UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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AMERICAN FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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[X] No fee required.
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APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF AMERICAN FINANCIAL CORPORATION
Function
The function of the Audit Committee is to review the company's financial
statements, accounting policies and internal controls. The Committee also
provides for free and open communication between it and the company's
independent auditors, its internal auditors and its financial management. The
company's independent auditors are ultimately accountable to the Board of
Directors and the Audit Committee.
Composition
The Board of Directors shall designate annually three or more directors to serve
as the Audit Committee, with one member appointed as Chair of the Committee.
Members of the Committee shall meet all applicable independence and other
qualification requirements.
Authority
In carrying out its responsibilities, the Audit Committee may conduct whatever
inquiries relating to the company's financial affairs, records, accounts,
reports or activities as the Committee in its discretion deems desirable or as
the Board of Directors may from time to time request.
The Committee will be provided free and open access to the company's independent
auditors and the company's internal auditing, financial management and legal
counsel staffs, and any other personnel required by the Committee, in order for
the Committee to review or investigate any matters which the Committee in its
discretion considers appropriate for inquiry. The Committee may also employ, at
the company's expense, any outside experts, legal counsel or other personnel
deemed by the Committee in its collective judgment to be reasonably necessary,
and in the best interest of the company and its shareholders, to enable the
Committee to ably perform its duties and satisfy its responsibilities.
Responsibilities
The Audit Committee has the following responsibilities:
1. Select Independent Auditors and Review Scope of Audit
(A) Recommend to the Board of Directors the selection of the company's
independent auditors to conduct the annual audit of the company's consolidated
financial statements. The Audit Committee shall have the authority and
responsibility to evaluate and recommend the selection and, where appropriate,
replacement of the independent auditors. The Board of Directors shall have the
ultimate authority and responsibility to select and, where appropriate, replace
the company's independent auditors.
(B) Review and discuss with the independent auditors the scope and timing of
their audit, including the locations to be visited by the independent auditors
and internal auditors.
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(C) Receive from the independent auditors on an annual basis a formal written
statement to the Audit Committee and the Board of Directors delineating all
relationships between the independent auditors and the company and its
affiliates; actively engage in a dialogue with the independent auditors
concerning any disclosed relationships or services that may impact the
objectivity and independence of the independent auditors; and recommend that the
Board of Directors take action, if appropriate, in response to the independent
auditors' report to satisfy itself of the independent auditors' independence.
2. Review Financial Statements and Audit Results
(A) After completion of each annual audit, review the company's annual financial
statements and accounting policies with the company's financial management and
independent auditors and recommend whether the audited financial statements
should be included in the annual Form 10-K.
(B) After completion of each annual audit, meet with the independent auditors to
review the results of their examination, including their opinion and any related
comments. Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (see summary below) relating
to the conduct of the audit.
(C) After completion of each annual audit, determine through discussion with the
independent auditors that no restrictions were placed by management on the scope
of their examination or its implementation and that there was a free exchange of
information.
3. Review Internal Accounting Controls
(A) Review with the independent auditors and the company's
financial and internal audit management the adequacy and effectiveness of the
company's internal accounting controls and elicit any recommendations they may
have for improvement.
(B) Review on a continuing basis the company's compliance with
the Foreign Corrupt Practices Act of 1977.
(C) Review the adequacy and implementation of the internal
audit function, including a review of the scope and results of its program.
4. Annual Reports. Annually report to the Board of Directors with
respect to its activities. Provide the Audit Committee report that is
required by federal securities laws to be included in the company's proxy
statement for its annual shareholders' meeting.
5. Review Charter. Annually review the adequacy of the Committee Charter.
* * * * *
SAS No. 61 requires an independent auditor to communicate to the Audit
Committee matters of significance related to the conduct of the audit such as
the selection of and changes in accounting policies, the methods used to account
for unusual transactions, the effect of accounting policies in controversial or
emerging areas, the process used by management in formulating accounting
estimates and the basis for the auditor's conclusions regarding the
reasonableness of those estimates, adjustments arising from the audit, and
disagreements with management over the application of accounting principles, the
basis for management's accounting estimates and the disclosures in the financial
statements.