Baker Hughes 2007 Annual Report Download - page 66

B-3 Baker Hughes Incorporated
to be discussed by the Statement on Auditing Standards
No. 114; (iii) received a formal written report from the inde-
pendent registered public accounting firm concerning the
auditors’ independence required by Independent Standards
No. 1 and has discussed with the independent accountant
the independent accountant’s independence; and (iv) based
upon the review and discussion of the audited financial
statements with both management and the independent
registered public accounting firm, the Committee recom-
mended to the Board of Directors that the audited financial
statements be included in the Company’s Annual Report on
Form 10-K for the last fiscal year for filing with the SEC.
•฀ Cause฀the฀Charter฀to฀be฀included฀periodically฀in฀the฀proxy฀
statement as required by applicable rules.
•฀ Review฀actions฀taken฀by฀management฀on฀the฀independent฀
registered public accounting firm and corporate auditors’
recommendations relating to organization, internal controls
and operations.
•฀ Meet฀separately฀and฀periodically฀with฀management,฀the฀
corporate auditors and the independent registered public
accounting firm to review the responsibilities, budget
and staffing of the Company’s internal audit function, the
effectiveness of the Company’s internal controls, including
computerized information systems controls, and security.
Review the Company’s annual internal audit plan, staffing
and budget, and receive regular reports on their activities,
including significant findings and management’s actions.
Review annually the audit of the travel and entertainment
expenses of the Company’s senior management. Review
annually the audit of the travel expenses of the members
of the Company’s Board of Directors. At least every three
years the Committee reviews the Corporate Audit Depart-
ment Charter. At least every five years the Committee
reviews the report received from a qualified, independent
audit firm regarding its quality assurance review of the
Company’s internal audit function.
•฀ Review฀membership฀of฀the฀Company’s฀“Disclosure฀Control฀
and Internal Control Committee” (“DCIC”), the DCIC’s
scheduled activities and the DCIC’s quarterly report. Review
on an annual basis the DCIC Charter.
•฀ Receive฀reports฀from฀the฀CEO฀and฀CFO฀on฀any฀material฀
weaknesses and significant deficiencies in the design or
operation of certain internal controls over financial reporting
and any fraud, whether or not material, that involves man-
agement or other employees who have a significant role in
the Company’s internal controls.
•฀ Review฀reports,฀media฀coverage฀and฀similar฀public฀informa-
tion provided to analysts and rating agencies, as the Com-
mittee deems appropriate.
•฀ Establish฀formal฀procedures฀for฀(i)฀the฀receipt,฀retention฀and฀
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters,
(ii) the confidential, anonymous submissions by Company
employees of concerns regarding questionable accounting
or auditing matters, and (iii) the protection of reporting
employees from retaliation.
•฀ Annually฀review฀with฀the฀independent฀registered฀public฀
accounting firm any audit problems or difficulties and
management’s response. The Committee must regularly
review with the independent auditor any difficulties the
auditor encountered in the course of the audit work,
including any restrictions on the scope of the independent
registered public accounting firm’ activities or on access to
requested information, and any significant disagreements
with management. Among the items the Committee may
want to review with the auditors are: any accounting adjust-
ments that were noted or proposed by the auditor but were
“passed” (as immaterial or otherwise); any communications
between the audit team and the audit firm’s national office
respecting auditing or accounting issues presented by the
engagement; and any “management” or “internal control”
letter issued, or proposed to be issued, by the audit firm to
the Company.
•฀ With฀regard฀to฀its฀compliance฀responsibilities,฀the฀Commit-
tee shall:
•฀ Review฀policies฀and฀procedures฀that฀the฀Company฀has฀
implemented regarding compliance with applicable federal,
state and local laws and regulations, including the Company’s
Business Code of Conduct and its Foreign Corrupt Practices
Act policies. Monitor the effectiveness of these policies and
procedures for compliance with the U.S. Federal Sentencing
Guidelines, as amended, and institute any changes or revi-
sions to such policies and procedures may be deemed, war-
ranted or necessary.
•฀ Review฀in฀conjunction฀with฀counsel฀(i)฀any฀legal฀matters฀
that could have significant impact on the organization’s
financial statements; (ii) correspondence and material inqui-
ries received from regulators or governmental agencies; and
(iii) all matters relating to the ethics of the Company and
its subsidiaries.
•฀ Coordinate฀the฀Company’s฀compliance฀with฀inquiries฀from฀
any government officials concerning legal compliance in
the areas covered by the Business Code of Conduct and
the Foreign Corrupt Practices Act policy.
•฀ Review฀the฀Company’s฀compliance฀with฀its฀environmental฀
policy on an annual basis.
•฀ Respond฀to฀such฀other฀duties฀as฀may฀be฀assigned฀to฀the฀
Committee, from time to time, by the Board of Directors.
•฀ While฀the฀Committee฀has฀the฀responsibilities฀and฀powers฀
set forth in this Charter, it is not the duty of the Committee
to plan or conduct audits; those are the responsibilities of
the independent registered public accounting firm. Further,
it is not the Committee’s responsibility to determine that the
Company’s financial statements are complete and accurate
and are in accordance with generally accepted accounting
principles; those are the responsibilities of management. Nor
is it the duty of the Committee to conduct investigations, to
resolve disagreements, if any, between management and
the independent auditor or to assure compliance with laws
and regulations or with Company policies.