 |
EXHIBIT A
EAGLE BANCORP
AUDIT COMMITTEE CHARTER
The Board of Directors of Eagle Bancorp ("Eagle") shall annually
designate an Audit Committee, which shall be composed of at least
three directors, all of whom have no relationship to Eagle or
its subsidiaries that may interfere with the exercise of their
independence from management and Eagle or its subsidiaries. In
determining the independence of members of the Audit Committee,
the Board shall meet current standards of independence established
for service on the Audit Committee by applicable law, including
the laws and regulations of the Securities Exchange Commission,
Federal Deposit Insurance Corporation ("FDIC") and the Office
of Thrift Supervision and other applicable laws and regulations.
Each member of the Audit Committee shall be financially literate,
as such qualification is interpreted by the Board of Directors
in its business judgment, or must become financially literate
within a reasonable period of time after his or her appointment
to the Audit Committee.
At least one member of the Audit Committee must have accounting
or related financial management expertise, as the Board of Directors
interprets such qualification in its business judgment.
Statement of Policy
The primary function of the Audit Committee is to provide assistance
to the Board of Directors in fulfilling its responsibility to
Eagle and its shareholders relating to (i) its oversight of management
and its auditors in respect of corporate accounting, financial
reporting practices, and the quality and integrity of the financial
reports of Eagle, (ii) the compliance of Eagle with legal and
regulatory requirements, (iii) the independent auditors qualifications
and independence, and (iv) the performance of Eagle's internal
audit function and independent accountants and performance of
the other duties of the Audit Committee specified by federal securities
laws and regulations, applicable banking regulations, or the listing
standards of The Nasdaq Stock Market, Inc. OTC Bulletin Board
or other securities exchange or market on which Eagle's securities
are listed or eligible for trading (as applicable, the "Listing
Standards").
It is not the role of the Audit Committee to guarantee the accuracy
or quality of Eagle's financial statements but to oversee the
work of management, the independent auditors and internal auditors.
The Audit Committee does not have responsibility for planning
or conducting the audit of Eagle or for determining that the financial
statements are complete and accurate and are in accordance with
generally accepted accounting principles. Those are responsibilities
of management and the independent accountants, rather than the
Audit Committee. The Audit Committee also is not responsible for
ensuring compliance with laws or regulations. In so doing, it
is the responsibility of the Audit Committee to maintain open
communication between the directors, the independent auditors,
the internal auditors, and the financial management of Eagle.
The outside auditor for Eagle is ultimately accountable to the
Board of Directors and Audit Committee of Eagle. The Audit Committee
and Board of Directors have the ultimate authority and responsibility
to select, evaluate and, where appropriate, replace the outside
auditor (or to nominate the outside auditor to be proposed for
shareholder approval in any proxy statement).
The Audit Committee is responsible for obtaining from the outside
auditor on a periodic basis a formal written statement delineating
all relationships between the auditor and Eagle and its subsidiaries.
The Audit Committee shall be responsible for conferring with the
outside auditor with respect to any disclosed relationships or
services that may affect the objectivity and independence of the
outside auditor and for recommending to the Board of Directors
such appropriate action as may be necessary to satisfy itself
as to the independence of the outside auditor.
Responsibilities
In carrying out its responsibilities, the Audit Committee policies
and procedures should remain flexible in order to best react to
changing conditions and to oversee management's implementation
of prudent corporate accounting and reporting policies.
In carrying out these responsibilities, the Audit Committee will:
General Responsibilities:
-
The Audit Committee will meet at least four
times each year or more frequently when and if required as circumstances
dictate. An Audit Committee member should not vote on any matter
in which he or she is not independent. The Audit Committee may
ask members of management or others to attend a particular meeting
and is authorized to receive all pertinent information from
management.
-
The Audit Committee shall establish procedures
for the (a) receipt, retention and treatment of complaints received
by Eagle regarding accounting, internal accounting controls
or auditing matters and (b) confidential, anonymous submission
by Eagle's employees of concerns regarding questionable accounting
or auditing matters.
-
The Audit Committee shall regularly report
on its activities to the Board and shall provide the Board of
Directors with such information as the Board of Directors may
request, and shall make such recommendations as the Audit Committee
shall deem appropriate.
-
The Audit Committee shall fulfill such other
duties and responsibilities as are required by applicable law,
the regulations of the Securities and Exchange Commission, or
the Listing Standards, and as assigned to the Audit Committee
from time to time by the Board of Directors.
- Review and recommend to the directors the independent auditors
to be selected to audit the financial statements of Eagle and
its divisions and subsidiaries, including American Federal Savings
Bank.
Responsibilities for Audits and Review of Quarterly and Annual
Financial Statements:
- The Audit Committee will have sufficient contact with the independent
accountant and the independent auditors will be required to treat
the relationship with the Audit Committee such that it will be
able to fulfill its obligations and be available to the full Board
of Directors at least annually and that it will provide the Audit
Committee with a timely analysis of significant financial reporting
issues.
- The Audit Committee will discuss with management, the internal
auditor and the independent accountant significant risks and exposures
and will assess management's steps to minimize them.
- Meet with the independent auditors and financial management
of Eagle to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations
of the independent auditors.
- Obtain from the independent auditors a written statement detailing
all relationships between the auditors and Eagle, discuss any
such relationships with the auditors, and recommend appropriate
action to satisfy itself as to the auditors' independence.
- Review the internal audit function of Eagle including the independence
and authority of its reporting obligations, the proposed audit
plans for the coming year, and the coordination of such plans
with the independent auditors.
- Review all examiner's reports, and correspondence thereto including
responses of Eagle.
- Receive prior to or at each meeting a summary of findings from
completed internal audits and a progress report on the proposed
internal audit plan, as appropriate, with explanations for changes
from the original plan.
- Review with management and the independent auditors the financial
statements contained in the annual report to shareholders to determine
that the independent auditors are satisfied with the disclosure
and content of the financial statements to be presented to the
shareholders. Changes in accounting principles also should be
reviewed.
- Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the Audit Committee without
members of management present. Among the items to be discussed
in these meetings are the independent auditors' evaluation of
Eagle financial, accounting, and auditing personnel, and the cooperation
that the independent auditors receive during the course of the
audit.
- The Audit Committee shall be solely responsible for determining
and approving fees and other terms for engagements, including
budget and staffing of the internal audit services function.
- Notwithstanding the foregoing, the Audit Committee shall not
approve any non-audit service engagement where the provision of
such service by the independent accountants is prohibited by applicable
law, the regulations of the Securities Exchange Commission or
the Listing Standards, and the independent auditor shall not provide
any such prohibited service.
- Notwithstanding the foregoing, pre-approval is not required
with respect to the provision of non-audit services if: (a) the
aggregate amount of all such non-audit services provided to Eagle
constitutes not more than five percent of the total amount of
revenues paid by Eagle to its independent auditors during the
fiscal year in which the non-audit services are provided; (b)
such services were not recognized by Eagle at the time of the
engagement to be non-audit services; and (c) the non-audit services
are promptly brought to the attention of the Audit Committee and
approved by the Audit Committee, or by one or more members of
the Audit Committee to whom authority to grant such approval has
been delegated, prior to the completion of the audit.
- The Audit Committee will review the following with the independent
accountant, the internal auditor and management:
a. The adequacy of Eagle's internal controls, including computerized
information system controls and security; and the resolution
of identified material weaknesses and reportable conditions
in internal controls;
b. Any fraud that involves management or other employees who
have a significant role in Eagle's internal controls;
c. Any significant findings and recommendations made by the
independent accountant or internal auditing, together with management's
responses to them;
d. All critical accounting policies and practices and any other
material components of Eagle's financial statements involving
management's judgment or estimates, and about the quality of
accounting principals and the clarity of financial disclosure
practices used or proposed to be used by Eagle;
e. The alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management officials, ramifications of the use thereof,
and the treatment preferred by the independent accountants,
as well as any required or suggested changes in auditing or
accounting practices or principles;
f. Material off-balance sheet transactions, arrangements, obligations
and other relationships of Eagle with unconsolidated entities
or others that may have a material current or future effect
on Eagle's financial condition, changes in financial condition,
results of operations, liquidity, capital expenditures, capital
resources of significant components of revenue or expenses;
g. Any material changes in accounting policies or practices
and the impact thereof on Eagle's financial statements;
h. The annual audited financial statements and quarterly financial
statements, including Eagle's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations";
i. Any report or recommendations of the independent accountants;
j. Anything else about the audit procedures or findings that
GAAP requires the accountants to discuss with the Committee.
k. Disclosures made by the CEO and CFO during the Forms 10-KSB
and 10-QSB certification process about significant deficiencies
in the design or operation of internal controls; and
l. Any difficulties or disputes encountered with management
while conducting audits, including any restrictions on the scope
of their work or access to required information.
- The Audit Committee will review annual filings with the SEC
and other published documents containing Eagle's financial statements
and will consider whether the information in the filings is consistent
with the information in the financial statements. The Audit Committee
shall discuss earnings press releases (particularly use of "pro
forma," or "adjusted" non-GAAP information). Such matters may
be discussed generally (e.g., types of information and presentations)
and need not include specific releases or guidance.
- The Audit Committee will determine that the quarterly financial
statements have been reviewed by the independent accountants in
accordance with SAS 100 before those interim statements are released
to the public or filed with the Securities Exchange Commission.
- The Audit Committee shall prepare, or cause to be prepared
by management, a report for inclusion in the proxy statement that
describes the Committee's composition and responsibilities, and
how they were discharged, including a statement regarding their
review and discussion of the annual financial statements, review
of the independence of the independent accountants, and discussions
with the independent accountants, and a statement that based on
the foregoing, the Committee recommended that the annual financial
statements be included in Eagle's annual report on Form 10-KSB.
Ongoing Responsibilities:
- The Audit Committee shall conduct an appropriate review of all
related party transactions for potential conflicts of interest
and all such transactions shall be approved by the Committee to
the extent required by applicable law.
- In performing its duties hereunder, the Audit Committee shall
have the authority to conduct or authorize investigations, to
retain and terminate such outside legal, accounting or other advisors
as it shall deem necessary, without seeking further approval of
the Board of Directors, and Eagle shall provide for appropriate
funding therefore. The Committee may utilize, consult with and
engage the members and resources of the Audit Committee in the
discharge of its duties.
- Review legal and regulatory matters that may have a material
effect on Eagle's financial statements, compliance policies and
programs and reports from regulators.
- The Audit Committee shall review and assess at least annually
its performance, and the adequacy of this Charter in light of
applicable law and regulations.
- The Audit Committee shall discuss Eagle's policies with respect
to risk assessment and risk management, including legal and ethical
compliance programs.
- Review the matters discussed at each committee meeting with
the Board of Directors.
- Investigate any matter brought to its attention within the scope
of its duties to the extent and in such manner as it considers
appropriate.
|
|
