ADT 2005 Annual Report Download - page 71

4) At least annually, review the external auditor’s proposed audit scope and approach, including
coordination of audit effort with internal audit, to ensure the completeness of coverage and
reduction of redundant efforts.
5) At least annually, obtain and review a report by the outside auditor describing its own internal
quality-control procedures; any material issues raised by its most recent quality-control review
or peer review; and any inquiry or investigation by governmental or professional authorities
respecting any of its audits within the past five years, together with any steps taken to deal
with any such issues.
6) On a regular basis, meet separately with the external auditors to discuss any matters that the
committee or auditors believe should be discussed privately.
Internal Audit
1) Select, monitor, evaluate, compensate, and if necessary, replace the internal audit director.
2) Review with management and the senior internal auditor the charter, scope, responsibilities,
plans, budget, staffing, organizational structure, thefts and defalcations and results of the
internal audit function.
3) The senior internal auditor will regularly attend all audit committee meetings. At least
quarterly, meet separately with the senior internal auditor to discuss any matters that the
committee or internal audit believes should be discussed privately.
Compliance
1) Selecting, monitoring, evaluating, compensating, and if necessary replacing the Corporate
Ombudsman.
2) Advise the Board with respect to the Company’s Guide to Ethical Conduct, and annually
review and assess the adequacy of the Guide to Ethical Conduct and recommend any
proposed changes to the Board. Specifically, the Audit Committee shall discuss with
management, the Company’s senior internal auditor, and the Senior Vice President—
Corporate Governance, their compliance with the Company’s Guide to Ethical Conduct,
including any insider and affiliated party transactions, and the Company’s procedures to
monitor compliance throughout the Company with the Guide to Ethical Conduct.
3) Advise the Board with respect to the Company’s policies and procedures regarding compliance
with applicable law and regulations.
4) Review the effectiveness of procedures for the receipt, retention, resolution and treatment of
complaints received by the Company regarding accounting, internal accounting controls or
auditing matters and for employees to make confidential and anonymous submissions of
concern regarding questionable accounting or auditing matters. This should also include a
review of management follow-up, including disciplinary action, for any actions of
noncompliance.
Internal Controls
1) Meet periodically with management to review the Company’s major financial risk exposures
and the steps management has taken to monitor and control such exposures.
2) Periodically review the adequacy and effectiveness of the Company’s disclosure controls and
procedures and the Company’s internal controls, including any significant deficiencies and
significant changes in internal controls.
2006 Proxy Statement A-3