Annual Report — Small Business — Form 10-KSB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10KSB Annual Report -- Small Business 63 306K
2: EX-10.1 Automobile Parts Purchase Contract 8 35K
3: EX-10.2 Cherry Automobile Parts Purchase Contract 6 31K
4: EX-10.3 Automotive Purchase Contract 5 23K
5: EX-10.4 License and Technical Assistant Agreement 7 31K
6: EX-10.5 License Agreement 15 63K
7: EX-23.1 Subsidiaries of the Company 1 8K
8: EX-31.1 Section 302 Certification of CEO 2± 11K
9: EX-31.2 Section 302 Certification of CFO 2± 11K
10: EX-32.1 Section 906 Certification of CEO 1 7K
11: EX-32.2 Section 906 Certification of CFO 1 7K
12: EX-99.1 Code of Conduct and Ethics 5 21K
13: EX-99.2 Audit Comittee Charter 5 19K
EX-99.2 — Audit Comittee Charter
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Exhibit 99.2
CHINA AUTOMOTIVE SYSTEMS, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee shall assist the Board of Directors in its
oversight of (1) the integrity of the Corporation's financial statements and its
financial reporting and disclosure practices, (2) the soundness of the
Corporation's systems of internal controls regarding finance and accounting
compliance, (3) the independence and qualifications of the Corporation's
independent auditors, (4) the performance of the Corporation's internal audit
function and its independent auditors, and (5) the Corporation's compliance with
legal and regulatory requirements and the soundness of the Corporation's ethical
and environmental compliance programs. The Audit Committee is also responsible
for preparing the report required to be included in the Corporation's proxy
statement.
MEMBERSHIP
The Audit Committee shall consist of at least three Directors. The
members of the Audit Committee shall meet the independence and expertise
requirements set forth by the Securities and Exchange Commission.
No member of the Audit Committee may serve on the audit committee of
more than three public companies, including the Corporation, unless the Board
(1) determines that such simultaneous service would not impair the ability of
the member to effectively serve on the Audit Committee and (2) discloses this
determination in the Corporation's proxy statement.
The members of the Audit Committee shall be appointed at least annually
by the Board, with one of the members appointed as Committee Chair. Audit
Committee members may be replaced by the Board.
RESPONSIBILITIES
In performing its oversight responsibilities, the Audit Committee shall:
Financial Statement and Disclosure Matters
1. Review and discuss the Corporation's quarterly financial statements,
including disclosures made in "Management's Discussion and Analysis of
Financial Condition and Results of Operations", with management and the
independent auditors prior to the filing of the Corporation's quarterly
report on Form 10-Q, including a discussion with the independent auditors
of the matters required to be discussed by Statement of Auditing Standards
No. 61 ("SAS No. 61"), as amended.
2. Review and discuss the Corporation's annual financial statements, including
disclosures made in "Management's Discussion and Analysis of Financial
Condition and Results of Operations", with management and the independent
auditors prior to the filing of the Corporation's annual report on Form
10-K, including a discussion with the independent auditors of the matters
required to be discussed by SAS No. 61, as amended.
3. Discuss with management the Corporation's earnings press releases (paying
particular attention to the use of any "pro forma" or "adjusted" non-GAAP
information), as well as the nature of financial information and earnings
guidance provided to securities analysts and rating agencies. The Audit
Committee's discussion in this regard may be general in nature and need not
take place in advance of each instance in which the Corporation may provide
financial information or earnings guidance.
4. Discuss with management the Corporation's major financial risk exposures
and the steps management has taken to monitor and control such exposures,
including the Corporation's risk assessment and risk management policies.
5. Review, with management, the internal auditors and the independent
auditors, major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Corporation's selection or application of accounting principles, and major
issues as to the adequacy of the Corporation's internal controls and any
special audit steps adopted in light of material control deficiencies. In
this regard, the Audit Committee should obtain and discuss with management
and the independent auditors reports and analyses from management and the
independent auditors concerning: (a) all critical accounting policies and
practices to be used by the Corporation, (b) significant financial
reporting issues and judgments made in connection with the preparation of
the financial statements, including all alternative treatments of financial
information within generally accepted accounting principles ("GAAP") that
have been discussed with management, the ramifications of the use of the
alternative disclosures and treatments, and the treatment preferred by the
independent auditors, and (c) any other material written communications
between the independent auditors and management.
6. Review with the independent auditors (a) any audit problems or other
difficulties encountered during the course of the audit process, including
any restrictions on the scope of the independent auditors' activities or
access to required information and any significant disagreements with
management and (b) management's response to such matters.
7. Resolve any disagreements between management and the independent auditors
regarding financial reporting.
8. Review periodically the effect of regulatory and accounting initiatives, as
well as off-balance sheet structures, on the financial statements of the
Corporation.
Oversight of the Corporation's Relationship with its Independent Auditors
9. Appoint or replace the Corporation's independent auditors (subject, if
applicable to stockholder ratification), and approve all fees payable to
the independent auditors. The independent auditors shall report directly to
the Audit Committee.
10. Approve, in advance, all audit services, and all non-audit services
provided by the Corporation's independent auditors that are not
specifically prohibited under the Sarbanes-Oxley Act. Non-audit services
need not be approved in advance only if (a) the aggregate amount of all
such non-audit services are not more than 5% of all amounts paid to the
independent auditors during the fiscal year, (b) they were not recognized
to be non-audit services at the time of the engagement and (c) they are
promptly brought to the attention of the Audit Committee and approved prior
to the completion of the audit. The Committee may delegate pre-approval
authority to one or more members of the Committee, but all such decisions
must be presented to the full Committee at its next regularly scheduled
meeting.
11. Review, at least annually, the qualifications, performance and independence
of the independent auditors. In conducting its review and evaluation, the
Committee should:
a. Obtain and review a report by the Corporation's independent auditors
describing: (i) the auditing firm's internal quality-control
procedures; (ii) any material issues raised by the most recent
internal quality-control review, or peer review, of the auditing firm,
or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
independent audits carried out by the auditing firm, and any steps
taken to deal with any such issues; and (iii) all relationships
between the independent auditors and the Corporation;
b. Review and evaluate the lead audit partner;
c. Assure the rotation of the lead audit partner and the audit partner
responsible for reviewing the audit as required by law; d. Discuss
with the independent auditors any disclosed relationships or services
that may impact the objectivity and independence of the independent
auditors;
e. Consider whether, in order to assure continuing auditor independence,
there should be regular rotation of the audit firm itself;
f. Take into account the opinions of management and the Corporation's
internal auditors;
g. Present its conclusions with respect to the independent auditors to
the Board and, if necessary, recommend that the Board take appropriate
action to satisfy itself of the qualifications, performance and
independence of the independent auditors.
12. Set clear hiring policies for employees or former employees of the
independent auditors. At a minimum, these policies should provide that any
registered public accounting firm may not provide audit services to the
Corporation if the CEO, controller, CFO, chief accounting officer or any
person serving in an equivalent capacity for the Corporation was employed
by such accounting firm and participated in the audit of the Corporation
within one year of the initiation of the current audit.
Oversight of the Corporation's Internal Audit Function
13. Review the scope and effectiveness of internal auditing activities.
14. Review and discuss with the independent auditors the responsibilities,
budget and staffing of the Corporation's internal audit function.
Compliance Oversight
15. Review, with the Corporation's general counsel, any legal matter that could
have a significant impact on the Corporation's financial statements.
16. Annually review the Corporation's compliance program for its Code of Ethics
and Conduct and the results of internal audit's review of the expense
accounts of the Corporation's elected officers.
17. Annually review the status of the Corporation's environmental compliance
program.
18. Establish procedures for (a) the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters and (b) the confidential, anonymous
submission by employees of the Corporation of concerns regarding
questionable accounting or auditing matters.
MEETINGS; OPERATIONAL MATTERS AND REPORTS
The Audit Committee shall meet at least four times annually, or more frequently
as circumstances dictate.
The Audit Committee is to meet periodically in separate executive sessions with
each of management, the Corporation's independent auditors and its internal
auditor.
The Audit Committee may form and delegate authority to subcommittees when
appropriate.
In connection with its duties and responsibilities, the Audit Committee shall
have the authority to retain outside legal, accounting or other advisors,
including the authority to approve the fees payable by the Corporation to such
advisors and other retention terms.
The Audit Committee shall annually review its performance. In addition, the
Audit Committee shall review and reassess the adequacy of this Charter annually
and recommend to the Board any changes it considers necessary or advisable.
The Audit Committee shall report regularly to the Board, including with respect
to any issues that arise with respect to the quality or integrity of the
Corporation's financial statements, the Corporation's compliance with legal or
regulatory requirements, the performance and independence of the Corporation's
independent auditors or the performance of the internal audit function.
LIMITATION OF AUDIT COMMITTEE'S ROLE
The Audit Committee's role is one of oversight. Management is responsible for
preparing the Corporation's financial statements, and the independent auditors
are responsible for auditing those financial statements. Management is
responsible for the fair presentation of the information set forth in the
financial statements in conformity with GAAP. The independent auditors'
responsibility is to provide their opinion, based on their audits, that the
financial statements fairly present, in all material respects, the financial
position, results of operations and cash flows of the Corporation in conformity
with GAAP. 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 Corporation's financial statements and
disclosures are complete and accurate and are in conformity with GAAP. Further,
it is not the duty of the Audit Committee to assure compliance with applicable
laws and regulations, the Corporation's Code of Ethics and Conduct or its
environmental compliance program.
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