Exhibit 99.1
CHARTER OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS
OF
TRANSIT GROUP, INC.
September 4, 2001
1. Purpose of Audit Committee. The purpose of the Audit Committee is to
assist the Board in fulfilling its responsibility to ensure the fairness and
accuracy of the Company's financial statements and to ensure the existence of
appropriate internal financial controls, and the independence of the independent
public accountant's engaged to audit the Company's financial statements (the
"external auditors"), and to render the reports required of the Audit Committee
pursuant to Item 306 of Regulation S-K, and to allow the Company to make the
disclosures required by Item 7(e)(3) of Schedule 14(A) and related Commission
regulations.
2. Qualifications of Audit Committee. The Audit Committee shall consist of
not less than two nor more than five directors. Each member of the Audit
Committee shall be generally familiar with the general requirements of financial
reporting.
3. Duties of the Audit Committee. Subject to the second sentence of
Paragraph 10, the Audit Committee will perform the following duties in the
manner and priority the Audit Committee determines, in its discretion, to be
appropriate under the circumstances:
(a) Review the Company's earnings statements with management and with the
Company's external auditors prior to the release of such statements to the
public;
(b) Assure that the Company's interim financial statements are reviewed by
the Company's external auditors, as required by Item 310(b) of Regulation S-K,
prior to the filing of such interim financial statements with the Commission as
part of the Company's report on Form 10-K;
(c) Review and discuss the Company's audited financial statements with
management;
(d) Review and discuss the Company's audited financial statements with the
Company's external auditors and shall review those matters required to be
discussed by SAS-61, as modified or supplemented from time to time;
(e) Receive the written disclosures and the letter from the Company's
external auditors required by Independent Standards Board's Standard No. 1, as
modified or supplemented, discuss with the external auditors their independence,
and review all audit and other services performed by the external auditors for
the Company to assure that such services do not compromise the external
auditors' independence;
(f) Review annually the scope of the external auditors' work, including
any non-auditing or consulting services;
(g) Review with the Company's external auditors all adjustments made to
the Company's audited financial statements, including a reconciliation of any
adjustments made in the audited financial statements from the Company's
quarterly interim financial statements;
(h) Review with management and the Company's external auditors any
significant financial reporting issues or judgments called for in connection
with the preparation of the Company's financial statements, including the
adequacy and appropriateness of any reserves, policies relating to the
recognition of revenue, the quality and appropriateness of the Company's
accounting principles, and any other matters which, in its judgment, or the
judgment of the Company's external auditors, could have a material impact on the
Company's financial statements;
(i) Meet with the Company's external auditors and with management to
review and assess any material financial risk exposure to the Company and the
steps management has or plans to take to monitor and control financial risk;
(j) Review with the Company's external auditors and management the
adequacy of the Company's internal financial controls and reporting systems;
(k) Confer with the Company's external auditors about any matters
described in Section 10A of the Securities and Exchange Act of 1934 that may
have come to the attention of the external auditors;
(l) Review any major changes to the Company's auditing and accounting
policies and practices suggested by the Company's external auditors or by
management. (In undertaking the duties specified herein, in communications with
the Company's external auditors, the Audit Committee will, in accordance with
SAS-6 1, communicate with the external auditors with respect to (1) methods used
to account for significant or unusual transactions; (2) the effect of
significant accounting policies in controversial or emerging areas for which
there is a lack of authoritative guidance or consensus; (3) the process used by
management in formulating particularly sensitive accounting estimates, and the
basis for the auditors conclusions regarding the reasonableness of those
estimates; and (4) disagreements with management, if any, over the application
of accounting principles, the basis for management's accounting estimates, and
the disclosures in the Company's financial statements);
(m) Recommend annually the selection and engagement of the Company's
external auditors and review their fees and the proposed scope and plan of the
annual audit;
(n) Review the external auditors' management letter and consider any
comments made by the external auditors with respect to improvements in the
internal accounting controls of the Company, consider any corrective action
recommended by the external auditors, and review any corrective action taken by
management;
(o) Review and devote attention to any areas in which management and the
Company's external auditors disagree and determine the reasons for such
disagreement;
(p) Review the performance of the external auditors and, if appropriate,
recommend that the Board replace any external auditor failing to perform
satisfactorily;
(q) Review the performance of the Company's Chief Financial Officer and
Controller;
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(r) Review any difficulties any external auditor may have encountered with
respect to performance of an audit, including, without limitation, any
restrictions placed upon the scope of the audit on access to information, or any
changes in the proposed scope of the audit;
(s) Provide, as part of the Company's proxy filed pursuant to Regulation
14A or 14C, as applicable, the report required by Item 306 of Regulation S-K and
cause a copy of that report to be included annually in the Company's proxy
solicitation materials;
(t) Periodically review the adequacy of this Charter and make
recommendations to the Board with respect to any changes in this Charter.
4. Access to Information. In order to perform its obligations, the Audit
Committee shall have unrestricted access to all relevant internal and external
Company information and to any officer, director or employee of the Company.
5. Employee Access to Audit Committee. Any person employed by the Company
and any of the Company's independent contractors will have access to the Audit
Committee to report any matter which such person believes would be of interest
to the Audit Committee or of general concern to the Audit Committee or the
Board. Contacting a member of the Audit Committee to report any irregularity,
questionable activity, or other matter will not subject the person making the
report to discipline.
6. Frequency of Meetings.
(a) The Audit Committee will meet each quarter prior to the release of the
Company's earnings statements to review the earnings release. In addition, the
Audit Committee will convene if a meeting is noticed by its Chairman, any member
of the Audit Committee, any member of the Board, the Chief Financial Officer, or
the Chief Executive Officer.
(b) The Audit Committee, at least once a year, will meet privately with
the Company's external and internal auditors, and no representative of the
Company's management shall attend such meetings.
7. Access to Legal Counsel. The Audit Committee, at its request, shall
have access to the Company's outside legal counsel, and, if requested, to its
own independent legal counsel. The Company will pay for the cost of any such
legal counsel.
8. Meeting Procedures.
(a) Members of the Audit Committee shall endeavor to attend all meetings
of the Audit Committee. The Audit Committee may meet telephonically or in person
and may take action upon the written consent of all members. A majority of the
Audit Committee will constitute a quorum for all purposes.
(b) Written minutes will be maintained for each meeting of the Audit
Committee.
9. Other Duties. The Audit Committee will perform such other duties as the
Board may assign to it.
10. Limitation of Audit Committee Duties. The Audit Committee is not an
investigative committee of the Board and shall have no investigative duties
unless expressly
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assigned to the Audit Committee by the Board. The Audit Committee will exercise
its business judgment in performing its duties under this Charter, including the
duties outlined in Paragraph 3, and may emphasize and prioritize those duties
and responsibilities set forth above which the Committee, in its discretion and
judgment, believes are the most important, given the particular circumstances.
It is not the duty of the Audit Committee to undertake the audit of the Company
itself, to plan the audit, or to undertake any of the responsibilities of the
Company's internal or external auditors. The Audit Committee is not required to
follow the procedures required of auditors in performing reviews of interim
financial statements or audited financial statements. In performing its
functions, the Audit Committee may rely upon information provided to it by
management, by the Company's internal and external auditors, or by legal
counsel. If any claim is asserted against the Audit Committee, any of its
members or the Company by a stockholder or any other person, nothing in this
Charter shall be construed to limit or restrict any defense available to the
Audit Committee, any of its members, or the Company.
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