ADT 2005 Annual Report Download - page 70

RESPONSIBILITIES
The Audit Committee will carry out the following responsibilities:
Financial Statements
1) Review the annual audited and quarterly financial statements, including the ‘‘Management’s
Discussion and Analysis of Financial Condition and Results of Operations’’ with management,
the internal auditor, and the outside auditor, and recommend to the Board whether the
audited financial statements should be included in the annual report on Form 10-K.
2) Discuss, including with the internal and outside auditor, corporate policies with respect to
earnings press releases, as well as financial information and earnings guidance provided to
analysts and rating agencies.
3) Review the process for the SEC-required CEO and CFO quarterly certification of financial
statements.
4) Review from time to time (but in no event less often than annually) with the outside auditor
and management, as appropriate:
• Significant financial reporting issues and judgments made in connection with the
preparation of the Company’s financial statements;
• Major issues regarding the Company’s accounting and auditing principles and practices,
including critical accounting policies, and major changes in auditing and accounting
principles and practices suggested by the outside auditor, internal auditor or management;
• Matters required to be discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit;
• The results of the audit, which should include a review of any audit problems or difficulties
encountered by the outside auditor in the course of the audit work, including any
restrictions on the scope of activities or access to required personnel or information, and
any disagreements with management; and
• Principles of accounting proposed or promulgated by regulatory accounting authorities.
External Audit
1) Annually retain, subject to the affirmative vote of a majority of the votes cast by shareholders,
evaluate, and, if appropriate, recommend termination of the Company’s outside auditor. The
Audit Committee shall be directly responsible, in its capacity as a committee of the Board, for
the appointment, compensation, oversight, and evaluation of performance of the work of the
outside auditor. In addition, the Audit Committee will review and evaluate the performance of
the auditor’s lead audit partner. The Audit Committee shall approve in advance all audit
engagement fees and the terms of all audit services to be provided by the outside auditor. The
Audit Committee shall establish policies and procedures for the engagement of the outside
auditor to provide permissible non-audit services, which shall include pre-approval of such
services.
2) At least annually, obtain and review a report from the outside auditor describing any
relationships between the auditor and the Company and any other relationships that may
adversely affect the auditor’s independence, consider the independence of the outside auditor,
and otherwise take appropriate action to satisfy itself of the independence of the auditor,
including considering whether the provision of non-audit services by the outside auditor is
compatible with the auditor’s independence.
3) Establish policies for the hiring of employees and former employees of the outside auditor.
A-2 2006 Proxy Statement