Baker Hughes 2009 Annual Report Download - page 70

60 Baker Hughes Incorporated
With regard to its audit responsibilities, the Committee shall:
• Receive and review reports from the independent registered
public accounting firm pursuant to the Sarbanes-Oxley Act
of 2002 (“SOX”) and Section 10(A)(k) of the Exchange Act
regarding: (i) all critical accounting policies and practices
being used; (ii) all alternative treatments of financial infor-
mation within generally accepted accounting principles that
have been discussed with management, and the treatment
preferred by the independent registered public accounting
firm; and (iii) other material written communications
between the independent auditor and management,
such as any management letter or schedule of unrecorded
audit adjustments.
• On an annual basis, receive and review formal written
reports from the independent registered public accounting
firm regarding the auditors’ independence required by the
Public Company Accounting Oversight Board (“PCAOB”)
Ethics and Independence Rule 3526 “Communication with
Audit Committees Concerning Independence”, giving con-
sideration to the range of audit and non-audit services per-
formed by them and all their relationships with the Company,
as well as a report describing the (i) independent registered
public accounting firm’s internal quality-control procedures;
(ii) any material issues raised by the most recent internal
quality-control review or peer review of the independent
registered public accounting firm, or by any inquiry or inves-
tigation by governmental or professional authorities within
the preceding five years with respect to one or more inde-
pendent audits carried out by the auditors; and (iii) any
steps taken to deal with such issues. Conduct an active dis-
cussion with the independent registered public accounting
firm with respect to any disclosed relationships or services
that may impact the objectivity and independence of the
auditors. Select the independent registered public account-
ing firm to be employed or discharged by the Company.
Review and evaluate competence of partners and managers
of the independent registered public accounting firm who
lead the audit. As required by law, ensure the rotation of
the lead audit partner having primary responsibility for
the Company’s audit and the audit partner responsible for
reviewing the audit. Consider whether there should be a
rotation of the independent registered public accounting
firm. The Committee shall establish hiring policies for the
Company of employees or former employees of the inde-
pendent registered public accounting firm in accordance
with the NYSE rules, SOX and as specified by the SEC and
review and discuss with management and the independent
registered public accounting firm any proposals for hiring
any key member of the independent registered public
accounting firm’s team.
• Prior to commencement of the annual audit, review with
management, the corporate auditors and the independent
registered public accounting firm the proposed scope of the
audit plan and fees, including the areas of business to be
examined, the personnel to be assigned to the audit, the
procedures to be followed, special areas to be investigated,
as well as the program for integration of the independent
and internal audit efforts.
• Review policies and procedures for the engagement of the
independent registered public accounting firm to provide
audit and non-audit services, giving due consideration to
whether the independent auditor’s performance of non-
audit services is compatible with the auditor’s independence
and review and pre-approve all audit and non-audit fees for
such services, subject to the de minimus exception under
SOX. With the exception of the annual audit, the Committee
may delegate to a member of the Committee the authority
to pre-approve all audit and non-audit services with any
such decision presented to the full Committee at the next
scheduled meeting.
• Review with management and independent registered pub-
lic accounting firm the accounting and reporting policies
and procedures that may be viewed as critical accounting
estimates, any improvements, questions of choice and mate-
rial changes in accounting policies and procedures, including
interim accounting, as well as significant accounting, audit-
ing and SEC pronouncements.
• Review with management and the independent registered
public accounting firm any financial reporting and disclosure
issues, including material correcting adjustments and off-
balance sheet financings and relationships, if any. Discuss
significant judgment matters made in connection with the
preparation of the Company’s financial statements and
ascertain that any significant disagreements among them
have been satisfactorily resolved. Ascertain that no restrictions
were placed by management on implementation of the
independent or corporate auditors’ examinations. Regularly
scheduled executive sessions will be held for this purpose.
• Review with management, the corporate auditors and the
independent registered public accounting firm the results of
(i) the annual audit prior to release of the audited financial
statements in the Company’s annual report on Form 10-K
filed with the SEC, including a review of the MD&A section;
and (ii) the quarterly financial statements prior to release
in the Company’s quarterly report on Form 10-Q filed with
the SEC, including a review of the MD&A section. Have
management review the Company’s financial results with
the Board of Directors.
• Review and discuss with management and the independent
registered public accounting firm management’s report on
internal control prior to the filing of the Company’s annual
report on Form 10-K.
• Establish guidelines with respect to earnings releases and
financial information and earnings guidance provided to
analysts and rating agencies. The Committee may request
a prior review of any annual or quarterly earnings release
or earnings guidance and delegate to the Chairman of
the Committee the authority to review any such earnings
releases and guidance.
• Review with the Board of Directors any issues that arise with
respect to the quality or integrity of the Company’s financial
statements and financial reporting system, the Company’s
compliance with legal or regulatory requirements, the per-
formance and independence of the Company’s independent
registered public accounting firm or the performance of the
internal audit function.