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Corporate Governance

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Audit Committee Charter

Statement of Purpose

The Audit Committee of SureWest Communications ("Company") shall provide assistance to the Board of Directors ("Board") in the general oversight of corporate accounting, financial reporting processes and practices of the Company, the quality and integrity of the financial reports of the Company, and the Company's internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations. In so doing, it is the responsibility of the Audit Committee to maintain free and open means of communication between the directors, the independent registered public accounting firm, the internal auditors, and the financial management of the corporation, including insuring receipt from the independent registered public accounting firm a formal written statement delineating all matters set forth in NASDAQ Rules.

The Audit Committee is not responsible for planning or conducting the audit or determining whether the Company's financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Such activities are the responsibility of management and the Company's independent registered public accounting firm. The Audit Committee does not itself prepare financial statements or perform audits or auditing services, and its members are not auditors, certifiers of the Company's financial statements or guarantors of the reports of the Company's independent registered public accounting firm.

The Audit Committee has authority to obtain advice and assistance from outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties, and the Audit Committee shall receive appropriate funding, as determined by the Audit Committee, from the Company for payment of compensation to the outside legal, accounting or other advisors employed by the Audit Committee.

Organization and Structure

The Audit Committee shall be composed of at least three directors determined by the Board to meet the independence and financial literacy requirements of NASDAQ Rules, and otherwise meet or satisfy all requirements for Audit Committee membership under NASDAQ Rules. Appointment to the Audit Committee, including the designation of the Chair and the designation of any committee members as "audit committee financial experts" shall be made on an annual basis by the full Board upon recommendation of the Nominating and Governance Committee. The Audit Committee shall be supported by the Company's Chief Financial Officer and Controller.

Meetings of the Audit Committee shall be held at such times and places, but not less than four times per year (preferably once each quarter), as the Audit Committee shall determine, including by written consent. When necessary, the Audit Committee shall meet in executive session outside of the presence of any executive officer of the Company. The Chair of the Audit Committee shall report on activities of the Audit Committee to the full Board.

Responsibilities and Duties

In carrying out its responsibilities, the Audit Committee believes its policies and procedures should remain flexible, in order to best react to changing conditions and to ensure to the directors and shareholders that the corporate accounting and reporting practices of the Company are in accordance with all requirements and are of the highest quality. The Committee has all the responsibilities and authority necessary to comply with NASDAQ Rules.

In carrying out these responsibilities, the Audit Committee will:

  • Appoint the independent registered public accounting firm to be employed by the corporation to audit the consolidated financial statements of the Company for the ensuing year, and be directly responsible for the compensation and oversight of the work of the independent registered public accounting firm, and shall have full authority for replacement. The independent registered public accounting firm shall report directly to the Audit Committee. The independent registered public accounting firm selected by the Board shall be submitted to a ratification vote of shareholders at each annual meeting of shareholders. The Audit Committee shall consider, but shall not be bound by the ratification vote of shareholders, in determining whether to retain or replace the independent registered public accounting firm selected by the Committee for the then current fiscal year or any subsequent fiscal year.
  • Preapprove all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accounting firm, subject to the diminimis exceptions for non-audit services described in the Securities Exchange Act of 1934, as amended, which exceptions must be reviewed and either approved or rejected by the Audit Committee prior to the completion of the audit. The Audit Committee may delegate authority to its Chair or subcommittees of one or more members when appropriate, including the authority to grant preapprovals of audit and permitted non-audit services, provided that the decisions of the Chair or such subcommittee to grant preapprovals shall be presented to the full Audit Committee at its next scheduled meeting.
  • Meet with the independent registered public accounting firm and financial management of the Company to review the scope of the proposed audit for the current year and the audit procedures to be utilized, and at the conclusion thereof, review such audit, including any comments or recommendations of the independent registered public accounting firm.
  • Review and discuss with the independent registered public accounting firm its annual written statement delineating all relationships or services between the independent registered public accounting firm and the Company, or any other relationships or services that may impact its objectivity and independence.
  • Review with management and the independent registered public accounting firm the Company's annual audited and quarterly unaudited consolidated financial statements, including the Company's disclosures in "Management's Discussion and Analysis of Financial Condition and Results of Operations," and review with management and the independent registered public accounting firm:

    • (i) the results of the audit and the opinion on the annual financial statements;

    (ii) the judgments of the independent registered public accounting firm on the quality and consistent application of the Company's accounting principles, the reasonableness of significant judgments, clarity of disclosures and underlying estimates in the consolidated financial statements;

    (iii) changes in accounting principles or application thereof, significant judgment areas, and significant and complex transactions;

    (iv) the effectiveness and adequacy of the Company's internal auditing; and

    (v) any disagreements between management and the independent registered public accounting firm, about matters that individually or in the aggregate could be significant to the Company's consolidated financial statements or the report of the independent registered public accounting firm, and any serious difficulties the independent registered public accounting firm encountered in dealing with management related to the performance of the audit and management's response;

    (vi) all known and likely uncorrected misstatements identified by the independent registered public accounting firm during the audit, other than those that the independent registered public accounting firm believes are trivial, and the propriety of correcting the misstatements and implications of not correcting them and all material misstatements identified by the independent registered public accounting firm that were not corrected;

    (vii) managements consultation with other accountants; and

    (viii) significant issues, if any, arising from the audit that were discussed, or were the subject of correspondence, with management, such as business conditions affecting the Company, and business plans and strategies that may affect the risks of material misstatement, the retention of the independent registered public accounting firm and the application of accounting principles and auditing standards.

  • Recommend to the Board whether the audited consolidated financial statements should be included in the Company's Annual Report on Form 10-K and review with management and the independent registered public accounting firm the Company's Quarterly Reports on Form 10-Q prior to filing with the SEC, and to the extent practicable, consistent with the timing requirements for filing Form 8-K’s, the Chairman of the Audit Committee shall review and approve all Form 8-K’s before they are filed with the SEC.
  • Discuss each of the Company's earnings press releases with management and the independent registered public accounting firm prior to its issuance, as well as corporate policies with respect to the disclosure of financial information. In particular, the Committee shall periodically review with management and the independent registered public accounting firm the type of presentation and information to be included in the Company's earnings press releases and, to the extent applicable, earnings guidance provided to analysts and ratings agencies.
  • Periodically meet with the independent registered public accounting firm without members of management present. Among the items to be discussed in these meetings, among others, are the evaluation of the Company’s financial, accounting, and internal auditing personnel, and the cooperation that the independent registered public accounting firm received during the course of the audit.
  • Resolve any disagreements between management and the registered public accounting firm regarding financial reporting.
  • Review and report to the Board the propriety and ethical implications of any transactions, as reported or disclosed to the Committee by the independent registered public accounting firm, employees, officers, members of the Board or otherwise, between (a) the Company and (b) any employee, officer or member of the Board of the Company or any affiliates of the foregoing.
  • Review accounting and financial human resources succession planning within the Company.
  • At least annually, obtain from and review a report by the independent registered public accounting firm describing (i) its internal quality control procedures, and (ii) any material issues raised by the most recent internal quality control review, or peer review, or by any professional inquiry or investigation within the preceding five years regarding any audit performed by the independent registered public accounting firm, and any steps taken to deal with any such issues.
  • Review the adequacy and effectiveness of the Company's disclosure controls and procedures.
  • Review the adequacy and effectiveness of the Company's internal controls, including any significant deficiencies in such controls and significant changes or material weaknesses in such controls reported by the independent registered public accounting firm, internal auditors or management, and any fraud, whether or not material, that involves management or other Company employees. Review with the appropriate member of the Internal Audit Department the scope, qualifications, resources, activities and effectiveness of the internal audit function, and approve the appointment, replacement or dismissal of members of the Internal Audit Department.
  • Periodically meet separately with the appropriate member of the Internal Audit Department outside the presence of management and the independent registered public accounting firm.
  • Annually review and approve the Company’s internal audit charter.
  • Annually review and approve the Company’s internal audit plan.
  • Submit, or cause to be submitted, the minutes of all meetings of the Audit Committee to, or discuss the matters discussed at each committee meeting with, the board of directors.
  • 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, doing so is appropriate.
  • Annually review the adequacy of the Committee formal written charter and recommend any proposed changes to the Board.

Whistleblower Responsibilities

The Audit Committee shall establish and annually review written procedures that provide for, among other things, the receipt, retention and treatment of any and all complaints received by the Company regarding accounting, internal accounting controls, internal and external auditing matters, fraud or illegal acts, and which provide for the confidential, anonymous submission by Company employees of any concerns regarding questionable accounting or auditing matters or fraud or illegal acts. The Audit Committee shall adopt such procedures which, in its discretion, provide assurances that all credible serious complaints received by the Company are conveyed to the Committee or the Chairman of the Committee.

Disclosures From Independent Registered Public Accounting Firm and Management

The Audit Committee shall ensure that in connection with the filing of any periodic financial statement with the Securities and Exchange Commission that the Committee has obtained all the certifications and written disclosures required of management and or the independent registered public accounting firm, prerequisite to the filing of any such reports including the disclosures required by Item 407 (d) of Regulation SK or equivalent, applicable AICPA standards, and certifications required by Sarbanes-Oxley.

Annual Report

The Audit Committee shall prepare an annual report for inclusion in the Company’s annual proxy statement, setting forth all information and or other disclosures as may be required by law in connection with filing such proxy statement.

Annual Performance Review

The Audit Committee shall conduct an annual evaluation and review of its performance in carrying out its responsibilities hereunder.