Charles River Laboratories International, Inc.
Charles River Laboratories, Inc.
Audit Committee Charter
Amended October 2018
Executive management of Charles River Laboratories International, Inc. and Charles River Laboratories, Inc. (together, the “Corporation”) is responsible for the completeness and accuracy of its financial reporting and the adequacy of its internal financial and operating controls. Its Board of Directors has responsibility to oversee management’s discharge of these responsibilities. To assist the Board, the Corporation has established, through its Bylaws, an Audit Committee whose authority and responsibilities are described by this Charter.
This Charter is created in order to define the Audit Committee's objectives,
the range of its authority, the scope of its activities and its duties and responsibilities.
It is intended to give Audit Committee members, management, external and internal
auditors a clear understanding of their respective roles. The Audit Committee
and the Board of Directors will review and assess the adequacy of this Charter
periodically but at least annually.
The Audit Committee is created by the Board of Directors of the Company to:
- assist the Board in its oversight of
- the integrity of the financial statements of the Company;
- the qualifications, independence and performance of the Company's independent
- the performance of the Company's internal audit function; and
- compliance by the Company with legal and regulatory requirements with respect to financial reporting matters; and
- prepare the Audit Committee report that Securities and Exchange Commission
rules require to be included in the Company's annual proxy statement.
Size, Composition and Term of Appointment
The Audit Committee is a committee of the Board of Directors and will consist
of no fewer than three directors, each of whom will meet the independence and
experience requirements of the New York Stock Exchange ("NYSE") and
at least one of whom will have accounting or related financial management expertise
to qualify as a "financial expert" as defined by the relevant rules
promulgated by the NYSE, Financial Accounting Standards Board ("FASB"),
Securities and Exchange Commission ("SEC"), National Association of
Securities Dealers ("NASD") or other regulatory bodies. The Corporate
Governance and Nominating Committee will recommend nominees for appointment
to the Audit Committee annually and as vacancies or newly created positions
occur. Audit Committee members will be appointed by the Board and may be removed
by the Board at any time. The Corporate Governance and Nominating Committee
will recommend to the Board, and the Board will designate, the Chair of the
The Audit Committee will meet as often as it determines is appropriate to carry
out its responsibilities under this charter, but not less frequently than quarterly.
The Chair of the Audit Committee, in consultation with the other committee members,
will determine the frequency and length of the committee meetings and will set
meeting agendas consistent with this charter.
Oversight by the Board of Directors
- 1. The Committee will report its activities to the full Board on a regular basis so that the Board is kept informed of its activities on a current basis. This report will include a review of any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements with respect to financial reporting matters, the qualifications, independence and performance of the Company’s independent auditor, the performance of the internal audit function, and any other matters that the Audit Committee deems appropriate or is requested to be included by the Board. The Committee will perform all duties determined by the Board.
- The Board will determine annually that the Committee's members are independent
and that the Committee has fulfilled its duties and responsibilities.
The Committee derives its authority from the By-Laws of the Corporation and
is hereby given all resources and authority necessary to properly discharge
its duties and responsibilities. The Committee acts on the Board's behalf in
matters outlined below.
In addition to any other responsibilities which may be assigned from time to
time by the Board, the Audit Committee is responsible for the following matters:
- The Committee, as representatives of the shareholders, has the ultimate
authority to select, evaluate and, where appropriate, replace the independent
auditor to be proposed for shareholder approval in the proxy statement. The
Committee will consider management's recommendation of the appointment of the
independent auditor. The Committee will review with management the performance,
appointment and/or termination of the independent public accountants.
- The Committee will evaluate the independent auditors’ qualifications, performance and independence and will present its conclusions and recommendations to the full Board on at least an annual basis. As part of such annual evaluation, the Committee will:
- The Committee will evaluate the independent auditors' qualifications, performance
and independence and will present its conclusions and recommendations to the
full Board on at least an annual basis. As part of such annual evaluation, the
The Committee will review with management and the independent auditor the
Company's compliance with laws and regulations having to do with accounting
and financial matters.
The Committee and the Board of Directors should consider whether the independent
auditor should meet with the full Board to discuss any matters relative to the
financial statements and/or any potentially relevant matters, and to answer
any questions that other directors may have.
The Committee will establish policies for the Company's hiring of current
or former employees of the independent auditor.
- obtain and review a report(s) from the Company's independent auditors:
- describing the independent auditors' internal quality-control procedures;
- describing any material issues raised by (i) the most recent internal
quality-control review or peer review of the auditing firm, or (ii) any inquiry
or investigation by governmental or professional authorities within the preceding
five years, regarding one or more independent audits carried out by the auditing
firm; and any steps taken to deal with any such issues;
- describing all relationships between the independent auditor and the
- assuring that Section 10A of the Securities Exchange Act of 1934 has
not been implicated;
- review and evaluate the senior members of the independent auditor team(s),
particularly the lead audit and reviewing partners;
- consider whether the lead audit or reviewing partner should be rotated
more frequently than is required by law, so as to assure continuing auditor
- consider whether the independent auditors should be rotated, so as
to assure continuing auditor independence; and
- obtain the opinion of management and the internal auditors of the independent
Financial Statements, Disclosure and Other Risk Management and Compliance Matters
- The Committee will review with management, internal auditors and the independent
auditor, as appropriate, and in separate meetings if the Committee deems it
The Committee will request from financial management and the independent
auditor, a briefing on any significant accounting and reporting issues, including
any changes in accounting standards or rules promulgated by the FASB, SEC or
other regulatory bodies, that have an effect on the financial statements.
The Committee will inquire about the existence and substance of any significant
accounting accruals, reserves, or estimates made by management that had a material
impact on the financial statements.
The Committee will, in conjunction with the Chief Executive Officer and Chief Financial Officer of the Company, review the Company’s internal controls and disclosure controls and procedures, including whether there are any significant deficiencies in the design or operation of such controls and procedures, material weaknesses in such controls and procedures, any corrective actions taken with regard to such deficiencies and weaknesses and any fraud involving management or other employees with a significant role in such controls and procedures.
The Committee will review and discuss with the independent auditor any audit problems or difficulties and management’s response thereto, including those matters required to be discussed with the Audit Committee by the auditor pursuant to Public Company Accounting Oversight Board Statement on Auditing Standard No. 1301 (which has superseded Statement on Auditing Standards 61):
- the annual audited financial statements, including the Company's disclosures
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations", prior to the filing of the Company's Form 10-Ks;
- the quarterly financial statements, including the Company's disclosures
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations," prior to the filing of the Company's Form 10'Qs;
- any analyses or other written communications prepared by management, the internal auditors and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative methods consistent with generally accepted accounting principles (GAAP) on the financial statements;
- the critical accounting policies and practices of the Company;
- related-party transactions and off-balance sheet transactions and structures;
- any major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company's selection
or application of accounting principles;
- regulatory and accounting initiatives or actions applicable to the
Company (including any SEC investigations or proceedings);
- in conjunction with management, the Company's policies with respect
to the Company's earnings press releases and all financial information, such
as earnings guidance, provided to analysts and rating agencies, including the
types of information to be disclosed and the types of presentation to be made
and paying particular attention to the use of "pro forma" or "adjusted"
non-GAAP information; and
- the Company's policies and practices with respect to risk assessment
and risk management, including discussing with management the Company's major
financial risk exposures and the steps that have been taken to monitor and control
The Committee will establish procedures for:
- any restrictions on the scope of the independent auditor's activities
or access to requested information;
- any accounting adjustments that were noted or proposed by the auditor
but were "passed" (as immaterial or otherwise);
- any communications between the audit team and the audit firm's national
office regarding auditing or accounting issues presented by the engagement;
- any management or internal control letter issued, or proposed to be
issued, by the auditor; and
- any significant disagreements between the Company's management and
the independent auditor.
The Committee will review any significant complaints regarding accounting,
internal accounting controls or auditing matters received pursuant to such procedures.
The Committee will prepare the audit committee report that the SEC rules
require to be included in the Company's annual proxy statement.
- the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or auditing matters,
- the confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing matters.
Private Discussions with Independent Auditor
The Committee will meet privately with the independent auditor to request their
opinion on various matters including the quality of the Company's accounting
principles as applied in its financial reporting, and the quality and performance
of its financial and accounting personnel and the internal audit staff, if any.
Areas Requiring Special Attention
The Committee will instruct the independent auditor and Internal Audit, if any, that the Committee expects to be advised if there are any areas that require special attention.
The Committee will review with management and the independent auditor the annual
Management Letter comments and management's responses to each.
The Committee will discuss/review with management, company counsel, and the
independent auditor the substance of any significant issues raised by counsel
concerning litigation, contingencies, claims or assessments. The Committee should
understand how such matters are reflected in the Company's financial statements.
- The Committee will ensure that the internal audit function is structured
in a manner that achieves organizational independence, including full and
unrestricted access to senior management, the Audit Committee and the Board
- The Committee will review and approve the internal audit function's charter
to ensure unrestricted access to records, personnel and physical properties
relevant to perform engagements.
- At least annually, the Audit Committee will evaluate the performance, responsibilities,
budget and staffing of the Company's internal audit function and review the
internal audit plans and budgets to determine that the internal audit objectives
and goals, staffing plans, appropriateness of resources, financial budgets and
audit schedules provide adequate support of the Company's and Committee's goals
and objectives. Such evaluation will include a review of the responsibilities,
budget and staffing of the Company's internal audit function with the independent
- At least annually, the Committee will evaluate the performance of the senior employees responsible for the internal audit function of the Company, and make recommendations to the Board and management regarding the responsibilities, retention or termination of such employees. Decisions regarding the hiring or termination of the head of Internal Audit will require the endorsement of the Audit Committee chair.
- The Committee will regularly provide internal audit with the opportunity
to confer privately with the Committee, without the presence of management.
- The Committee will ascertain that recommendations to management by internal
audit have been adequately considered and, if accepted, properly implemented.
Reporting to the Board
- At least annually, the Committee will evaluate its own performance and report
to the Corporate Governance and Nominating Committee on such evaluation.
- The Committee will periodically review and assess the adequacy of this charter
and recommend any proposed changes to the Corporate Governance and Nominating
- The Committee will provide input to the Compensation Committee as to the compensation of the Corporation’s Chief Financial Officer.
The Committee will meet separately, periodically, with management, with internal
auditors or other personnel responsible for the internal audit function and
with the independent auditor.
The Committee is authorized (without seeking Board approval), and will have available from the Corporation appropriate funding,to retain special legal, accounting or other advisors and may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to meet with any members of, or advisors to, the Audit Committee.
The Committee may delegate its authority to subcommittees or the Chair of the
Audit Committee when it deems appropriate and in the best interests of the Company.
LIMITATIONS INHERENT IN THE AUDIT COMMITTEE'S ROLE
It is not the duty of the Audit Committee to plan or conduct audits or to determine
that the Company's financial statements are complete and accurate and are in
accordance with GAAP. This is the responsibility of management and the independent
auditor. Furthermore, while the Audit Committee is responsible for reviewing
the Company's policies and practices with respect to risk assessment and management,
it is the responsibility of the CEO and senior management to determine the appropriate
level of the Company's exposure to risk.
This charter may be amended by a majority of the independent members of the
Board of Directors.