Audit Committee Charter Revised0704

Audit Committee Charter Revised0704

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CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF IMAGE ENTERTAINMENT, INC. I. AUDIT COMMITTEE PURPOSE The Audit Committee is appointed by the Board of Directors of Image Entertainment, Inc. (the Company") to assist the Board in fulfilling its oversight responsibilities. The Audit Committee’s primary duties and responsibilities are to: ! Monitor the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting, and legal compliance. ! Monitor the independence and performance of the Company’s independent auditors and internal auditing department. ! Provide an avenue of communication among the independent auditors, management, the internal auditing department, and the Board of Directors. The Audit Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities and it has direct access to the independent auditors as well as anyone in the organization. The Audit Committee has the ability to retain, at the Company’s expense, special legal, accounting, or other consultants or experts it deems necessary in the performance of its duties. II. AUDIT COMMITTEE COMPOSITION AND MEETINGS Audit Committee members shall meet the requirements of the NASDAQ Exchange. The Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be independent nonexecutive directors, free from any ...

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CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF IMAGE ENTERTAINMENT, INC.I.AUDIT COMMITTEE PURPOSE  The Audit Committee is appointed by the Board of Directors of Image Entertainment, Inc. (the Company") to assist the Board in fulfilling its oversight responsibilities. The Audit Committee’s primary duties and responsibilities are to: Monitor the integrity of the Company’s financial reporting process and systems of internal ! controls regarding finance, accounting, and legal compliance. Monitor the independence and performance of the Company’s independent auditors and internal ! auditing department. Provide an avenue of communication among the independent auditors, management, the internal ! auditing department, and the Board of Directors.  The Audit Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities and it has direct access to the independent auditors as well as anyone in the organization. The Audit Committee has the ability to retain, at the Company’s expense, special legal, accounting, or other consultants or experts it deems necessary in the performance of its duties. II.AUDIT COMMITTEE COMPOSITION AND MEETINGS Audit Committee members shall meet the requirements of the NASDAQ Exchange. The Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be independent nonexecutive directors, free from any relationship that would interfere with the exercise of his or her independent judgement. All members of the Audit Committee shall 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 and experience.  Audit Committee members shall be appointed by the Board on recommendation of the Nominating Committee. 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 Audit Committee shall meet from two to four times annually, or as otherwise deemed necessary. The Audit Committee Chair shall prepare and/or approve an agenda in advance of each meeting. The Audit Committee should meet privately in executive session at least annually with management, the director of the internal auditing department, the independent auditors 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 the independent auditors quarterly to review the Company’s financial statements and significant findings based upon the auditors limited review procedures.
III.AUDIT COMMITTEE RESPONSIBILITIES AND DUTIESReview Procedures (1)Review and reassess the adequacy of this Charter at least annually. Submit the charter to the Board of Directors for approval and have the document published at least every three years in accordance with SEC regulations. (2)Review the Company’s annual audited financial statements prior to filing or distribution. Review should include discussion with management and independent auditors of significant issues regarding accounting principles, practices and judgments. (3)In consultations with management, the independent auditors and the internal auditors, consider the integrity of the Company’s financial reporting processes and controls. Discuss significant financial risk exposures and the steps management has taken to monitor, control and report such exposures. Review significant findings prepared by the independent auditors and the internal auditing department together with management’s responses. Timing and Meeting Requirements(4)Review with financial management and the independent auditors the Company’s quarterly financial results prior to the release of earnings and/or the Company’s quarterly financial statements prior to filing or distribution. Discuss any significant changes to the Company’s accounting principles and any items required to be communicated by the independent auditors in accordance with SAS 61 (see item 9). The Chair of the Audit Committee may represent the entire Audit Committee for purposes of this review. Independent Auditors(5)The independent auditors are ultimately accountable to the Audit Committee and the Board of Directors. The Audit Committee shall review the independence, and performance of the auditors and annually recommend to the Board of Directors the appointment of the independent auditors or approve any discharge of auditors when circumstances warrant. (6)The Audit Committee should review and approve the fees and other significant compensation to be paid to the independent auditors. (7)On at least an annual basis, consistent with independent Standards Board Standard 1, the Audit Committee should receive, review and discuss with the independent auditors their written statement defining all relationships they have with the Company, actively engage in a dialogue with the auditors with respect to any disclosed relationships or other services that might impact the auditors’ independence and objectivity and take or recommend that the board take appropriate action to oversee the auditors’ independence. (8)Review the independent auditors audit plan  discuss scope, staffing, locations, reliance upon management and internal audit and general audit approach. (9)Prior to releasing the yearend earnings, discuss the results of the audit with the independent auditors. Discuss matters required to be communicated to audit committee in accordance with AICPA SAS 61. (10)Consider the independent auditors’ judgement about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.
(11)The outside auditors have ultimate accountability to the Board of Directors and the Audit Committee, which shall have the ultimate authority (subject to Board approval or ratification) and responsibility to select, evaluate, and where appropriate replace the outside auditor. Internal Audit Department and Legal Compliance(12)Review the budget plan, changes in plan, activities organizational structure, and qualifications of the internal audit department, as needed. (13)Review the appointment, performance and replacement of the senior internal audit executive. (14)Review significant reports prepared by the internal audit department together with management’s response and followup to these reports. (15)On at least an annual basis, review with the Company’s counsel, any significant litigation, legal matters that could have a significant impact on the organization’s financial statements, the Company’s compliance with applicable laws and regulations and inquiries received from regulators or governmental agencies. Other Audit Committee Responsibilities(16)Commencing in 2001, annually prepare a report to shareholders as required by the Securities and Exchange Commission. The report should be included in the Company’s annual proxy statement. (17)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. (18)Maintain minutes of meetings and periodically report to the Board of Directors on significant results of the foregoing activities. Other Matters(19)Establish, review and update periodically a Code of Ethical Conduct and review management’s system to enforce this code. (20)Periodically perform selfassessment of audit committee performance. (21)Review financial and accounting personnel succession planning within the Company. (22)Annually review policies and procedure as well as audit results associated with directors’ and officers’ expense accounts and perquisites. Annually review a summary of director’s and officers’ related party transactions and potential conflicts of interest.
Statement of Principles
IMAGE ENTERTAINMENT, INC. Audit Committee PreApproval Policy EXHIBITA Adopted ____________, 200__
The Audit Committee of Image Entertainment, Inc. (the “Company”) is required to preapprove the audit and nonaudit services performed by the independent auditor, in order to assure that the provision of such services does not impair the auditor’s independence. The Audit Committee believes that the combination of general preapproval of certain types of services and specific preapproval of other services will result in an effective and efficient procedure to preapprove services performed by the independent auditor. Unless a type of service to be provided by the independent auditor has received general preapproval, it will require specific preapproval by the Audit Committee.
In determining whether to grant general or specific preapproval, the Audit Committee will consider whether such services are consistent with the applicable rules and regulations on auditor independence. The Audit Committee will also consider whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Company’s business, personnel, accounting systems, risk profile and other factors, and whether the services might enhance the Company’s ability to manage or control risk or improve audit quality. All such factors will be considered by the Audit Committee in its business judgment as a whole, and no one factor should necessarily be determinative. The appendices to this Policy describe the Audit, AuditRelated, Tax and Other Services that have the pre approval of the Audit Committee. The term of any preapproval is 12 months from the date of pre approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will periodically revise the list of preapproved services, based on subsequent determinations. Delegation The Audit Committee may delegate preapproval authority to one or more of its independent members. The member or members to whom such authority is delegated shall report any preapproval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate its responsibilities to preapprove services performed by the independent auditor to management, and management shall have no such authority. Audit Services
The annual Audit services engagement terms and fees will be subject to the specific preapproval of the Audit Committee. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Company structure or other matters.
In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant preapproval for other Audit services, which are those services that only the independent auditor reasonably can provide. The Audit Committee has preapproved the Audit services listed in Appendix A. All other Audit services not listed in Appendix A must be separately preapproved by the Audit Committee. The Audit Committee will review Appendix A for necessary revisions each year.
Auditrelated Services
Auditrelated services are assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and that are traditionally performed by the independent auditor. The Audit Committee believes that the provision of Auditrelated services does not impair the independence of the auditor, and has preapproved the Auditrelated services listed in Appendix B. All other Auditrelated services not listed in Appendix B must be separately preapproved by the Audit Committee. The Audit Committee will review Appendix B for necessary revisions each year.
Tax Services The Audit Committee believes that the independent auditor can provide Tax services to the Company such as tax compliance, tax planning and tax advice without impairing the auditor’s independence. However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee has preapproved the Tax services listed in Appendix C. All Tax services involving large and complex transactions not listed in Appendix C must be separately preapproved by the Audit Committee. The Audit Committee will review Appendix C for necessary revisions each year. All Other Services The Audit Committee may grant preapproval to those permissible nonaudit services classified as All Other services that it believes are routine and recurring services, and would not impair the independence of the auditor. The Audit Committee has preapproved the All Other services listed in Appendix D. Permissible All Other services not listed in Appendix D must be separatelyapproved by the Audit Committee. PROHIBITED Services A list of the SEC’s prohibited nonaudit services is attached to this policy as Exhibit 1. The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of these services and the applicability of exceptions to certain of the prohibitions. PreApproval Fee Levels Preapproved fee levels for all services to be provided by the independent auditor will be established periodically by the Audit Committee. Any proposed services exceeding preapproved levels by more than 10% will require specific preapproval by the Audit Committee. In addition, if fees on any specific project within generally preapproved services are expected to exceed $50,000, specific preapproval by the Audit Committee will be required. The Audit Committee has preapproved fees for Audit services as set forth in Appendix A of up to $110,000 for the annual financial audit and up to $10,000 for each quarterly review. Fees for such Audit services are generally approved each year at the fee level for the prior year, or such other level as approved by the Audit Committee. Specific fees for each engagement shall be negotiated and approved by the Audit Committee, or by the Chairman or another designated independent member of the Audit Committee, in each instance. Supporting Documentation With respect to each proposed preapproved service, the independent auditor will provide the detailed back up documentation, which will be provided to the Audit Committee, regarding the specific services to be provided. Procedures Requests or applications to provide services that require separate approval by the Audit Committee will be submitted to the Audit Committee by both the independent auditor and the Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence.
PreApproved Audit Services for Fiscal Year 200__
Dated: ___________________, 200__ Service Financial audits of the Company and its subsidiaries or affiliates
Appendix A
Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters, consents), and assistance in responding to SEC comment letters
Consultations by the Company’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard setting bodies (Note: Under SEC rules, some consultations may be “auditrelated” services rather than “audit” services)
Attestation of management reports on internal controls
PreApproved AuditRelated Services for Fiscal Year 200__
Dated: ___________________, 200__ Service Due diligence services pertaining to potential business acquisitions/dispositions
Appendix B
Agreedupon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters
Consultations by the Company’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standardsetting bodies (Note: Under SEC rules, some consultations may be “audit” services rather than “auditrelated” services) Attest services not required by statute or regulation General assistance with implementation of the requirements of SEC rules or listing standards promulgated pursuant to the SarbanesOxley Act
PreApproved Tax Services for Fiscal Year 200__
Dated: ___________________, 200__
Service
U.S. federal, state and local tax planning and advice
U.S. federal, state and local tax compliance
International tax planning and advice
International tax planning, advice and compliance
Review of federal, state, local and international income, franchise, and other tax returns
Appendix C
Licensing [or purchase] of income tax preparation software from the independent auditor, provided the functionality is limited to preparation of tax returns.
Assistance with tax audits and appeals before the IRS and similar state, local and foreign tax agencies Tax advice and assistance regarding statutory, regulatory or administrative developments Mergers and acquisition tax due diligence assistance
Tax advice and assistance regarding structuring of mergers and acquisitions
PreApproved All Other Services for Fiscal Year 200__
Dated: ___________________, 200__ Service None
Appendix D
Prohibited NonAudit Services
Exhibit 1
„Bookkeeping or other services related to the accounting records or financial statements of the audit 1 client „Financial information systems design and implementation „Appraisal or valuation services, fairness opinions or contributioninkind reports „Actuarial services „Internal audit outsourcing services „Management functions „Human resources „Brokerdealer, investment adviser or investment banking services „Legal services „Expert services unrelated to the audit
1 Provision of these nonaudit services is permitted if it is reasonable to conclude that the results of these services will not be subject to audit procedures. Materiality is not an appropriate basis upon which to overcome the rebuttable presumption that prohibited services will be subject to audit procedures because determining materiality is itself a matter of audit judgment.