Quest Diagnostics 2004 Annual Report Download - page 30

•Performance of the Internal Audit Function and Independent Auditor
(a) Meet with the internal auditor, independent auditor and financial management to review
the scope, planning and staffing of the proposed audit for the current year and, at the
conclusion thereof, review such audit, including any comments or recommendations of the
independent auditor and inquire about whether any undue time pressures were placed on
the independent auditor.
(b) Review the organization, responsibilities, plans, results, budget and staffing of the internal
audit function, including the independence and authority of its reporting obligations, the
proposed audit plans for the coming year and the summary of findings from completed
and in progress internal audits.
(c) Review and concur in the appointment, replacement, reassignment or dismissal of the
Director of Internal Audit and advise the Director of Internal Audit that he or she is
expected to provide to the Committee summaries of and, as appropriate, the significant
reports to management prepared by the internal auditing department and management’s
responses thereto.
(d) Take into account the opinions of management and the Company’s internal auditors in
assessing the independent auditor’s qualifications, performance and independence.
(e) Review and discuss with the independent auditor, internal auditors and financial
management, the quality, adequacy and effectiveness of the Company’s internal controls
and any significant deficiencies or material weaknesses in the design or operation of such
internal controls and elicit any recommendations for the improvement of such internal
controls.
(f) Review the Company’s policies with respect to risk assessment and risk management.
•Financial Statements, Accounting Principles and Related Disclosures
(a) Review and discuss the annual audited financial statements and quarterly financial
statements with management and the independent auditor, including the Company’s
disclosures under “Management’s Discussion and Analysis of Financial Condition and
Results of Operations’’ before the filing of the Company’s Form 10-K and Form 10-Q.
(b) Review and discuss with management earnings press releases before they are issued and
the types of financial information and earnings guidance provided to analysts and rating
agencies.
(c) Review in a timely manner with the independent auditor: (1) all critical accounting
policies and practices used by the Company in preparing its financial statements, (2) all
alternative treatments of financial information within United States generally accepted
accounting principles that have been discussed with management, ramifications of the use
of these alternative disclosures and treatments, and the treatment preferred by the
independent auditor, and (3) other material communications between the independent
auditor and management, such as any “management’’ letter or schedule of unadjusted
differences. In addition, the Committee shall review with the independent auditor any
audit problems or difficulties and management’s response.
(d) Review with management, and any outside professionals as the Committee considers
appropriate, the adequacy and effectiveness of the Company’s disclosure controls and
procedures, and elicit any recommendations for the improvement of such controls and
procedures.
(e) Review with management, and any outside professionals as the Committee considers
appropriate, important trends and developments in financial reporting practices and
requirements and their effect on the Company’s financial statements.
(f) Prepare the Committee’s report required by the Securities and Exchange Commission to
be included in the Company’s annual proxy statement.
(g) Consider any reports or communications (and management’s and/or the internal audit
department’s responses thereto) submitted to the Committee by the independent auditors
28 ?Quest Diagnostics Incorporated ?2004 Proxy Statement