AUDIT COMMITTEE CHARTER
Organization
This Charter governs the operations of the audit Committee of the Board of
Directors of Bluetorch ,Inc. The committee shares, reviews and reassess
the charter at least annually and recommends any appropriate changes to the
Board of Directors. The committee shall be appointed by the Board of Directors
and shall be comprised as follows:
a) If the total board consists of fewer than three independent members, then
all independent board members shall sit on the Audit Committee.
b) If the total board consists of three or more independent members then the
Audit Committee shall consists of at least three members, the majority of
whom shall be independent according to NASD requirements.
c) All Audit Committee members shall meet the NASD requirements with respect
to financial literacy and at least one committee member who is also
independent shill be a "financial expert."
The Audit Committee shall meet as often as may be deemed necessary or
appropriate in its judgment, but at least four times each year coinciding with
the release of the Company's financial statements. Meetings of the committee may
be held either in person or telephonically.
Statement of Policy
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders the investment community. and others relating to the company's
financial statements and financial reporting process, the system of internal
accounting and financial controls, the annual Independent audit of the Company's
financial statements, and the legal compliance and ethics programs as
established by management and the board. In so doing. the Committee shall remain
free and open communications between the Committee, the independent auditors and
management of the Company. In discharging its oversight roles the Committee is
empowered to investigate any matter brought to its attention with full access to
all books, records, facilities and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of
their activities to the Board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The Committee in carrying out its
responsibilities believes its policies and procedures should remain flexible in
order to best react to changing conditions and circumstances.
The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
* The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately accountable to
the board and the Audit Committee, as representatives of the Company's
shareholders. The Committee shall have the ultimate authority for and
responsibility to evaluate and annually recommend the selection, retention, and,
where appropriate, the replacement of the independent auditors. The Committee
shall review and approve the performance by the independent auditors of any
nonaudit-related service if the fees for such service are projected to exceed
15% of the most recently completed fiscal year's combined audit fees and
audit-related service fees. The Committee shall review and discuss with the
auditors their independence from management and the Company and the matters
included in the written disclosures required by professional independence
standards applicable to the independent auditors. Annually, the Committee shall
review and assess whether the independent auditor's performance of non-audit
services is compatible with the auditor's independence. In addition, The Audit
Committee shall review any candidate for the senior accounting and/or financial
executive position prior to his or her appointment by the Company.
* The Committee shall review and discuss with the independent auditors and with
the head of the Company's finance or internal audit department the overall scope
and plans for the audits. Also, the Committee shall discuss with management and
the independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the Committee
shall meet separately with the independent auditors, without management present,
to discuss the results of their respective audit procedures.
*The Committee shall review and discuss the results of the quarterly reviews and
any other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards. The chair of
the Committee may represent the entire Committee for the purpose of this review.
The Committee shall review and discuss with management and the independent
auditors the financial statements to be included in the Company's annual report
on Form 10-K, including their judgment about the quality, not just the
acceptability, of accounting principles, the reasonableness of significant
judgments, the basis and appropriateness of any change in significant accounting
policies and the clarity of the disclosures in the financial statements. Also,
the Committee shall review and discuss the results of the annual audit and any
other matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards.
* The Committee shall review and discuss with management and the independent
auditors any material financial or non-financial arrangements of the Company
which do not appear on the financial statements of the Company and any
transactions or courses of dealing with parties related to the Company which
transactions are significant in size or involve terms or other aspects that
differ from those that would likely be negotiated with independent parties, in
each case where such arrangements or transactions are relevant to an
understanding of the company's financial statements.