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SCRIPSAMERICA, INC.

 

AUDIT COMMITTEE CHARTER

 

The Audit Committee of the Board of Directors of ScripsAmerica, Inc. (the “Company”) shall be organized and have the oversight responsibility, purposes, authority and specific duties as set forth below.

 

Audit Committee Membership and Qualifications

 

The Audit Committee shall consist of at last three (3) members appointed by the Company’s Board of Directors from among its members; Provided, however, that no “affiliate” of the Company shall be a member.  In addition, provided that director members are a majority, non-directors may be appointed, e.g., for the purpose of securing financial expertise.  The Chairman of the Audit Committee shall be a member of the Board of Directors and shall have accounting or related financial management expertise. The Board may replace members of the Audit Committee at any time, for any reason, in its sole discretion.

 

At such time as the Company may become subject to rules regarding the independence and experience requirements for members of the Audit Committee (e.g., the rules of the New York Stock Exchange), as such requirements are interpreted by the Board of Directors in its business judgment, the membership of the Audit Committee shall meet such requirements.

 

Each member of the Audit Committee must be able to read and understand financial statements (including the Company’s balance sheet, income statement and cash flow statement) and otherwise be financially literate, as determined by the Board of Directors in its business judgment, or must be financially literate within a reasonable time after appointment to the Audit Committee.

 

No director member of the Audit Committee shall receive, directly or indirectly, any non-director based compensation; i.e., consulting fee, advisory fee, legal fee, investment banking fee,   or other compensatory fee, but may receive stock, stock options or increased director compensation for Audit Committee service.

 

Purposes of the Audit Committee

 

The Committee is a part of the Board of Directors.  It’s primary function is to assist the Board of Directors in fulfilling its oversight responsibilities.  As such, the Audit Committee’s primary purposes are to:

(a) oversee the accounting and financial reporting processes of the Company and the audit of the Company’ financial statements;

(b) assist the Board of Directors in its oversight of (i) the integrity of the Company’s financial statements to be provided to shareholders and the Securities and Exchange Commission, (ii) the system of internal controls that management has established, and (iii) the audit process;

(c) establish and maintain a pathway for communication between the Company’s financial management, the independent accountants, and the Board of Directors.

 

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles.  Those are the responsibility of the independent auditor and management.  Nor is it the duty of the Audit Committee to set auditor independence standards, to conduct investigations, to resolve disagreements, if any, between management and the independent auditor, or to assure compliance with laws and regulations and the Company’s business conduct guidelines (e.g.,Code of Ethics and Code of Conduct).

 

Meetings of the Audit Committee

 

The Audit Committee shall meet at least four times annually and as many additional times as the Committee deems necessary.  At at least one of such meetings, all members shall be present in person.  Otherwise, attendance can be in person, by teleconference or by video conference, or a combination thereof.  In addition, the Audit Committee may request that members of management, outside legal counsel and representatives of the independent accountants be present at meetings.

 

The Audit Committee shall meet in separate executive sessions with the Chief Executive Officer, the General Counsel, such other members of management as the Audit Committee shall deem appropriate, and representatives of the independent accountants.

 

The Audit Committee shall maintain minutes of its meetings and shall provide regular reports of its activities to the Board of Directors.

 

Authority of the Audit Committee

 

The Audit Committee shall have the authority to retain special legal, accounting or other consultants to advise or inform the Audit Committee.  The Audit Committee may also meet with investment bankers and financial analysts.  The Audit Committee, with the prior approval of the Board of Directors, shall have the authority to investigate any matter or activity involving the financial accounting and financial reporting, as well as the internal controls and procedures of the Company. All employees will be directed to cooperate with respect thereto as requested by members of the Audit Committee.

 

The Audit Committee may, in its discretion, delegate duties and responsibilities to a subcommittee of the Audit Committee.  Any such subcommittee shall maintain minutes of its meetings and shall provide regular reports of its activities to the Audit Committee as a whole.

Each member of the Audit Committee shall be entitled to rely upon the (i) integrity of those persons within and outside the Company from which he or she receives information and (ii) accuracy of the financial and other information provided to the Audit Committee by such person absent actual knowledge to the contrary (which shall be promptly reported to the Board of Directors).

 

Duties and Responsibilities of the Audit Committee

 

To carry out its oversight responsibilities on behalf of the Board of Directors, the Audit Committee shall have the following duties and responsibilities:

 

1.  Advise the Board of Directors with respect to the appointment, compensation, retention and oversight of the Company’s independent auditors, and, in connection therewith, review and evaluate matters potentially affecting the independence and capabilities of the independent auditors;

 

2.  Review and pre-approve all audit and other services to be provided by the independent auditors and all non-audit services to be provided by the independent auditors, including all associated fees and charges;

 

3.  Consider whether the provision of non-audit services by the independent auditors is compatible with the maintenance of their independence;

 

4.  Inquire as to the independence of the independent auditors and obtain from them, at least annually, a formal written statement delineating all relationships between the independent auditors and the Company;

 

5.  Review: (i) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies; (ii) analyses prepared by he Company’s management and/or the independent auditors setting forth significant financial reporting issues and judgements made in connection with the preparation of the financial statements; and (iii) the effect of regulatory and accounting initiatives on the financial statements of the Company;

 

6. Prior to the commencement of the annual audit, meet with the independent auditors, CFO, and other related personnel to review the audit scope and plan of the audit and address the coordination of audit efforts to assure the effective use of audit resources;

 

7.  Review: (i) the annual audited financial statements with management and the independent auditor, including significant issues and judgments regarding accounting and auditing principles as well as the effect of off-balance sheet structures on the Company’s financial statements; (ii) the adequacy of internal controls that could significantly affect the Company’s financial statements;

 

8.  At the conclusion of the annual audit, review with management and the independent auditors the financial statements and the related footnotes and financial information to be included in the Company’s annual report to shareholders and on Form 10-K, including a report on changes during the year in accounting principles and their application;

 

9.  Prior to each quarterly report on Form 10-Q, review with the independent auditors the financial information to be included in such report;

 

10.  Discuss with the independent auditors the quality of the Company’s financial and accounting personnel.  Also, elicit the comments of management regarding the responsiveness of the independent auditors to the Company’s needs;

 

11. Review with the Company’s management and the independent auditors the Company’s accounting and financial reporting controls and procedures and obtain annually, in writing, from the independent auditors, their letter as to the adequacy of such controls;

 

12.  Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board of Directors for approval;

 

13.  Establish procedures, consistent with the Company’s Whistleblower Policy, for the receipt, retention and treatment of complaints received by the Board of Directors or the Audit Committee relating to accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company or of any provider of accounting related services regarding questionable accounting or auditing matters pertaining to the Company;

 

14. Consider such other matters with respect to the Company’s financial affairs, internal controls, and th internal and external audits as the Audit Committee may deem advisable; and

 

15.  Perform such other functions and to have such powers as may be necessary or appropriate in the efficient and lawful discharge of the powers provided in this Charter.