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EXHIBIT #99
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CHARTER OF THE
AUDIT COMMITTEE OF
DEVRY INC.
I. Authority
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The Audit Committee (the "Committee") of DeVry Inc. (the
"Company") is established, pursuant to the Bylaws of the Company,
to assist the Board of Directors (the "Board") in fulfilling its
oversight responsibilities for the Company.
II. Purpose
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The purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities of the
Company, including, but not limited to oversight of the
following:
1. integrity of the Company's financial statements;
2. the disclosure and financial reporting process, including
the Company's disclosure controls and procedures;
3. the Company's compliance with legal and regulatory
requirements;
4. qualifications, independence and performance of the
Company's independent accountants;
5. performance of the Company's internal audit function; and
6. maintenance of internal controls regarding financial,
accounting and legal compliance consistent with good business
practices.
In so doing, it is the responsibility of the Committee to
encourage open communication between the Committee, the outside
auditors, the internal auditors (or other persons carrying on the
internal audit function) and management of the Company.
The Committee's responsibilities are ones of thoughtful
oversight, recognizing that the Company's management is
responsible for the integrity and preparation of the Company's
financial statements and that the Company's outside auditors are
responsible for auditing those financial statements.
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In discharging its oversight role, the Committee is
empowered to (i) investigate any matter brought to its attention
with full access to all books, records, facilities and personnel
of the Company and (ii) engage and, on behalf of the Company,
compensate, or require the compensation of, independent counsel
and other advisers, including accounting advisers, as it
determines necessary to carry out its duties.
III. Membership
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The Committee shall be comprised of not less than three
members of the Board. The Company's Nominating and Governance
Committee ("Nominating Committee") shall recommend nominees for
appointment to the Committee annually and as vacancies or newly
created positions occur. Committee members shall be appointed by
the Board and may be removed by the Board at any time. The
Nominating Committee shall recommend to the Board, and the Board
shall designate, the Chair of the Committee. Members of the
Committee shall serve for one year or until their successors are
duly elected and qualified.
Each member of the Committee shall be independent in
accordance with the rules of the Securities and Exchange
Commission (the "SEC"), New York Stock Exchange (the "NYSE") and
any other regulatory body having jurisdiction over the Company's
financial reporting. All members shall be financially literate
in accordance with the rules of the NYSE. At least one member of
the Committee shall have auditing, accounting or related
financial management expertise, as the Board interprets such
qualification in its business judgment. In addition, no member
of the Committee may serve on the audit committee of more than
three public companies, including the Company, unless the Board
determines that such simultaneous service will not impair the
ability of such member to effectively serve on the Committee.
IV. Responsibilities
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The duties and responsibilities of a member of the Committee
contained herein shall be in addition to those required for a
member of the Board.
The primary general responsibility of the Committee is to
oversee the Company's financial reporting process on behalf of
the Board and report the results of its activities to the Board.
While the Committee has the responsibilities and powers set forth
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in this charter, 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 are in accordance with
generally accepted accounting principles ("GAAP") and
requirements of law. Management is responsible for the
preparation, presentation and integrity of the Company's
financial statements and for the appropriateness and legality of
the accounting principles and reporting policies that are used by
the Company. The outside auditors are responsible for auditing
the Company's financial statements annually, for reviewing the
Company's unaudited interim financial statements and for
reporting on certain matters to the Committee.
While the fundamental responsibility for the Company's
financial statements and disclosures rests with management, as
reviewed by the outside auditors, the Committee should request
management, internal auditors and outside auditors to inform them
of, and should review:
- major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and
major issues as to the adequacy of the Company's internal
controls and any special audit steps adopted in light of material
control deficiencies;
- analyses prepared by management and/or the independent
auditors setting forth significant financial reporting issues and
judgments made in connection with the preparation of the
financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements;
- the effect of regulatory and accounting initiatives, as well
as off-balance sheet structures, on the financial statements of
the Company;
- the effect of insider transactions on the financial
statements of the Company under Section 401 of the Sarbanes-Oxley
Act of 2002 ("Sarbanes-Oxley");
- earnings press releases and other reports or written or
electronic material (including website posted material)
disclosing "pro forma," or "adjusted" non-GAAP, information; and
- communications received from and Company responses to
governmental officials and generally reliable published reports
that raise material issues regarding the Company's financial
statements or accounting matters.
Within the overall general responsibility the following
shall be specific duties and responsibilities of the Committee.
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These are set forth as a guide with the understanding that the
Committee may supplement them as appropriate, but shall have them
reviewed and approved annually by the Board.
1. Financial Statements
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- Review and discuss with management and the outside auditor
the annual audited and quarterly unaudited financial statements
of the Company prior to their being filed with the SEC,
including: (a) an analysis of the outside auditors' judgment as
to the quality of the Company's accounting principles and
judgments made in connection with the preparation of the
financial statements, including analyses of the effect of
alternative GAAP methods on the financial statements; (b)
significant financial reporting issues and judgments made in
connection with the preparation of the financial statements,
including any significant changes in the Company's selection or
application of accounting principles and financial statement
presentations; (c) the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the
Company's financial statements; and (d) the Company's disclosures
under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
- Receive, review and discuss reports from the outside
auditors on: (a) all critical accounting policies and practices
to be used; (b) all alternative treatments of financial
information within GAAP that have been discussed with management,
ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the outside auditors;
(c) any communications between the outside auditors and its
national office respecting auditing or accounting issues
presented by the audit engagement; and (d) other material written
communications between the outside auditors and management, such
as any management letter, schedule of unadjusted differences,
reports on observations and recommendations on internal controls
or a listing of adjustments and reclassifications not recorded.
- Review, prior to issuance, earnings releases, and review and
discuss generally the types of information to be disclosed, and
the type of presentations to be made, including the use of "non-
GAAP financial measures," in the Company's earnings press
releases, as well as financial information and earnings guidance
provided to analysts and ratings agencies. The Chair of the
Committee may represent the entire Committee for purposes of the
review of earnings release and such other information.
- Review and discuss with the co-CEOs and CFO the basis for
the certifications to be provided in the Company's Form 10-K and
Form 10-Qs.
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2. Internal Control Environment
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- Review and discuss with the outside auditors, the head of
the internal audit department (or other persons responsible for
the internal audit function) and management the adequacy and
effectiveness of the Company's internal accounting and financial
controls, including:
- any significant deficiencies in the design or operation of
the internal controls;
- any material weaknesses in the internal controls;
- any special steps adopted in light of any material control
deficiencies;
- any alleged fraud (whether or not material) that involves
management or the Company's employees who have a significant role
in the Company's internal controls; and
- the Company disclosure controls and procedures and
management reports thereon.
- Review management's periodic assessments of the
effectiveness of the Company's internal controls over financial
reporting and procedures for financial reporting and the outside
auditors' attestations as to management's assessments, as well as
management's periodic certifications as to internal controls over
financial reporting and related matters, including disclosures to
the Committee as to deficiencies or weaknesses in internal
controls and procedures for financial reporting or fraud by
persons involved therewith.
- Discuss with management, the head of the internal audit
department (or other persons responsible for the internal audit
function) and the outside auditors the adequacy and effectiveness
of the Company's accounting and financial controls, including the
Company's policies and procedures to assess, monitor and manage
the Company's exposure to risk (business and financial) and the
steps management has taken with respect thereto.
- Review all related party transactions and the controls that
require such transactions to be appropriately reviewed, approved
and disclosed as required.
3. Internal Audit
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- Oversee and discuss the internal auditing activities and
performance, including the appointment, and replacement when
appropriate, of the head of the Company`s internal audit
department (or other persons responsible for the internal audit
function), the internal audit charter and the budget and staffing
for the internal audit department.
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- Review with the head of the internal audit department (or
other persons responsible for the internal audit function) the
scope of the annual operational audit plan and receive, on a
periodic basis, summary audit reports from completed audits,
progress reports on the annual audit plan and a status report
detailing actions taken, or to be taken, by management to address
outstanding issues or findings.
- Review reports of internal audit activity and
recommendations.
- Review with the outside auditors the performance and
effectiveness of the internal audit function and its role in the
internal control environment.
4. External Audit
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- The Committee shall be directly responsible for, and have
sole authority as to, the appointment (subject to shareholder
ratification), retention, termination and compensation (on behalf
of the Company) and oversight of the work of the outside
auditors, including resolution of disagreements between
management and the auditors regarding accounting matters and
financial reporting, all for the purpose of such outside
auditors' preparation and issuance of audit reports, periodic
reports, attestations, comfort letters and other related work as
to the Company's financial statements, financial information and
accounting matters. The outside auditors shall report directly
to the Committee.
- The Committee shall have sole authority to, and must, pre-
approve all audit and non-audit services provided by the outside
auditors to the Company (including all fees and terms of service
but subject to any de minimis exceptions permitted by law for
non-audit services, which must, in any event, be approved
annually by the Committee prior to completion of the annual
audit). The Committee may take any measures that it determines
to be appropriate to assure that the independent auditors are not
engaged to perform specific non-audit services proscribed by law
or regulation. The Committee may delegate pre-approval authority
to a member or members of the Committee or to a subcommittee of
the Committee. The decisions of any Committee members or
subcommittee to whom pre-approval authority is delegated must be
presented to the full Committee at its next scheduled meeting.
- At least annually, consider the independence of the outside
auditors, including whether the outside auditors' performance of
permissible non-audit services is compatible with the auditor's
independence, and obtain from the outside auditors a written
statement delineating all relationships between the outside
auditors and the Company and any other relationships that may
adversely affect the independence of the auditor. Discuss with
the outside auditors any disclosed relationships or services that
may impact the objectivity and independence of the outside
auditors.
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- At least annually, the Committee shall obtain and review a
report by the outside auditors describing
- the outside auditing firm's internal quality control
procedures;
- 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
- all relationships between the outside auditors and the
Company (to assess the auditor's independence).
- Based upon the foregoing two paragraphs, the outside
auditor's work throughout the year, and any other relevant
factors, evaluate the performance of the Company's outside
auditors in the fulfillment of their role, including a review and
evaluation of the lead partner of the Company's outside auditors.
In making its evaluation, the Committee shall take into account
the opinions of management and the head of the Company's internal
audit department (or other persons responsible for the internal
audit function).
- Ensure the rotation of the lead and concurring audit
partners required under Section 203 of Sarbanes-Oxley and
applicable SEC and NYSE rules.
- Meet separately with the independent accountants to discuss
any matters that the Committee or the outside auditors believe
should be discussed privately, including any audit problems or
difficulties and management's response.
- Review periodic communications required by external audit
regulators between the outside auditors and the Audit Committee
including relevant matters in Statement on Auditing Standards
("SAS") No. 61 and SAS No. 100 (as modified, amended or
supplemented from time to time). The communication shall include
the outside auditors' judgements about the quality and
applicability of the Company's accounting principles,
appropriateness of underlying estimates, and the effect of
significant events, transactions and changes in accounting
estimate applied to the Company's financial reporting.
- Review with management and the outside auditors the scope
and results of the annual audit, including any problems,
difficulties or restrictions encountered during the audit,
including any written communications between the outside auditors
and management.
- Recommend to the Board whether the audited financial
statements should be included in the annual report on Form 10-K.
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- Set, and recommend for Board approval, clear hiring policies
for the Company as to employees or former employees of the
outside auditors that meet legal requirements and stock exchange
rules.
5. Compliance
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- Establish procedures for receipt, retention and handling of
confidential and anonymous submission by employees or others
relating to controls, accounting or auditing matters and any
other matters as might materially affect the Company.
- Discuss with management, the head of the internal audit
department (or other persons responsible for the internal audit
function) and the outside auditors the Company's adherence to
legal compliance programs and its Code of Conduct and the steps
management has taken to require and monitor such adherence by
Company employees and agents.
- Review and discuss the status of compliance with accounting,
legal, regulatory, tax and other developments of major
significance to the Company.
6. Other
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- Review and reassess this Charter of the Committee on an
annual basis, or more frequently as appropriate, and recommend
required changes to the Board.
- Maintain minutes and records of all meetings and activities
of the Committee.
- Have included in the Company's annual proxy relating to
meetings of shareholders, all reports and information as may be
required by SEC or other regulations.
- Perform an annual evaluation of the Committee's performance.
- Require each of its members to certify annually that such
person meets the independence requirements prescribed by law
and/or stock exchange rules, including that such person has
received no compensation from the Company other than director and
Board committee fees.
- Perform any other activities and special reviews consistent
with the Charter, the Company's Bylaws and governing law as the
Committee or the Board deems necessary or appropriate.
V. Committee Meetings
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The Committee shall meet as least four times a year, or more
frequently as circumstances dictate at the discretion of the
Chair. The Committee shall establish an agenda for each meeting.
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The Committee may ask representatives of the Company's management
and/or others to attend Committee meetings and to provide
pertinent information as appropriate. The Committee shall
periodically meet separately in executive session with each of
management, the head of the internal audit department (or other
personnel responsible for the internal audit function) and the
outside auditors.
VI. Meetings with the Board of Directors
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The Committee shall meet with the Board at each regularly
scheduled Board meeting, or such additional times as the Board
deems appropriate, to discuss the status of its work. The
Committee will provide the Board with a report of its activities
following each meeting of the Committee at the next regularly
scheduled meeting of the Board, or sooner depending on the
circumstances. The Committee shall review with the Board any
issues that arise as to the quality or integrity of the Company's
financial statements, the Company's compliance with legal or
regulatory requirements, the performance and independence of the
Company's outside auditors or the performance of the internal
audit function.
VII. Access to the Corporation and Resources
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The Committee shall have access to all Company books,
records, facilities and personnel needed to perform its
responsibilities, including meetings with the independent
accountants, the personnel performing the internal auditing
function, General Counsel's office and any other personnel deemed
necessary. The Committee shall have the authority to engage
independent legal, accounting and other advisers, as it
determines necessary to carry out its duties, and be provided by
the Company with appropriate funding, as determined by the
Committee, in order to discharge its responsibilities.
VIII. Certification
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This Charter of the Audit Committee, as amended, was duly
approved and adopted by the Board of Directors on the 10th day of
February, 2004.
________________________________________Secretary