EXHIBIT 99
EMPIRE OF CAROLINA, INC.
Charter of the Audit Committee of the Board of Directors
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
o Monitor the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting, and
legal compliance.
o Monitor the independence and performance of the Company's
independent auditors.
o Provide an avenue of communication among the independent auditors,
management, and the Board of Directors.
The Audit Committee has the authority to conduct an investigation
appropriate to fulfilling its responsibilities, and it has direct access
to the independent auditors as well as anyone in the organization. The
Audit Committee has the ability to retain, at the Company's expense,
special legal, accounting, or other consultants or experts it deems
necessary in the performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements for AMEX. The Audit
Committee shall be comprised of three or more directors as determined by
the Board, each of whom shall be independent non-executive directors, free
from any relationship that would interface with the exercise of his or her
independent judgment. All members of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements, and at least one member of the Committee
shall have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board on recommendation
of the Executive Committee. If an Audit Committee Chair is not designated
or present, the members of the Committee may designate a Chair by majority
vote of the Committee membership.
The Committee shall meet privately in executive session at least annually
with the management, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believe
should be discussed. In addition, the Committee, or at least its Chair,
should communicate with the management and the independent auditors
quarterly to review the Company's financial statements and significant
finding based upon the auditors limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have
the document published at least every three years in accordance with
SEC regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgements.
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Empire of Carolina Audit Committee Charter
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3. In consultation with the management and the independent auditors, consider
the integrity of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps management has
taken to monitor, control, and report such exposures. Review significant
findings prepared by the independent auditors together with management's
responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to release of earnings and/or
the company's quarterly financial statement's prior to filing or
distribution. Discuss any significant changes to the Company's accounting
principles and any items required to be communicated by the independent
auditors in accordance with SAS 61 ( see item 9). The Chair of the
Committee may represent the entire Audit Committee for purposes of this
review.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommended to
the Board of Directors the appointment of the independent auditors or
approve any discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence. In so doing, the
Committee will request from the auditor a written affirmation that the
auditor is in fact independent.
8. Review the independent auditors audit plan and engagement letter-discuss
scope, staffing, locations, reliance upon management, and internal audit
and general audit apporach.
9. Prior to releasing the year-end earnings, discuss the results of the audit
with the independent auditors. Discuss certain matters required to be
communicated to audit committees in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Legal Compliance
11. On at least an annual basis, review the Company's counsel, any legal
matters that could have significant impact on the organization's financial
statements, the Company's compliance with applicable laws and regulations,
and inquires received from regulators or governmental agencies.
Other Audit Committee Responsibilities
12. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's
annual proxy statement.
13. Perform any other activities consistent with this Charter, the Company's
by-law's, and governing law, as the Committee or the Board deems necessary
or appropriate.
14. Periodically report to the Board of Directors on significant results of
the foregoing activities.
15. Annually review a summary of director and officers' related party
transactions and potential conflicts of interest.
