UBA Audit Charter and Whistleblower Policy
UNITED BANCORPORATION OF ALABAMA, INC.
AUDIT COMMITTEE CHARTER
I. GENERAL STATEMENT OF PURPOSE
The Audit Committee of the Board of Directors (the “Committee”) of United Bancorporation of Alabama, Inc. (the “Company”) shall assist the Board of Directors in monitoring (1) the integrity of the financial statements of the Company, (2) the independent auditor’s qualifications and independence, (3) the performance of the Company’s internal audit function and independent auditors, and (4) compliance by the Company with legal and regulatory requirements.
It is not the role of the Committee to duplicate the work of internal and independent auditors; rather, its role is that of oversight. Management is responsible for preparing the Company’s financial statements and related disclosures and the Company’s independent auditors are responsible for auditing those financial statements. It is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with GAAP.
The Committee, and each member of the Committee in his or her capacity as such, shall be entitled to rely, in good faith, on information, opinions, reports or statements prepared or presented to them by (i) the audit committee of any of the Company’s subsidiaries, (ii) officers and other employees of the Company or its subsidiaries, whom such member believes to be reliable and competent in the matters presented, and (iii) counsel, public accountants or others persons as to matters which the member believes to be within the professional competence of such person.
II. AUDIT COMMITTEE COMPOSITION
The Committee shall consist of a majority of independent members of the Board of Directors of the Company. In order to be considered independent, a member of the Committee may not, other than in his or her capacity as a member of the Committee, the Board of Directors, or any other Board committee (i) accept any consulting, advisory, or other compensatory fee from the Company; (ii) be an officer or employee of the Company or its subsidiaries or (iii) own five percent or more of the voting securities of the Company or its subsidiaries. The Board of Directors shall designate one member of the Committee to be the Chairman of the Committee. All members of the Committee shall have sufficient financial experience and ability to enable them to discharge their responsibilities.
The Committee shall meet as often as it determines, but not less frequently than once a year. Minutes of each meeting will be compiled by the Company’s Corporate Secretary who shall act as Secretary to the Committee, or in the absence of the Corporate Secretary, by an Assistant Corporate Secretary of the Company or any other person designated by the Committee.
IV. AUTHORITY AND RESPONSIBILITIES
The Committee shall generally be responsible for the following:
A. Retention of Independent Auditor. The Committee shall be directly responsible for the appointment, compensation, oversight, evaluation and termination of any independent auditor employed by the Company (including resolving disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report and related work. The Committee shall affirm an understanding with the independent auditor that they must report directly to the Committee.
B. Preapproval of Services. All auditing services (which may entail providing comfort letters in connection with securities underwritings) and all non-audit services provided to the Company by the Company’s auditors which are not prohibited by law shall be preapproved or ratified by the Committee pursuant to such processes as are determined to be advisable. Preapproved shall include blanket preapproval of non-prohibited services for limited dollar amounts which the Committee, in its business judgment, does not believe possess the potential for abuse or conflict. The Committee may delegate to one or more designated members of the Committee the authority to grant preapprovals. The decisions of any member to whom authority is delegated under this paragraph to preapprove an activity shall be presented to the full Committee at its next scheduled meeting.
C. Procedures for Complaints. The Committee shall establish procedures to facilitate:
(i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, auditing matters or material violations of any banking law, rule or regulation;
(ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters;
Those procedures are reflected in the Policy attached hereto as Appendix I.
D. Financial Statement and Disclosure Matters. The Committee, to the extent it deems necessary or appropriate, shall:
- Review and discuss with management and the independent auditor the annual audited financial statements.
- Review and discuss with management and the independent auditor the Company’s quarterly financial statements.
- Discuss with management and the independent auditor any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including (i) any significant changes in the Company’s selection or application of accounting principles, (ii) any major issues as to the adequacy of the Company’s internal controls, (iii) the development, selection and disclosure of critical accounting estimates, (iv) analyses of the effect of alternative assumptions, estimates or GAAP methods on the Company’s financial statements, (v) analyses and disclosure of financial trends, and (vi) presentation of the financial statements and notes thereto.
- Discuss with management the Company’s earnings press releases, if any, including the use of “pro forma”, “adjusted” or other non-GAAP information, as well as any financial information and earnings guidance provided to analysts and/or rating agencies.
- Discuss with management and the independent auditor any significant effect of accounting initiatives as well as off-balance sheet structures on the Company’s financial statements.
- Discuss with management and the internal auditors any significant effect of regulatory initiatives on the Company’s financial statements.
- Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
E. Oversight of the Company’s Relationship with the Independent Auditor. The Committee, to the extent it deems necessary or appropriate, shall:
- Review the experience and qualifications of the senior members of the independent auditor team.
- Obtain and review a written report from the independent auditor at least annually regarding (i) the auditor’s internal quality-control procedures, (ii) any material issues raised by the most recent quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years concerning one or more independent audits carried out by the firm, (iii) any steps taken to deal with any such issues, and (iv) all relationships, both direct and indirect, between the independent auditor and the Company. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management and the internal auditor. The Committee shall present its conclusions to the Board and, if so determined by the Committee, recommend that the Board take additional action to satisfy itself of the qualifications, performance and independence of the auditor.
- Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the lead audit partner or even the independent auditing firm itself on a regular basis.
- Recommend to the Board policies for the Company’s hiring of employees or former employees of the independent auditor who were engaged on the Company’s account.
- Discuss with the independent auditor issues on which the independent auditor communicated with its national office regarding auditing or accounting issues.
- Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
F. Oversight of the Company’s Internal Audit Function.
- Review the appointment and replacement of the senior internal auditing executive.
- Review any significant reports to management prepared by the internal auditing department and management’s responses.
- Discuss with the independent auditor the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.
- The Committee may rely on reports and recommendations of, and may delegate all or part of the oversight matters described above to, the audit committee of its subsidiaries.
G. Compliance Oversight.
- Obtain reports from management and the Company’s senior internal auditing executive relating to the Company’s conformity with applicable legal and regulatory requirements. Review required reports and disclosures, if any, of insider and affiliated party transactions.
- Review with management and the Company’s internal auditor’s compliance with laws and regulations. Advise the Board with respect to the Company’s compliance with applicable laws and regulations.
- Review with the Company’s counsel any significant pending material litigation and compliance matters.
- The Committee will address and take any action, as it deems necessary or appropriate, with respect to any issues relating to inquiries or investigations regarding the quality of financial reports filed by the Company or otherwise distributed to the public.
H. Miscellaneous Powers and Responsibilities.
- The Committee shall have the power to investigate any matter brought to its attention within the scope of its duties, with the power to retain outside counsel for this purpose if, in its judgment, that is appropriate.
- The Committee shall submit the minutes of all meetings of the Committee to the Board of Directors.
- The Committee shall review and assess the adequacy of this Charter at least annually.
- The Committee shall oversee the Company’s Code of Ethics; however, the Committee is not responsible for assuring compliance with the Company’s Code of Ethics.
- The Committee shall prepare any report with respect to the Committee required to be included in the Company’s annual proxy statement or otherwise.
- The Committee shall have the power to access the Company’s counsel without the approval of management, as it determines necessary to carry out its duties.
- The Committee shall also have the authority without the consent of management or the Board, at the Company’s expense, to the extent it deems necessary or appropriate, to retain special independent legal, accounting or other consultants to advise the Committee in connection with fulfilling its obligations hereunder.
- The Committee shall have the responsibility to discuss with management and the independent auditor any significant or material correspondence with regulators or governmental agencies, including all examination reports received from the various supervisory authorities, and any employee complaints or published reports that raise material issues regarding the Company’s financial statements or accounting policies and review management’s replies to such correspondence, complaints, or reports.
- The Committee shall have the responsibility to discuss with the Company’s counsel any legal matters that may have a material impact on the Company’s financial statements or compliance policies.
to United Bancorporation of Alabama, Inc.
Audit Committee Charter
Procedures for the Submission of Complaints Regarding
Accounting, Internal Accounting Controls or Auditing Matters
The Audit Committee of the Board of Directors (the “Audit Committee”) of the United Bancorporation of Alabama, Inc. (the “Company”) has established the following procedures for (1) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, auditing matters (“Accounting Matters”) and material violations of any banking law, rule or regulation to which the Company is subject (“Compliance Matters”) (2) the confidential, anonymous submission by employees and third parties of concerns regarding questionable accounting or auditing matters or possible violations of applicable laws.
- The Company shall promptly forward to the Audit Committee any complaints that it receives regarding Accounting Matters or Compliance Matters.
- Any employee of the Company or any of its subsidiaries, may submit, on a confidential, anonymous basis if the employee so desires, any good faith concerns regarding Accounting Matters or Compliance Matters, including, without limitation, the following:
- fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement of the Company;
- fraud or deliberate error in the recording and maintaining of financial records of the Company;
- deficiencies in or noncompliance with the Company’s internal accounting controls;
- misrepresentation or false statement to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of the Company;
- deviation from full and fair reporting of the Company’s financial condition; or
- material violations of any banking law, rule or regulation to which the Company is subject.
All such concerns shall be set forth in writing and forwarded in a sealed envelope to the Chairman of the Audit Committee, in an envelope labeled with a legend such as: “To be opened by the Audit Committee only. Being submitted pursuant to the “Whistleblower Policy” adopted by the Audit Committee.” If an employee would like to discuss any matter with the Audit Committee, the employee should indicate this in the submission and include a telephone number at which he or she might be contacted if the Audit Committee deems it appropriate. If the employee would prefer an alternative method of contact, the employee may mail a complaint as indicated above to the Company’s Whistleblower Post Office Box using the address listed below.
- Third parties who are not employees of the Company or any of its subsidiaries with concerns regarding Accounting Matters or Compliance Matters, including those items listed above, are directed to forward their complaints to the Company’s Whistleblower Post Office Box in the same manner as described above.
- Following the receipt of any complaints submitted hereunder, the Audit Committee will determine whether the complaint actually pertains to Accounting Matters or Compliance Matters and, when possible, acknowledge receipt of the complaint to the sender. Complaints relating to Accounting Matters and Compliance Matters will be reviewed under Audit Committee direction and oversight by such persons, including internal audit personnel, as the Audit Committee determines to be appropriate. To the extent requested and maintained by the sender confidentiality of complaints will be maintained to the fullest extent possible, consistent with the need to conduct an adequate review. All complaints that the Audit Committee determines do not pertain to Accounting Matters or Compliance Matters will be referred to the Chairman of the United Bank Board.
- Prompt and appropriate corrective action with respect to complaints relating to Accounting Matters will be taken when and as warranted in the judgment of the Audit Committee.
- The Audit Committee may enlist committee members (of the Audit Committee and the Bank Audit Committee), employees of the Company or its subsidiaries and/or outside legal, accounting or other advisors, as it deems appropriate, to conduct any investigation of complaints regarding Accounting Matters or Compliance Matters.
- The Company will not discharge, demote, suspend, threaten, harass, directly or indirectly, or in any manner discriminate against any Company or subsidiary employee in the terms and conditions of employment based upon any lawful actions of such employee with respect to good faith reporting of complaints regarding Accounting Matters or Compliance Matters.
- The Audit Committee shall retain as part of the records of the Audit Committee any such complaints or concerns received under this Whistleblower Policy in accordance with the Company’s document retention policy.
- This Whistleblower Policy does not apply to all grievances, such as those related to terms of employment or those concerns that are addressed by the Company’s policies on anti-discrimination, sexual harassment, fair lending or privacy.
Audit Committee Chairman
Post Office Box 8
Atmore, Alabama 36504
Whistleblower Post Office Box
Post Office Box 1383
Atmore, Alabama 36504
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