Quest Diagnostics 2004 Annual Report Download - page 22

compensation policies and as determined to be in the best interests of Quest Diagnostics and its
stockholders.
THE COMPENSATION COMMITTEE:
William F. Buehler, Chairman
Kenneth D. Brody
John B. Ziegler
Report of the Audit and Finance Committee
The primary purpose of the Audit and Finance Committee of the Board of Directors is (1)
to assist in the Board’s oversight of (a) the quality and integrity of the Company’s financial
statements and related disclosure, (b) the Company’s compliance with legal and regulatory
requirements, (c) the independent auditor’s qualifications and independence, and (d) the
performance of the Company’s internal audit function and independent auditor, and (2) to
provide advice to the Board on financing activities and other financial matters.
The Audit and Finance Committee meets with management periodically to consider the
adequacy of Quest Diagnostics’ internal controls and the objectivity of its financial reporting.
The Committee also regularly meets privately with the Quest Diagnostics’ independent auditor
and with the appropriate Quest Diagnostics personnel and internal auditors to discuss these
matters. The Company’s internal auditors and independent auditor each have unrestricted access
to the Committee. In addition, as part of the Committee’s finance activities, the Committee
reviews Quest Diagnostics’ financing plans and other significant financial policies and actions,
and makes recommendations to the full Board of Directors for approval of certain actions. The
Committee also appoints the independent auditor and periodically reviews their performance
and independence from management and pre-approves all audit and non-audit services, if any,
provided by the independent auditor.
The Board of Directors has adopted a written charter setting out the functions the
Committee is to perform, a copy of which is attached as Appendix A to this proxy statement.
Quest Diagnostics management has primary responsibility for Quest Diagnostics’ financial
statements and the overall reporting process, including Quest Diagnostics’ system of internal
controls.
The independent auditors audit the annual financial statements prepared by management,
express an opinion as to whether those financial statements fairly present the financial position,
results of operations and cash flows of Quest Diagnostics in conformity with accounting
principles generally accepted in the United States of America and discuss with the Committee
any issues they believe should be raised.
In the performance of its oversight role, the Committee reviewed Quest Diagnostics’ audited
financial statements and met with both management and PricewaterhouseCoopers LLP, the
independent auditor, to discuss those financial statements. The members of the Committee are
not full-time employees of Quest Diagnostics and are not, and do not represent to be,
performing the functions of auditors or accountants. Management has represented to the
Committee that the financial statements were prepared in accordance with generally accepted
accounting principles.
The Committee has received from and discussed with PricewaterhouseCoopers LLP the
written disclosure and the letter required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). These items relate to that firm’s
independence from Quest Diagnostics. In addition, the Committee reviewed all services provided
by PricewaterhouseCoopers LLP to Quest Diagnostics, and the corresponding fees, in considering
whether non-audit services were compatible with maintaining PricewaterhouseCoopers’
independence from Quest Diagnostics. The Committee also discussed with
20 ?Quest Diagnostics Incorporated ?2004 Proxy Statement