AUDIT COMMITTEE CHARTER
Published on April 13, 2007
ACCESS
PHARMACEUTICALS, INC.
AMENDED
AND RESTATED AUDIT COMMITTEE CHARTER
Charter
This
charter governs the operations of the Audit Committee (the "Committee") of
the
Board of Directors (the "Board") of Access Pharmaceuticals, Inc. (the
"Company"). At least annually, the Committee shall review and reassess the
adequacy of this charter and recommend any proposed changes to the Board for
its
approval. The Company shall make this charter available on its website at
www.accesspharma.com.
Membership
of Committee
The
Committee shall be composed of at least three directors appointed by the
Board.
All
Committee members shall be able to read and understand fundamental financial
statements, including the Company’s balance sheet, income statement, and cash
flow statement, and at least one member shall have past employment experience
in
finance or accounting, requisite professional certification in accounting,
or
any other comparable experience or background which result’s in the individual’s
financial sophistication sufficient to satisfy the requirements of the
Commission.
The
Committee shall be appointed by the Board, upon recommendation of the Nominating
and Corporate Governance Committee of the Board, if one exists. The chairman
of
the Committee shall be designated by a majority vote of the full Committee.
Committee members shall serve until their successors are duly appointed and
qualified or until their earlier removal by the Board at any time.
Meetings
The
Committee shall meet as often as it shall determine, but not less frequently
than as required by the Commission, AMEX or other applicable rule or regulation.
The Committee may request any officer or employee of the Company or the
Company's outside counsel or independent auditor to attend a meeting of the
Committee or to meet with any members of, or any consultant to, the
Committee.
Except
as
otherwise provided by the Certificate of Incorporation or By-Laws of the
Company, the frequency, location and operation of meetings and similar
procedural matters relating to the Committee shall, to the extent applicable,
be
the same as those that relate to meetings of, and procedural matters concerning,
the Board.
Purposes
of the Committee
The
Committee shall assist the Board in overseeing the integrity of the Company's
financial statements, the Company's compliance with legal and regulatory
requirements, the independent auditor's qualifications and independence and
the
performance of the Company's independent auditors. In doing so, it is the goal
of the Committee to maintain free and open communication among the Committee,
independent auditor and management of the Company. In discharging its oversight
role, 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.
Responsibilities
and Processes
The
primary responsibility of the Committee is to select, and ensure the
independence of the independent auditor, oversee the Company's financial
reporting process on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing the Company's
financial statements, and the independent auditor is 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 Committee should take the
appropriate actions to set the overall corporate "tone" for quality financial
reporting, sound business risk practices and ethical behavior.
The
Committee may form and delegate authority to subcommittees consisting of one
or
more members when appropriate. In addition, the Committee is authorized to
engage, and the Company shall provide funding for, such independent counsel
and
other advisors as the Committee may deem necessary or advisable to retain to
assist the Committee in carrying out its duties. The Company shall provide
appropriate funding, as determined by the Committee, for payment of compensation
to any such counsel or other advisors and to any registered public accounting
firm engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attestation services for the Company. The
Company shall also provide appropriate funding, as determined by the Committee,
for payment of ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its duties.
The
following shall be the principal recurring processes of the 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.
Relating
to the Independent Auditor
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The
Committee shall have a clear understanding with management and the
independent auditor that the independent auditor is ultimately
accountable, and must report directly, to the Committee, as
representatives of the Company's stockholders. The Committee shall
have
the sole authority to appoint (subject, if applicable, to ratification
by
the stockholders of the Company), terminate and replace the independent
auditor. The Committee may receive input from management on these
matters
but shall not delegate these responsibilities. The Committee shall
be
responsible for the oversight of the independent auditor, including
the
resolution of any disagreements between management and the independent
auditor regarding financial reporting or other
matters.
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The
Committee shall have the sole authority to approve the scope, fees
and
terms of all audit engagements, as well as all permissible non-audit
engagements of the independent auditor. The Committee shall pre-approve
all audit and permissible non-audit services to be performed for
the
Company by the independent auditor, giving effect to the "de minimus"
exception for ratification of certain non-audit services set forth
in
Section 10A(a)(i)(1)(B) of the Exchange Act. On an annual basis,
the
Committee shall consider whether the provision of non-audit services
by
the independent auditor, on an overall basis, is compatible with
maintaining the independent auditor's independence from
management.
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The
Committee shall ensure that it receives from the auditors a formal
written
statement delineating all relationships between the auditor and the
Company, consistent with Independence Standards Board Standard 1.
The
Committee shall discuss with the auditor any disclosed relationships
or
services that may impact the objectivity and independence of the
auditor
and shall take, or recommend that the Board take, appropriate action
to
oversee the independence of the auditor. The Committee shall ensure
the
rotation of the lead (or coordinating) audit partner having primary
responsibility for the audit and the audit partner responsible for
reviewing the audit, to the extent required by law.
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Relating
to Audits and Financial Statements
| · |
The
Committee shall discuss with the independent auditor the overall
scope and
plans for the annual audit. In addition, the Committee shall discuss
with
management and the independent auditor 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.
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The
Committee shall review with management and the independent auditor
the
audited financial statements (including management's discussion and
analysis contained therein) to be included in the Company's Annual
Report
on Form 10-K, including its judgment as to the quality, and not only
the
acceptability, of accounting principles, the reasonableness of significant
judgments and the clarity of the disclosures in the financial statements.
The Committee also shall discuss the results of the annual audit
and any
other matters required to be communicated to the Committee by the
independent auditor under generally accepted accounting principles.
Based
on the foregoing and on review of other information made available
to the
Committee, the Committee shall recommend to the Board whether the
audited
financial statements should be included in the Company's Form 10-K.
In
addition, the Committee shall prepare annually a report to the
stockholders of the Company, as required by the rules of the
Commission.
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The
Committee shall similarly review the interim financial statements
with
management and the independent auditor prior to the filing of each
of the
Company's Quarterly Reports on Form 10-Q. The Committee also shall
discuss
the results of the quarterly review and any other matters required
to be
communicated to the Committee by the independent auditor under generally
accepted accounting standards. The chairman of the Committee may
represent
the entire Committee for the purposes of this
review.
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The
Committee shall discuss with the independent auditor the matters
required
to be discussed by Statement on Auditing Standards No. 61 relating
to the
conduct of the audit, including any difficulties encountered in the
course
of the audit work, any restrictions on the scope of activities or
access
to requested information, and any significant disagreements with
management. The Committee also shall obtain from the independent
auditor
assurance that Section 10A(b) of the Exchange Act (including auditor
discovery that illegal acts may have occurred) has not been
implicated.
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The
Committee shall review each report of the independent auditor, delivered
to the Committee pursuant to Section 10A(k) under the Exchange Act,
concerning: (a) all critical accounting policies and practices to be
used, (b) all alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with
management, ramifications of the use of such alternative disclosures
and
treatments and the treatment preferred by the independent auditor
and
(c) other material written communications between the independent
auditor and management, such as any management letter or schedule
of
unadjusted differences.
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The
Committee shall review the disclosures made by officers of the Company
in
the certification required to be filed (a) as part of the Company's
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, regarding
any significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving management
or other employees who have a significant role in the Company's internal
controls and (b) pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, regarding the compliance of periodic reports and their fair
presentation of the Company's financial statements and results of
operations.
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Relating
to Other Compliance Matters
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The
Committee shall establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and the confidential,
anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters and shall monitor ongoing
compliance with those provisions.
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The
review and approval of the Committee shall be required prior to the
Company entering into any transactions with a related
party.
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The
Committee shall review such other reports, adopt such other policies
and
implement such other procedures as shall be necessary to comply with
the
rules and regulations that, from time to time, may be established
by AMEX
or the Commission.
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