require specific pre-approval by the Committee, as provided in and subject to the terms provided in this policy. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Committee, except as otherwise provided in Article III hereof with respect to audit services.
The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit & Risk Management Committee specifically provides for a different period. The Committee will review this policy, including the list of pre-approved services, at the same time as it reviews its Charter.
The Audit & Risk Management Committee may delegate pre-approval authority to one or more of its members as provided in its Charter. Pursuant to the requirements of the Charter, the member or members to whom such authority is delegated shall report any pre-approval decisions to the Committee at its next meeting. The Committee cannot delegate to management its responsibilities to pre-approve services performed by the outside auditing firm.
III. Audit Services
The annual audit services engagement terms and fees, which shall include the terms and fees for the annual audit and the reviews of the first three quarterly periods of each fiscal year, will be subject to the specific pre-approval of the Audit & Risk Management Committee. The Committee will pre-approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Company structure or other matters. Notwithstanding the foregoing, if in the course of performing pre-approved audit services it (a) becomes apparent to the lead partner at the outside auditing firm that due to previously unforeseen circumstances the cost for an annual audit or quarterly review will exceed the pre-approved fees and (b) under the circumstances then existing, the lead partner determines (i) pre-approval of additional fees cannot be immediately obtained and (ii) the audit or review needs to continue without interruption, then the audit or review may be continued for up to two days without obtaining such pre-approval. The outside auditing firm shall be paid for the services provided during such period even if the additional fees are not pre-approved by the Committee on a going-forward basis.
In addition to the annual audit services engagement approved by the Audit & Risk Management Committee, the Committee may grant pre-approval for other audit services, which are those services that only the outside auditing firm reasonably can provide.
IV. Audit-Related Services
Audit-related services are assurance and related services that are reasonably related to the performance of the annual audit or quarterly reviews of the Company’s financial statements and that are traditionally performed by the outside auditing firm. The Audit & Risk Management Committee believes that the provision of audit-related services does not impair the independence of the outside auditing firm. All audited-related services must be pre-approved.
V. Tax Services
The Audit & Risk Management Committee believes that the outside auditing firm can provide tax services to the Company such as tax compliance, tax planning and tax advice without impairing the firm’s independence. However, the Committee will not permit the retention of the outside auditing firm in connection with a transaction initially recommended by the outside auditing firm, the purpose of which may be tax avoidance and the tax treatment of which may not be supported by the Internal Revenue Code and related regulations. All tax services must be separately pre-approved by the Committee.
VI. All Other Services
The Audit & Risk Management Committee may grant pre-approval to those permissible non-audit services that it believes are routine and recurring and would not impair the independence of the outside auditing firm. All such services must be separately pre-approved by the Committee.
A list of the prohibited non-audit services under Section 10A of the Exchange Act is attached to this policy as Exhibit 1. The rules and relevant guidance of the Securities and Exchange Commission should be consulted to determine the precise definitions of these and all other services, the applicability of exceptions to certain of the prohibitions and the parameters and scope of pre-approval decisions.
VII. Pre-Approval Fee Levels
Pre-approval fee levels for all services to be provided by the outside auditing firm will be established periodically by the Audit & Risk Management Committee. Any proposed services exceeding these levels will require specific pre-approval by the Committee, except as otherwise provided in Article III hereof.
VIII. Supporting Documentation
With respect to each proposed pre-approved service, the outside auditing firm will provide detailed back-up documentation requested by the Audit & Risk Management Committee regarding the specific services to be provided.
Requests to provide services that require separate approval by the Audit & Risk Management Committee will be submitted to the Committee (or the members of the Committee to whom pre-approval authority has been delegated) by the Chief Operating & Financial Officer, Controller or other appropriate financial officer. The presenting officer should be prepared to explain both the purpose of the service and whether, in their view, the request is consistent with the Securities and Exchange Commission’s rules on auditor independence.
Prohibited Non-Audit Services
- Bookkeeping or other services related to the accounting records or financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions or contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
- Management functions
- Human resources
- Broker-dealer, investment adviser or investment banking services
- Legal services
- Expert services unrelated to the audit