Exhibit 99.1
CHARTER OF THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF
AMERITRANS CAPITAL CORPORATION
I. AUDIT COMMITTEE PURPOSE.
The Audit Committee (the "Committee") of Ameritrans Capital Corporation
(the "Corporation") is appointed by the Board of Directors (the "Board") to
assist the Board in fulfilling its oversight responsibilities. The
Committee's primary duties and responsibilities are to: (i) monitor the
integrity of the Company's financial reporting process and systems of
internal controls regarding finance, accounting, and legal compliance; (ii)
appoint the Company's independent accountants; (iii) monitor the
independence and performance of the Company's independent accountants, the
external audit function, and the loan review function; and (iv) provide an
avenue of communication among the independent accountants, management, the
external audit function, and the Board.
II. AUDIT COMMITTEE AUTHORITY.
The Audit Committee has the authority (i) to conduct any investigation
appropriate to fulfilling its responsibilities and has direct access to the
independent accountants, as well as anyone in the Company; (ii) to retain,
at the Company's expense, special legal, accounting, or other consultants
or experts it deems necessary in the performance of its duties; (iii) to
appoint and determine the compensation of the independent accountants, and
the Company shall provide appropriate funding for such compensation; and
(iv) to resolve disagreements between the Company's management and the
independent accountants regarding financial reporting.
III. ROLE AND INDEPENDENCE; ORGANIZATION.
A. The Committee appoints the Company's independent accountants and assists
the Board in fulfilling its responsibility for oversight of the quality and
integrity of the accounting, internal control, and financial reporting
practices of the Company. It may also have such other duties as may from
time to time be assigned to it by the Board. The membership of the
Committee shall consist of at least three directors, who are each free of
any relationship that, in the opinion of the Board, may interfere with such
member's individual exercise of independent judgment. No Committee member,
other than in his or her capacity as a member of the Board of Directors or
of the Committee, may accept any consulting, advisory, or other
compensatory fee from the Company. No Committee member may be an officer,
employee, or 10% or greater shareholder of the Company or any parent or
subsidiary thereof. Each Committee member shall also meet the independence
and financial literacy requirements for serving on audit committees, and at
least one member shall have accounting or related financial management
expertise, as set forth in the applicable rules of NASDAQ.
B. A director will not be considered "independent" under NASDAQ rules, if,
among other things, he or she has:
1. Been employed by the Company in the current or past three years;
2. Accepted any compensation from the Company in excess of $60,000 during the
previous fiscal year (except for Board service, retirement plan benefits,
or non-discretionary compensation).
3. An immediate family member who is, or has been in the past three years,
employed by the Company as an executive officer;
4. Been a partner, controlling shareholder, or an executive officer of any
for-profit business to which the Company made, or from which it received,
payments (other than those which arise solely from investments in the
Company's securities) that exceed five percent of the Company's
consolidated gross revenues for that year, or $200,000, whichever is more,
in any of the past three years; or
5. Been employed as an executive of another entity where any of the Company's
executives serve on that entity's compensation committee.
IV. AUDIT COMMITTEE COMPOSITION AND MEETINGS.
A. The Audit Committee shall be comprised of at least three (3) members, each
of whom must comply with applicable NASDAQ Marketplace Rules, meet the
independence requirements set forth in Article III above and must have a
basic understanding of finance and accounting and be able to read and
understand fundamental financial statements, and at least one member of the
Audit Committee shall have accounting or related financial management
expertise.
B. Audit Committee members shall be appointed by the Board. If an Audit
Committee Chair is not designated or present, the members of the Audit
Committee may designate a Chair by majority vote of the Audit Committee
membership. The Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, and Compliance Officer, at the request of the Audit
Committee, may attend Audit Committee meetings, as non-voting, non-member
liaisons of the Company.
C. The Audit Committee shall meet at least four times annually, or more
frequently, as circumstances dictate. The Audit Committee should meet
privately in executive session at least annually with management, the
independent accountants, and as a committee to discuss any matters that the
Audit Committee or each of these groups believe should be discussed. In
addition, the Audit Committee, or at least its Chair, should communicate
with management and/or the independent accountants quarterly to review the
Company's financial statements and significant findings based upon the
auditors' limited review procedures.
V. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES.
In carrying out its responsibilities, the Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the Board and stockholders that the corporate
accounting and reporting practices of the Corporation are in accordance with all
requirements and are of the highest quality.
A. REVIEW PROCEDURES. The Audit Committee shall:
1. Review and reassess the adequacy of this charter at least annually, submit
the charter to the Board of Directors for approval annually, and make the
document publicly available.
2. Review the Audit Committee budget, plan and changes in plan, activities,
and organizational structure, as needed. 3. On at least an annual basis,
review with the Company's counsel any legal matters that could have a
significant impact on the Company's financial statements, compliance with
applicable laws and regulations, and inquiries received from regulators or
governmental agencies, if any.
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B. FINANCIAL REPORTING PROCESSES.
1. In consultation with the independent accountants review the integrity of
the organization's financial reporting processes, both internal and
external.
2. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principals as applied in
its financial reporting. 3. Consider and approve, if appropriate, major
changes to the Corporation's auditing and accounting principals and
practices, including internal controls, as suggested by the independent
accountants, or management.
C. DOCUMENTS/REPORTS REVIEW.
1. Submit the minutes of all meetings of the Committee to, or discuss the
matters discussed at each Committee meeting with, the Board.
2. Review with financial management and the independent accountants the
Corporation's annual and periodic financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by
the independent accountants, considering, as appropriate, whether the
information contained in these documents is consistent with the information
contained in the financial statements and whether the independent
accountants and legal counsel are satisfied with the disclosure and content
of such documents. The Chair may represent the entire Committee for
purposes of this review.
D. INDEPENDENT ACCOUNTANTS.
The Audit Committee will recommend to the Board the selection of the
independent accountants, considering independence and effectiveness and approve
the fees and other compensation to be paid to the independent accountants. On an
annual basis, the Committee shall review and discuss with the independent
accountants all significant relationships the independent accountants have with
the Corporation and relevant third parties to determine the independent
accountants' independence. In making this determination, the Committee shall
consider not only auditing and other traditional accounting functions performed
by the independent accountants, but also consulting, legal, and other
professional services rendered by the independent accountants and their
affiliates. The Committee will also require the independent accountants to
submit on an annual basis a formal written statement delineating all
relationships among the Corporation, the independent accountants, and their
respective affiliates.
1. The independent accountants are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the accountants and shall be responsible
for the annual appointment of the independent accountants or approve any
discharge of accountants when circumstances warrant.
2. The Audit Committee shall approve the audit fees and other compensation to
be paid to the independent accountants for permitted services.
3. Prior to releasing the year-end earnings, the Audit Committee shall discuss
the results of the audit with the independent accountants. Discuss certain
matters required to be communicated to Audit Committee.
4. In making this determination, the Committee shall consider not only
auditing and other traditional accounting functions performed by the
independent accountants, but also consulting, legal, and other professional
services rendered by the independent accountants and their affiliates. The
Committee will also require the independent accountants to submit on an
annual basis a formal written statement delineating all relationships among
the Corporation, the independent accountants, and their respective
affiliates.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
6. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy of the
organization's financial statements. Among the items to be discussed in
these meetings are the independent accountants' evaluation of the
Corporation's financial, and accounting personnel, and the cooperation that
the independent accountants received during the course of each audit.
E. PROCESS IMPROVEMENT.
1. Establish regular and separate systems of reporting to the Committee by
each of management, and the independent accountants, regarding any
significant judgments made in management's preparation of the financial
statements and the view of each as to appropriateness of such judgments.
2. Following completion of the annual audit, review separately with each of
management and the independent accountants, any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required information.
3. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial statements.
4. Review with the independent accountants, and management the extent to which
changes or improvements in financial or accounting practices, as approved
by the Committee, have been implemented. This review should be conducted at
an appropriate time subsequent to implementation of changes or
improvements, as decided by the Committee.
F. OTHER AUDIT COMMITTEE RESPONSIBILITIES.
(a.) The Audit Committee shall also:
(i) Annually prepare a report to shareholders as required by the SEC. This
report should be sent to shareholders, together with the Company's
annual proxy statement.
(ii) Review significant reports prepared by the Company's internal and/or
external loan review personnel, together with management's response
and follow-up to these reports.
(iii) Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
(iv) Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
(v) Review the Company's risk management policy and systems to ensure the
various types of risk are defined, measured, controlled, and
monitored.
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