BION ENVIRONMENTAL TECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee ("the Committee"), of the Board of Directors ("the Board")
of Bion Environmental Technologies, Inc. ("the Company"), will have the
oversight responsibility, authority and specific duties as described below.
COMPOSITION
The Committee will be comprised of two or more directors as determined by the
Board. The members of the Committee will meet the independence and experience
requirements of the Nasdaq Stock Market (Nasdaq) then in effect. The members
of the Committee will be elected annually at the annual meeting of the full
Board and will be listed in the annual report to shareholders. One of the
members of the Committee will be elected Committee Chair by the Board.
RESPONSIBILITY
The Committee is a part of the Board. Its primary function is to assist the
Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the audit process. In addition, the
Committee provides an avenue for communication between the independent
accountants, financial management and the Board. The Committee should have a
clear understanding with the independent accountants that they must maintain
an open and transparent relationship with the Committee, and that the ultimate
accountability of the independent accountants is to the Board and the
Committee. The Committee will make regular reports to the Board concerning
its activities.
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 are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee 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.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
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MEETINGS
The Committee is to meet at least once annually and as many additional times
as the Committee deems necessary. Content of the agenda for each meeting
should be cleared by the Committee Chair. The Committee is to meet in
separate executive sessions with the chief financial officer and independent
accountants at least once each year and at other times when considered
appropriate.
ATTENDANCE
Committee members will strive to be present at all meetings. As necessary or
desirable, the Committee Chair may request that members of management and
representatives of the independent accountants be present at Committee
meetings.
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval. This should be done in
compliance with applicable Nasdaq Audit Committee Requirements.
2. Review with the Company's management and independent accountants the
Company's accounting and financial reporting controls. Obtain annually
in writing from the independent accountants their letter as to the
adequacy of such controls.
3. Review with the Company's management and independent accountants
significant accounting and reporting principles, practices and
procedures applied by the Company in preparing its financial
statements. Discuss with the independent accountants their judgements
about the quality, not just the acceptability, of the Company's
accounting principles used in financial reporting.
4. Review the scope and general extent of the independent accountants'
annual audit. The Committee's review should include an explanation
from the independent accountants of the factors considered by the
accountants in determining the audit scope, including the major risk
factors. The independent accountants should confirm to the Committee
that no limitations have been placed on the scope or nature of their
audit procedures. The Committee will review annually with management
the fee arrangement with the independent accountants.
5. Inquire as to the independence of the independent accountants and
obtain from the independent accountants, at least annually, a formal
written statement delineating all relationships between the independent
accountants and the Company as contemplated by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees.
6. Have a predetermined arrangement with the independent accountants that
they will advise the Committee through its Chair and management of the
Company of any matters identified through procedures followed for
interim quarterly financial statements, and that such notification is
to be made prior to the related press release or, if not practicable,
prior to filing Forms 10-QSB. Also receive a written confirmation
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provided by the independent accountants at the end of each of the first
three quarters of the year that they have nothing to report to the
Committee, if that is the case, or the written enumeration of required
reporting issues.
7. At the completion of the annual audit, review with management and the
independent accountants the following:
- The annual financial statements and related footnotes and
financial information to be included in the Company's annual
report to shareholders and on Form 10-KSB.
- Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the
year in accounting principles and their application.
- Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the
audit. Inquire about the cooperation received by the independent
accountants during their audit, including access to all requested
records, data and information. Inquire of the independent
accountants whether there have been any disagreements with
management which, if not satisfactorily resolved, would have
caused them to issue a nonstandard report on the Company's
financial statements.
- Other communications as required to be communicated by the
independent accountants by Statement of Auditing Standards (SAS)
61 as amended by SAS 90 relating to the conduct of the audit.
Further, receive a written communication provided by the
independent accountants concerning their judgment about the
quality of the Company's accounting principles, as outlined in
SAS 61 as amended by SAS 90, and that they concur with
management's representation concerning audit adjustments.
If deemed appropriate after such review and discussion, recommend to
the Board that the financial statements be included in the Company's
annual report on Form 10-KSB.
8. After preparation by management and review by independent accountants,
approve the report required under SEC rules to be included in the
Company's annual proxy statement. The charter is to be published as an
appendix to the proxy statement every three years.
9. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also, elicit the comments of
management regarding the responsiveness of the independent accountants
to the Company's needs.
10. Meet with management and the independent accountants to discuss any
relevant significant recommendations that the independent accountants
may have, particularly those characterized as "material" or "serious".
Typically, such recommendations will be presented by the independent
accountants in the form of a Letter of Comments and Recommendations to
the Committee. The Committee should review responses of management to
the Letter of Comments and Recommendations from the independent
accountants and receive follow-up reports on action taken concerning
the aforementioned recommendations.
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11. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
12. Review with management and the independent accountants the methods used
to establish and monitor the Company's policies with respect to
unethical or illegal activities by Company employees that may have a
material impact on the financial statements.
13. Generally as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company's
counsel concerning legal and regulatory matters that may have a
material impact on the financial statements.
14. As the Committee may deem appropriate, obtain, weigh and consider
expert advice as to Audit Committee-related rules of Nasdaq, Statements
on Auditing Standards and other accounting, legal and regulatory
provisions.
