BANKS.com, Inc.
Charter of the Audit Committee
(Amended April 25, 2007)
Purpose
The Board of Directors (the "Board") of BANKS.com, Inc. (the "Company") has established an Audit Committee (the "Committee") whose role is to assist the Board in oversight and monitoring of: (i) the quality and integrity of the Company's financial statements and related disclosure; (ii) the Company's compliance with legal and regulatory requirements; (iii) the independent auditors qualifications and independence; (iv) the Company's system of internal controls; and (v) the auditing, accounting and financial reporting process in general.
The Committee does not prepare financial statements or perform audits, and its members are not auditors or certifiers of the Company's financial statements. It is not the duty of the Committee to conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with Generally Accepted Accounting Principles and applicable rules and regulations. The Committee serves a board level oversight role through which it provides advice, counsel and direction to management and the independent auditors on the basis of information it receives, discussions with accountants and its members' experience in business, financial and accounting matters. It is not the responsibility of the Committee to resolve disagreements, if any, between management and the independent auditors or to ensure that the Company complies with all laws and regulations and its code of ethics.
Nothing contained in this Charter is intended to, or should be construed as, creating any responsibility or liability of the members of the Committee except to the extent otherwise provided under Florida law which shall continue to set the legal standard for the conduct of the members of the Committee.
Committee Membership
The Committee shall be composed according to all rules and regulations of the Securities and Exchange Commission ("SEC") and applicable listing standards. In addition, each member shall be free from any relationship (including disallowed compensatory arrangements) that, in the opinion of the Board, would interfere with their exercise of independent judgment as members of the Committee.
All members of the Committee shall be able to read and understand fundamental financial statements, including balance sheet, income statement and statement of cash flows. The Chair of the Committee shall be a "financial expert" in compliance with the criteria established by the SEC. The existence of a member qualifying as a financial expert shall be disclosed in periodic filings as required by applicable rules and regulations of the SEC.
The members of the Committee shall be appointed by the Board annually or as necessary to fill vacancies. Each member shall serve until his or her successor is duly elected and qualified or until such member's earlier resignation or removal. The Board shall appoint one member of the Committee to act as its Chair. Any member of the Committee may be removed, with or without cause, by a majority vote of the Board
Committee Duties and Responsibilities
In carrying out its duties and responsibilities, the Committee's policies and procedures shall remain flexible, so that it may be in the best position to react and respond to changing circumstances or conditions. The following offers guidelines regarding the Committee's duties and responsibilities.
1. Review of Charter. The Committee shall review and reassess the adequacy of this Charter at least annually or as conditions otherwise dictate, and recommend to the Board any necessary amendments. The Committee shall also submit the Charter to the Board for approval and publish the document as required by law or Securities and Exchange Commission rules.
2. Hiring and Selection of Auditors. The Committee shall appoint, retain, compensate and oversee the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The Committee shall have the sole authority to approve the hiring and firing of the independent auditors and all fees and terms of the audit and non-audit engagements with the independent auditors, in each case as may be permissible and compatible with the auditors' independence. The independent auditors shall report directly to the Committee.
3. Approval of Audit and Non-Audit Services. The Committee shall review and pre-approve all audit and non-audit services to be provided to the Company by the independent auditors (except for certain de minimus actions permitted under the Securities and Exchange Commission rules and regulations) and review and approve disclosures with respect to non-audit services.
4. Audit Plan/Oversight of Auditors. The Committee shall review and provide 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 on a periodic basis a statement from the independent auditors regarding relationships and services with the Company that may impact independence and presenting this statement to the Board, and to the extent there are such relationships, monitoring and investigating them; (iii) ensuring that the independent auditors submit to the Committee on a periodic basis a formal written statement delineating all relationships and services that may impact the objectivity and independence of the independent auditors; and (iv) reviewing reports submitted to the Committee by the independent auditors in accordance with the applicable Securities and Exchange Commission requirements. An accounting firm may not perform any audit service for the Company if a Chief Executive Officer, Chief Financial Officer, Controller or Chief Accounting Officer of the Company was employed by that firm and participated in any capacity in the audit of the Company during the one-year period preceding the date of initiation of the audit. Review the performance of the independent auditors on an annual basis. Provide an open avenue of communication between the independent auditor and the Board.
5. Auditor Independence. Review the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and discuss with the independent accountant the independent accountant's independence. Review and concur with the Company's hiring of employees of the independent auditors who were engaged on the Company's account.
6. Critical Accounting Policies. The Committee shall obtain, review and discuss reports from the independent auditors regarding: (i) all critical accounting policies and practices to be used; (ii) alternative treatments of financial information within GAAP that have been discussed with management; (iii) ramifications of the use of such alternatives and the treatment preferred by the auditor; and (iv) any other material written communications between the auditor and management.
The Committee shall also periodically discuss with the independent auditors: (i) their judgments about the quality, appropriateness, and acceptability of the Company's accounting principles and financial disclosure practices, as applied in its financial reporting; and (ii) the completeness and accuracy of the Company's financial statements.
7. Internal Controls/Risk Assessment. The Committee shall coordinate the Board's oversight of the Company's internal accounting controls for financial reporting, the Company's disclosure controls and procedures and the Company's code of ethics for senior financial officers. The Committee shall also periodically consult with the auditor out of the presence of management about internal controls and review the independent auditors' communication of any material weaknesses in internal controls as well as assess the adequacy of management's corrective action.
8. Financial Reporting. The Committee shall obtain, review and discuss the following: (i) the Company's audited financial statements and the documents containing such filings, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations", prior to filing or distribution. Include in such review discussion with management and independent auditors of significant issues regarding accounting principles, practices, audit findings, disclosures, judgments and any other requirements under accounting standards or rules. (ii) quarterly financial statements prior to issuing and the related filings with management and the independent auditors and consider any items required to be communicated by the independent auditors in accordance with the Statements on Auditing Standards No. 61.
9. Proxy Statement. The Committee shall provide a report for inclusion in the Company's proxy or information statement in accordance with the rules and regulations of the Securities and Exchange Commission. In addition, the Committee shall provide a report for inclusion in the Company's annual proxy or information statement as required under Item 407(d) of the SEC's Regulation S-B stating whether the Committee:
a. reviewed and discussed the audited financial statements with management
b. discussed with the independent auditor the matters required to be discussed by AICPA Statement on Auditing Standards No. 61 ("SAS" 61).
c. received the written disclosures from the auditor relating to its independence required by Independence Standards Board No. 1; and
d. recommended to the Board that the audited financial statements be included in the Company's annual report on Form 10-KSB.
10. CEO and CFO Certifications. The Committee shall receive and review the reports of the Chief Executive Officer and the Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act and Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
11. Anonymous Compliant Handling. The Committee shall coordinate the Board's oversight of the Company's Whistleblower policy regarding accounting, internal accounting controls or auditing matters. All such relevant complaints and submissions must be reported to the Committee.
12. Ability to Investigate/Retention of Counsel. The Committee has the authority to investigate any activity of the Company within its scope of responsibilities and shall have unrestricted access to members of management and all information relevant to its responsibilities. The Committee also has the authority to retain independent counsel or other experts and advisors, and the Committee shall have funding sufficient for this purpose and the authority to use such funding to compensate its counsel, experts and advisors.
In addition, the Committee shall review with the Company's counsel any legal matters that could have a significant impact on the Company's financial statements, the Company's compliance with applicable laws and regulations and inquiries received from regulators or other governmental agencies.
Meetings
The Committee shall meet at such times as it determines to be necessary or appropriate, but not less than four times per year. Any member of the Committee may call a meeting of the Committee. All meetings of, and actions taken by, the Committee shall be held and taken pursuant to and in accordance with the Company's Bylaws.
The Committee shall periodically meet in executive session, without Company management present. The Committee may invite to its meetings any officer, employee or director of the Company and such other person as it deems appropriate in order to carry out its responsibilities. A member of management shall not however, be present at any discussion or review where his or her personal performance and compensation is being deliberated or voted on.
A majority of the members of the Committee shall constitute a quorum for the transaction of business. The Committee shall keep minutes of its proceedings that shall be signed by the person whom the Chair designates to act as secretary of the meeting. The minutes of a meeting shall be approved by the Committee at its next meeting, shall be available to review by the entire Board, and shall be filed as permanent records with the Secretary of the Company. The Committee shall be governed by the same rules regarding meetings (including meetings by conference telephone, remote communication or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee shall be authorized to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) any applicable law. Members of the Committee are expected to use all reasonable effortsto attend each meeting.
Delegation of Authority
The Committee shall have the authority to delegate to one or more members of the Committee the authority to pre-approve audit and permissible non-audit services, as long as this pre-approval is presented to the full Committee at its scheduled meetings.
The Committee shall also have the authority to form and delegate responsibilities to subcommittees, as may be necessary or appropriate.
Other
This Charter is intended to provide a set of guidelines for the effective functioning of the Audit Committee. Subject to Board approval, the Committee may at any time modify or amend (i) this Charter, and (ii) the authority and responsibilities of the Committee set forth herein.