Circuit City 2002 Annual Report Download - page 44

is recognized that members of the Committee are not full-
time employees of the Company. As such, it is not the duty or
responsibility of the Committee or its members to conduct auditing or accounting reviews or procedures, except to the
extent described below under “Performance Evaluations”. Each member of the Committee shall be entitled to rely on
(i) the integrity of those persons and organizations within and outside the Company from which it receives information
and (ii) the accuracy of the financial and other information provided to the Committee by such persons and
organizations absent actual knowledge to the contrary (which shall be promptly reported to the Company’s Board). In
addition, the evaluation of the Company’s financial statements by the Committee is not of the same scope as, and does
not involve the extent of detail as, audits performed by the independent auditor, nor does the Committee’s evaluation
substitute for the responsibilities of the Company’s management for preparing, or the independent auditor for auditing,
the financial statements.
Committee Duties and Responsibilities
The duties and responsibilities of the Committee are to:
1. Retain and terminate the Company's independent auditors (subject, if applicable, to shareholder
ratification). The Committee shall have the sole authority to approve and/or pre-approve all audit
engagement fees and terms, as well as all significant non-audit engagements with the independent
auditor. The Committee need not pre-approve non-audit services that fall within the "De Minimis
Exception" set forth in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934.
2. At least annually, obtain and review a report by the independent auditor describing: the independent
auditor's internal quality-control procedures; any material issues raised by the most recent internal
quality-control review, or peer review, of the independent auditor, or by any inquiry or investigation
by governmental or professional authorities, within the preceding five years, respecting one or more
independent audits carried out by the independent auditor, and any steps taken to deal with any such
issues; and (to assess the auditor's independence) all relationships between the independent auditor
and the Company. After reviewing the foregoing report and the independent auditor's work
throughout the year, the Committee shall evaluate the auditor's qualifications, performance and
independence. This evaluation shall include the review and evaluation of the lead partner of the
independent auditor and the appropriateness of rotating the audit firm itself. In making its evaluation,
the Committee shall take into account the opinions of management and the Company's internal
auditors (or other personnel responsible for the internal audit function). The Committee shall present
its conclusions with respect to the independent auditor to the full Board.
3. 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."
4. Discuss earnings press releases, as well as financial information and earnings guidance provided to
analysts and rating agencies. This discussion may be done generally (i.e., discussion of the types of
information to be disclosed and the type of presentation to be made). The Committee is not required
to discuss in advance each earnings press release or each instance in which the Company provides
earnings guidance.
5.
As appropriate, obtain advice and assistance from outside legal, accounting or other advisors.
6. Discuss policies with respect to risk assessment and risk management. While it is the job of the chief
executive officer and senior management to assess and manage the Company's exposure to risk, the
Committee must discuss guidelines and policies to govern the process by which this is handled. The
Committee should discuss the Company's major financial risk exposures and the steps management
has taken to monitor and control such exposures.
7. Periodically meet separately with management, with internal auditors (or other personnel responsible
for the internal audit function), and with independent auditors.
8. Review with the independent auditor 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