Attached files
Adopted:
______________, 2011
AUDIT
COMMITTEE CHARTER
OF
CHINA
RESOURCES DEVELOPMENT INC.
Purpose
The Audit
Committee is appointed by the Board of Directors (“Board”) of China Resources
Development Inc. (“Company”) to assist the Board in monitoring (1) the integrity
of the annual, quarterly and other financial statements of the Company, (2) the
independent auditor’s qualifications and independence, (3) the performance of
the Company’s independent auditor and (4) the compliance by the Company with
legal and regulatory requirements. The Audit Committee also shall review
and approve all related-party transactions.
The Audit
Committee shall prepare the report required by the rules of the Securities and
Exchange Commission (“Commission”) to be included in the Company’s annual proxy
statement.
Committee
Membership
The Audit
Committee shall consist of no fewer than three members, absent a temporary
vacancy. The Audit Committee shall meet the “Independent Directors and
Audit Committee” requirements of the NASDAQ Stock Market and the independence
and experience requirements of Section 10A(m)(3) of the Securities Exchange Act
of 1934 (“Exchange Act”) and the rules and regulations of the
Commission.
The
members of the Audit Committee shall be appointed by the Board. Audit
Committee members may be replaced by the Board. There shall be a Chairman of the
Audit Committee which shall also be appointed by the Board. The Chairman of the
Audit Committee shall be a member of the Audit Committee and, if present, shall
preside at each meeting of the Audit Committee. He shall advise and
counsel with the executives of the Company, and shall perform such other duties
as may from time to time be assigned to him by the Audit Committee or the Board
of Directors.
Meetings
The Audit
Committee shall meet as often as it determines, but not less frequently than
quarterly. The Audit Committee shall meet periodically with management and
the independent auditor in separate executive sessions. The Audit
Committee may request any officer or employee of the Company or the Company’s
outside counsel or independent auditor to attend a meeting of the Audit
Committee or to meet with any members of, or consultants to, the Audit
Committee.
Committee
Authority and Responsibilities
The Audit
Committee shall have the sole authority to appoint or replace the independent
auditor. The Audit Committee shall be directly responsible for determining
the compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly to
the Audit Committee.
The Audit
Committee shall pre-approve all auditing services and permitted non-audit
services to be performed for the Company by its independent auditor, including
the fees and terms thereof (subject to the de minimus exceptions for non-audit
services described in Section 10A(i)(1)(B) of the Exchange Act which are
approved by the Audit Committee prior to the completion of the audit). The
Audit Committee may form and delegate authority to subcommittees of the Audit
Committee consisting of one or more members when appropriate, including the
authority to grant pre-approvals of audit and permitted non-audit services,
provided that decisions of such subcommittee to grant pre-approvals shall be
presented to the full Audit Committee at its next scheduled
meeting.
The Audit
Committee shall have the authority, to the extent it deems necessary or
appropriate, to retain independent legal, accounting or other advisors.
The Company shall provide for appropriate funding, as determined by the Audit
Committee, for payment of compensation to (i) the independent auditor for the
purpose of rendering or issuing an audit report and (ii) any advisors employed
by the Audit Committee.
The Audit
Committee shall make regular reports to the Board. The Audit Committee
shall review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval. The Audit Committee
annually shall review the Audit Committee’s own performance.
The Audit
Committee shall:
Financial Statement and
Disclosure Matters
1.
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Meet
with the independent auditor prior to the audit to review the scope,
planning and staffing of the audit.
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2.
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Review
and discuss with management and the independent auditor the annual audited
financial statements, and recommend to the Board whether the audited
financial statements should be included in the Company’s Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to
the filing of the Form 10-K).
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3.
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Review
and discuss with management and the independent auditor the Company’s
quarterly financial statements prior to the filing of its Form 10-Q,
including the results of the independent auditor’s review of the quarterly
financial statements.
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4.
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Discuss
with management and the independent auditor, as appropriate, significant
financial reporting issues and judgments made in connection with the
preparation of the Company’s financial statements,
including:
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(a)
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any
significant changes in the Company’s selection or application of
accounting principles;
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(b)
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the
Company’s critical accounting policies and
practices;
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(c)
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all
alternative treatments of financial information within GAAP that have been
discussed with management and the ramifications of the use of such
alternative accounting principles;
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(d)
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any
major issues as to the adequacy of the Company’s internal controls and any
special steps adopted in light of material control deficiencies;
and
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(e)
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any
material written communications between the independent auditor and
management, such as any management letter or schedule of unadjusted
differences.
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5.
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Discuss
with management the Company’s earnings press releases generally, including
the use of “pro forma” or “adjusted” non-GAAP information, and any
financial information and earnings guidance provided to analysts and
rating agencies. Such discussion may be general and include the
types of information to be disclosed and the types of presentations to be
made.
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6.
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Discuss
with management and the independent auditor the effect on the Company’s
financial statements of (i) regulatory and accounting initiatives and (ii)
off-balance sheet structures.
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7.
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Discuss
with management the Company’s major financial risk exposures and the steps
management has taken to monitor and control such exposures, including the
Company’s risk assessment and risk management
policies.
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8.
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Discuss
with the independent auditor the matters required to be discussed by
Statement on Auditing Standards No. 61 relating to the conduct of the
audit, including any difficulties encountered in the course of the audit
work, any restrictions on the scope of activities or access to requested
information, and any significant disagreements with
management.
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9.
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Review
disclosures made to the Audit Committee by the Company’s Chief Executive
Officer and Chief Financial Officer (or individuals performing similar
functions) during their certification process for the Form 10-K and Form
10-Qs about any significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting and any
fraud involving management or other employees who have a significant role
in the Company’s internal control over financial
reporting.
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Oversight of the Company’s
Relationship with the Independent Auditor
10.
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At
least annually, obtain and review a report from the independent auditor,
consistent with Independence Standards Board Standard 1, regarding (a) the
independent auditor’s internal quality-control procedures, (b) any
material issues raised by the most recent internal 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 one or more independent audits carried out by the firm, (c) any
steps taken to deal with any such issues and (d) all relationships between
the independent auditor and the Company. Evaluate the
qualifications, performance and independence of the independent auditor,
including whether the auditor’s quality controls are adequate and the
provision of permitted non-audit services is compatible with maintaining
the auditor’s independence, and taking into account the opinions of
management and the internal auditor. The Audit Committee shall
present its conclusions with respect to the independent auditor to the
Board.
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11.
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Verify
the rotation of the lead (or coordinating) audit partner having primary
responsibility for the audit and the audit partner responsible for
reviewing the audit as required by law. Consider whether, in order
to assure continuing auditor independence, it is appropriate to adopt a
policy of rotating the independent auditing firm on a regular
basis.
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12.
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Oversee
the Company’s hiring of employees or former employees of the independent
auditor who participated in any capacity in the audit of the
Company.
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13.
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Be
available to the independent auditor during the year for consultation
purposes.
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Compliance Oversight
Responsibilities
14.
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Obtain
assurance from the independent auditor that Section 10A(b) of the Exchange
Act has not been implicated.
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15.
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Review
and approve all related-party
transactions.
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16.
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Inquire
and discuss with management the Company’s compliance with applicable laws
and regulations and with the Company’s Code of Ethics in effect at such
time, if any, and, where applicable, recommend policies and procedures for
future compliance.
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17.
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Establish
procedures (which may be incorporated in the Company’s Code of Ethics, in
effect at such time, if any) for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or reports which raise material issues regarding the
Company’s financial statements or accounting
policies.
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18.
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Discuss
with management and the independent auditor any correspondence with
regulators or governmental agencies and any published reports that raise
material issues regarding the Company’s financial statements or accounting
policies.
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19.
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Discuss
with the Company’s General Counsel legal matters that may have a material
impact on the financial statements or the Company’s compliance
policies.
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20.
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Review
and approve all payments made to the Company’s officers and directors or
its or their affiliates. Any payments made to members of the Audit
Committee will be reviewed and approved by the Board, with the interested
director or directors abstaining from such review and
approval.
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Limitation
of Audit Committee’s Role
While the
Audit Committee has the responsibilities and powers set forth in this Charter,
it is not the duty of the Audit Committee to plan or 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. These are the responsibilities of
management and the independent auditor.
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