By Doris West,2014-05-15 22:05
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    (Amended and Restated)

    As Approved by the Board of Directors on April 27, 2007 Organization

     There shall be a committee of the Board of Directors of CTI Industries

    Corporation (the “Company”) to be known as the Audit Committee. This charter

    (“Charter”) shall govern the organization and operation of the Audit Committee.


    The purpose of the Audit Committee established pursuant to this Charter is to

    perform general oversight of the accounting and financial reporting processes of the

    Company, including its subsidiaries, and the audits of the financial statements of the

    Company. The Audit Committee shall assist the Board of Directors of the Company in

    fulfilling its oversight responsibilities relating to (a) the quality and integrity of the

    Company's fmancial information provided to shareholders and others, (b) the

    Company's internal control systems and disclosure controls established by

    management and the Board, ( c) the audit process and (d) the qualifications,

    independence and performance of any registered public accounting firm engaged for

    the purpose of preparing or issuing an audit report or performing other audit, review or

    attest services for the Company ("independent auditors").

    In addition, the Audit Committee shall have the authority to undertake the

    specific duties and responsibilities listed below and the authority to undertake such

    other specific duties as the Board of Directors from time to time may prescribe.


    The Audit Committee of the Board of Directors shall consist of at least three (3)

    members of the Board of Directors. The members of the Audit Committee shall be

    appointed by, and serve at the discretion of, the Board of Directors. Each member of

    the Committee shall meet the independence, financial literacy and other requirements

    of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the listing

    standards of The Nasdaq Stock Market, Inc. ("Nasdaq") and related rules and

    regulations. At least one member of the Committee shall qualify as an audit committee

    financial expert within the meaning of the Exchange Act and the rules and regulations

    adopted thereunder.

    Responsibility With Respect to Independent Auditors

    The Audit Committee shall have the ultimate responsibility for the

    appointment, compensation, retention and oversight of the work of the Company's


independent auditors. The Audit Committee shall have the authority and

    responsibility to select, evaluate, approve the compensation of and, where

    appropriate, replace the independent auditors. The Audit Committee has the sole

    responsibility for executing engagement letters with external auditors. The Audit

    Committee shall communicate to management and the auditors that (i) they shall

    work together and cooperate with regard to financial reporting, (ii) maintain an open

    communication among each of the Audit Committee, management and the auditors

    and (iii) be responsive each to the other in the performance of their duties and

    services to the Company. The Audit Committee shall assure open communication to

    management, and with the independent auditor, including any and all

    communications of the independent auditor to the Audit Committee related to

    management performance.

    Additional Specific Responsibilities

    In addition to, and in furtherance of, the foregoing responsibilities, the

    Committee shall:

? Review on a periodic basis the adequacy of the Company's system of internal

    controls, policies and procedures and approve the Company's policies relating

    to internal controls and protection of assets;

    ? Take appropriate action to oversee the independence of the independent

    auditors, including a review and approval of their audit and non-audit fees. The

    Audit Committee shall obtain from the independent auditors a formal written

    statement delineating all relationships between such auditors and the Company,

    consistent with Independence Standards Board Standard 1, and shall actively

    engage in a dialogue with such auditors with respect to any disclosed

    relationships or services that may impact the objectivity and independence of

    the independent auditors.

     Review with the independent auditors the following:

    a) The annual audit scope and audit testing plan;

    b) The Company's annual audited financial statements and quarterly

    financial statements, including the results of any audit or review of

    those financial statements, including a post-audit review of the audit

    findings (including any significant suggestions for improvements

    provided to management by the independent auditors), the form and

    content of the Company's financial statements and disclosures and the

    required communications from the independent auditors under

    generally accepted auditing standards and any applicable Securities and

    Exchange Commission ("SEC") regulations;

    c) The Company's Annual Reports on Form 10-K, Quarterly Reports on

    Form 10-Q, and the disclosures in management's discussion and

    analysis of the Company's financial condition and results of operations

    therein; quarterly and annual earnings press releases and information

    prepared by the Company for its regular public conference telephone


    calls concerning its earnings and results of operations in the context of

    information provided to the Audit Committee and the Board;

    d) The independent auditors' comments, reports or attestations on the

    adequacy of the Company's internal controls and significant findings

    and recommendations or issues resulting from the audit or review

    thereof and management's response;

    e) Matters related to the conduct of the audit that are required to be

    communicated to the Audit Committee under generally accepted

    auditing standards;

    f) Accounting considerations arising from changes in generally accepted

    accounting principles ("GAAP"), matters related to changes in

    accounting principles and financial statement presentation or the

    Company's operations;

    g) The performance and qualifications of the Company's financial


    h) Any material disagreements that may arise between the

    Company's management and its independent auditors;

    i) All critical accounting policies and practices to be used by the Company;

    all alternative treatments of financial information within GAAP that

    have been discussed by the independent auditors with management,

    ramifications of the use of such alternative treatments and the treatment

    preferred by the independent auditors; other material written

    communications between the independent auditors and the Company's

    management, such as any management letter or schedule of unadjusted

    differences; and any analyses of the independent auditors' judgment as

    to the quality of the Company's accounting principles, including

    significant reporting issues and judgments made in connection with the

    preparation of the financial statements; and

    j) The independent auditors' judgments as to the quality, not just the

    acceptability, of the Company's accounting principles and such matters

    as are required to be discussed with the Committee under generally

    accepted auditing standards.

    ? Recommend to the Board whether the Company's annual financial

    statements should be included in the Annual Report on Form 10-K.

    ? Conduct or authorize investigations into any matters within the Audit

    Committee's scope of responsibilities. The Audit Committee may retain

    independent counsel, accountants or others to assist in the conduct of any

    such investigation, without approval being required by the Board or


    ? Establish and implement policies and procedures for pre-approval of all


    services provided by the Company's independent auditors, including both audit

    and permissible non-audit services, and disclose all non-audit services

    authorized by the Audit Committee as required by applicable regulations. The

    following categories of services for the Company may not be performed by the

    Company's independent auditors under any circumstances (whether or not pre-

    approved by the audit committee) contemporaneously with any audit by such

    independent auditors. These services include: (i) bookkeeping; (ii) financial

    information systems design and implementation; (iii) appraisal or valuation

    services, (iv) fairness opinions, or contribution-in-kind reports; (v) actuarial

    services; (vi) internal audit outsourcing services; (vii) management or human

    resources services; (viii) broker or dealer, investment adviser or investment

    banking services; and (ix) legal services and expert services unrelated to the


    ? Obtain at least annually and review a report by the independent auditors

    describing the independent auditors' internal quality control procedures, any

    material issues raised by the most recent internal quality review or peer review

    of the independent auditors or by any inquiry or investigation by governmental

    or professional authorities within the preceding five years respecting one or

    more independent audits conducted by the independent auditors and any steps

    taken by the independent auditors to deal with any such issues ? Review and approve all "related party" transactions as required to be

    disclosed pursuant to Item 404 of Regulation S-K and as otherwise defined

    by the Audit Committee.

    ? Review the Audit Committee Report to be included in the Company's

    Proxy Statement.

    ? Provide a forum for the independent auditors to meet in closed session with

    the Committee; provided that the substance of any material communication

    relating to management at any such session shall be communicated to and

    reviewed with management.

    ? Review with senior management and the independent auditors the

    Company's accounting and financial personnel resources; ? Review, and oversee the resolution of, any disagreement between

    management and the independent auditors and, if appropriate, making

    recommendations with respect thereto to the Board;

    ? Establish procedures for receipt, retention and treatment of complaints

    about accounting, internal control or auditing matters, including procedures

    for the confidential, anonymous submission of employee concerns about

    questionable accounting, material control or auditing matters; discuss and

    evaluate any complaints or concerns received, and authorize such responses

    and follow-up actions, if any, as it deems necessary and appropriate. ? Perform such other duties as the Board of Directors may delegate to it, or as


    the Audit Committee may deem necessary or advisable in order to perform

    its responsibilities under this Charter or rules and regulations applicable to

    the Company's Audit Committee.


    The Audit Committee will meet at least four times each year at the call of the Audit Committee Chair. However, the Audit Committee may establish its own

    schedule. Each meeting shall include an executive session at which no member of

    management of the Company is present.

    The Audit Committee shall meet separately with the Chief Executive Officer and separately with the Chief Financial Officer of the Company at least annually to

    review the financial affairs of the Company. The Audit Committee shall meet with the

    independent auditors of the Company, at such times as it deems appropriate, to review

    the independent auditors' examination and management report.

    The Audit Committee is authorized, by majority vote or unanimous written consent of its members, to adopt its own rules of procedure, including the formalities

    of calling, noticing and holding meetings and for the taking of action of the Audit

    Committee by vote at any such meeting or by unanimous written consent of the

    members thereof. Unless and until any such procedures are formally adopted by the

    Audit Committee, the procedures with respect to calling, noticing and holding

    meetings of the Audit Committee and conducting business of the Audit Committee

    shall be the same as those provided in the By-laws of the Company with respect to

    calling, noticing and holding meetings of and taking action by the Board.


    The Audit Committee may present its reports or recommendations to the Board in written or oral form. The Audit Committee's recommendations shall be incorporated

    as a part of the minutes of the Board meeting at which those recommendations are



    The Audit Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board.


    The Audit Committee, in its sole discretion, shall have the authority, as and when it shall determine to be necessary or appropriate to the functions of the Audit


    ? At the Company's expense and not at the expense of the members thereof, to

    retain independent counsel (which may be, but need not be, the regular

    corporate counsel to the Company) and other advisors to assist it in connection


    with its functions;

    ? At the Company's expense and not at the expense of the members thereof, to

    incur ordinary administrative expenses that are necessary or appropriate in

    carrying out its duties; and

    ? To request, and to rely upon, advice, orally or in writing, from the Chief

    Executive Officer and the Chief Financial Officer of the Company and from

    any representative of the independent auditors to the Company participating

    in such independent auditors' engagement by the Company, concerning

    aspects of the operation or financial condition of the Company relevant to the

    functions of the Audit Committee.

    The officers of the Company are requested to cooperate with the Audit Committee and to render assistance to it as it shall request in carrying out its functions.

    Limitation of Audit Committee Responsibility

    In adopting this Charter, the Board acknowledges that it is not the responsibility of the Audit Committee to prepare the Company's financial statements,

    plan or conduct audits of those financial statements, or determine whether those

    financial statements are complete and accurate and conform to GAAP and applicable

    rules and regulations. These tasks are the responsibility of management and the

    Company's independent auditors.


    To the extent consistent with law and the listing standards of NASDAQ, the Audit Committee may delegate any of its responsibilities to a subcommittee comprised

    of one or more members of the Audit Committee. Delegation of such responsibilities

    shall not relieve the Audit Committee from its responsibilities for ensuring the faithful

    performance of its duties.

    Annual Reviews

    The Audit Committee will review and reassess the adequacy of this Charter on at least an annual basis and will report to the Board the results of such review and

    reassessment. At least annually, the Audit Committee will conduct an evaluation of its

    performance to determine whether it is functioning effectively.


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