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EXHIBIT 2
FASTCOMM COMMUNICATIONS CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities with respect to the
financial reports and other financial information provided by the Corporation
to the stockholders and others, the Corporation's system of internal controls,
and the Corporation's audit, accounting, and financial reporting processes
generally.
In carrying out this function, the Audit Committee shall serve as an
independent and objective monitor of the performance of the Corporation's
financial reporting process and system of internal control; review and
appraise the audit efforts of the Corporation's independent accountants and
internal audit department; and, provide for open, ongoing communication among
the independent accountants, financial and senior management, internal audit
department, and the Board of Directors concerning the Corporation's financial
position and affairs.
COMPOSITION
The Audit Committee shall be comprised of three or more directors, as
determined by the Board of Directors, each of whom shall be an independent
director as determined in accordance with the Corporation's By-laws and AMEX
rules. Notwithstanding the previous requirement, one director who is not
independent as determined in accordance with the Corporation's By-laws and
AMEX rules and is not a current employee or an immediate family member of an
employee, may be appointed to the Audit Committee, if the Board of Directors
under exceptional and limited circumstances, determines that membership on the
Audit Committee by the individual is required by the best interests of the
Corporation and its shareholders, and the Board of Directors discloses, in the
next annual proxy statement subsequent to such determination, the nature of
the relationship and the reasons for that determination. In accordance with
AMEX rules, all members of the Audit Committee shall be able to read and
understand fundamental financial statements, and at least one member of the
Committee shall have employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable experience
or background which results in the individual's financial sophistication.
MEETINGS
The Committee shall meet at least once annually, or more frequently
as circumstances dictate. The Committee shall meet at least annually, and more
often as warranted, with the management and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each
of these groups believes should be discussed privately. The
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Committee shall maintain a high degree of independence both in establishing
its agenda and directly accessing various members of the Corporation's and any
subsidiary's management.
RESPONSIBILITIES AND DUTIES
The Committee's responsibility is oversight, and it recognizes that
the Corporation's management is responsible for preparing the Corporation's
financial statements. Additionally, the Committee recognizes that financial
management (including the internal audit staff), as well as the independent
accountants, have more knowledge and more detailed information about the
Corporation than do the members of the Committee; consequently, in carrying
out its oversight responsibilities the Committee is not providing any expert
or special assurance as to the Corporation's financial statements or any
professional certification as to the independent accountants' work.
The following functions shall be the common recurring activities of
the Committee in carrying out its oversight responsibility. These functions
are set forth as a guide with the understanding that the Committee may diverge
from this guide as appropriate given the circumstances.
- Review with a representative of management and the independent
accountants the financial information contained in the Corporation's
Quarterly Report on Form 10-Q prior to its filing, the Corporation's
earnings announcements prior to release, and the results of the
independent accountants' review of Interim Financial Information
pursuant to SAS 71. The Chair may represent the entire Audit
Committee, either in person or by telephone conference call, for
purposes of this review.
- Review with management and the independent accountants at the
completion of the annual audit of the Corporation's consolidated
financial statements included in the Annual Report on Form 10-K for
the last fiscal year and prior to its filing:
(1) the Corporation's annual consolidated financial statements and
related footnotes;
(2) the independent accountants' audit of the consolidated
financial statements and their report;
(3) any significant changes required in the independent
accountants' examination plan;
(4) any serious difficulties or disputes with management
encountered during the course of the audit; and
(5) other matters related to the conduct of the audit which are
to be communicated to the Audit Committee under generally
accepted auditing standards including, discussions relating
to the independent accountants' judgments about such matters
as the quality, not just the acceptability, of the
Corporation's accounting practices and other items set forth
in SAS 61 (Communication with Audit Committees) or other such
auditing standards that may in time modify, supplement or
replace SAS 61.
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- On an annual basis, the Audit Committee should ensure receipt of, and
review with the independent accountants, a written statement required
by Independence Standards Board (ISB) Standard No. 1, as may be
modified or supplemented, and discuss with the accountants their
independence. The Committee will recommend that the Board of
Directors take appropriate action on any disclosed relationships that
may reasonably be thought to bear on the independence of the
accountants and satisfy itself that the Corporation has engaged
independent accountants as required by the Securities Acts
administered by the Securities and Exchange Commission.
- The Committee will have prepared and reviewed the Audit Committee
Report for inclusion in the annual stockholders' meeting proxy
statement. The Audit Committee Report must state whether the Audit
Committee:
(1) has reviewed and discussed the audited consolidated
financial statements with management;
(2) has discussed with the independent accountants the matters
required to be discussed by SAS 61, as may be modified,
supplemented or replaced;
(3) has received the written disclosures from the independent
accountants required by ISB Standard No. 1, as may be
modified or supplemented, and has discussed with the
accountants their independence; and
(4) has recommended to the Board of Directors, based on the
review and discussions referred to in above items (1)
through (3), that the Corporation's consolidated financial
statements be included in the Annual Report on Form 10-K for
the last fiscal year for filing with the Securities and
Exchange Commission.
- The Audit Committee and Board of Directors are responsible for the
selection, evaluation and, where appropriate, replacement of the
independent accountants. Selection for the ensuing calendar year will
be submitted to the stockholders for ratification or rejection at the
annual meeting of stockholders. Consistent with these
responsibilities, it is recognized that the independent accountants
are ultimately accountable to the Board of Directors and Audit
Committee.
- Review and reassess the adequacy of the audit committee charter on an
annual basis. The charter will be included as an appendix to the
annual stockholders' meeting proxy statement triennially or in the
next annual stockholders' meeting proxy statement after any
significant amendment to the charter.
- In consultation with the independent accountants, regularly review
the integrity of the Corporation's financial reporting processes and
system of internal control.
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- Review the performance of the internal audit department, including
the objectivity and authority of its reporting obligations, the
proposed audit plans for the coming year, and the coordination of
such plans with the independent accountants.
- Review, as needed, the internal audit department's charter, which
shall define its purpose, authority, and responsibilities.
- Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate assets,
and consider the results of any review of these areas by the internal
auditors or the independent accountants.
- Review legal and regulatory matters that may have a material impact
on the Corporation's consolidated financial statements, related
compliance policies and programs, and reports received from
regulators.
In addition to the activities described above, the Audit Committee
will perform such other functions as necessary or appropriate under law, the
Corporation's charter or By-laws, and the resolutions and other directives of
the Board of Directors.
The Audit Committee shall have the power to conduct or authorize
investigations into any matters within its scope of responsibilities and shall
be empowered to retain independent counsel, accountants, or others to assist
it in the conduct of any investigation.
The duties and responsibilities of a member of the Audit Committee
are in addition to those duties generally pertaining to a member of the Board
of Directors.
The Audit Committee will report its actions to the Board of Directors
with such recommendations as the Audit Committee may deem appropriate.
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