MEDIA SOURCE, INC.
AUDIT COMMITTEE CHARTER
One committee of the board of directors will be known as the audit
committee. Only independent directors will serve on the audit committee. An
independent director is free of any relationship that could influence his or her
judgment as a committee member. An independent director may not be associated
with a major vendor to, or customer of, the company. When there is some doubt
about independence, as when a member of the committee has a short-term
consulting contract with a major customer, the director should recuse himself
from any decisions that might be influenced by that relationship.
The primary function of the audit committee is to assist the board in
fulfilling its oversight responsibilities by reviewing the finance information
that will be provided to the shareholders and others the systems of internal
controls management and the board of directors have established and all audit
processes.
GENERAL REPONSIBILITIES
1. The audit committee provides open avenues of communication among the
Company's independent auditors (the "Auditor"), and the board of directors.
2. The audit committee must report committee actions to the full board of
directors and may make appropriate recommendations.
3. The audit committee has the power to conduct or authorize investigations
into matters within the committee's scope of responsibilities. The
committee is authorized to retain independent counsel, accountants or
others it needs to assist in an investigation.
4. The committee will meet at least four times each year, more frequently if
circumstances make that preferable. The audit committee chairman has the
power to call a committee meeting whenever he or she thinks there is a
need. An audit committee member should not vote on any matter in which he
or she is not independent. The committee may ask members of management or
others to attend the meeting and is authorized to receive all pertinent
information from management.
5. The committee will do whatever else the law, the company's charter or
bylaws or the board of directors require.
RESPONSIBILITIES FOR ENGAGING THE AUDITOR
1. The audit committee will select the Auditor for company audits. The
committee's selection is subject to approval by the full board of
directors. The audit committee also will review and set any fees paid to
the Auditor and review and approve dismissal of the Auditor.
2. The audit committee will confirm and assure the independence of the
Auditor, including a review of management consulting services provided by
the Auditor and the fees paid for them.
3. The audit committee will consider, in consultation with the Auditor, the
audit scope and procedural plans made by the Auditor.
4. The audit committee will listen to management and the Auditor if either
think there might be a need to engage additional auditors. The audit
committee will decide whether to engage an additional firm and, if so,
which one.
RESPONSIBILITIES FOR REVIEWING THE ANNUAL AUDIT AND THE REVIEW OF QUARTERLY AND
ANNUAL FINANCIAL STATEMENTS.
1. The audit committee will ascertain that the Auditor views the board of
directors as its client, that it will be available to the full board of
directors at least annually and that it will provide the committee with a
timely analysis of significant financial reporting issues.
2. The audit committee will ask management and the Auditor about significant
risks and exposures and will assess management's steps to minimize them.
3. The audit committee will review the following with the Auditor:
(a) The adequacy of the company's internal controls, including computerized
information system controls and security.
(b) Any significant findings and recommendations made by the Auditor, together
with management's responses to them.
4. Shortly after the annual examination is completed, the audit committee will
review the following with management and the Auditor:
(a) The company's annual financial statements and related footnotes.
(b) The Auditor's audit of and report on the financial statements.
(c) The Auditor's qualitative judgments about the appropriateness, not just the
acceptability, of accounting principles and financial disclosures and how
aggressive (or conservative) the accounting principles and underlying
estimates are.
(d) Any serious difficulties or disputes with management encountered during the
course of the audit.
(e) Anything else about the audit procedures or findings that GAAS requires the
Auditors to discuss with the committee.
5. The audit committee will review annual filings with the SEC and other
published documents containing the company's financial statements and will
consider whether the information in the filings is consistent with the
information in the financial statements.
6. The audit committee will review the interim financial reports with
management and the Company's CFO before those interim reports are released
to the public or filed with the Sec or other regulators.
7. The audit committee will prepare a letter for inclusion in the annual
report that describes the committee's composition and responsibilities and
how the responsibilities were fulfilled.
PERIODIC RESPONSIBILITIES
1. Review and update the committee's charter annually.
2. Review policies and procedures covering officers' expense accounts and
perquisites, including their use of corporate assets, and consider the
results of any review of those areas by Auditor.
3. Review legal and regulatory matters that may have a material effect on the
organization's financial statements, compliance policies and programs and
reports from regulators.
4. Meet with the CFO, the Auditor and management in separate executive
sessions to discuss and matters the committee or these groups believe
should be discussed privately with the audit committee.
