MSB FINANCIAL CORP. MILLINGTON BANK AUDIT COMMITTEE CHARTER

Transcription

1 MSB FINANCIAL CORP. MILLINGTON BANK AUDIT COMMITTEE CHARTER This Audit Cmmittee Charter has been amended as f July 17, The Audit Cmmittee shall review and reassess this Charter annually and recmmend any prpsed changes t the Bard f Directrs fr apprval. PURPOSE The Audit Cmmittee is appinted by the Bard f Directrs f MSB Financial, Crp. ( MSB ) and serves as a jint cmmittee f the Bards f Directrs f MSB and Millingtn Bank (the Bank ). Tgether, MSB and the Bank, and their subsidiaries, are referred t herein as the Cmpany. The primary purpse f the Audit Cmmittee is t assist the bard f directrs in fulfilling its versight respnsibilities fr: the integrity f the Cmpany's financial statements, the Cmpany's cmpliance with legal and regulatry requirements, the independent auditr's qualificatins and independence, and the perfrmance f the Cmpany's internal audit functin and independent auditrs. The Audit Cmmittee will als prepare the reprt that SEC rules require be included in the Cmpany's annual prxy statement. AUTHORITY The Audit Cmmittee has authrity t cnduct r authrize investigatins int any matters within its scpe f respnsibility. It is empwered t: Appint, cmpensate, retain and versee the wrk f the public accunting firm emplyed by the rganizatin t cnduct the annual audit. This firm will reprt directly t the Audit Cmmittee. Reslve any disagreements between management and the auditr regarding financial reprting. Pre-apprve all auditing and permitted nn-audit services perfrmed by the Cmpany's external audit firm. Retain independent cunsel, accuntants, r thers t advise the cmmittee r assist in the cnduct f an investigatin. Seek any infrmatin it requires frm emplyees--all f whm are directed t cperate with the cmmittee's requests--r external parties. Meet with Cmpany fficers, external auditrs, r utside cunsel, as necessary.

2 The cmmittee may delegate authrity t subcmmittees, including the authrity t preapprve all auditing and permitted nn-audit services, prviding that such decisins are presented t the full cmmittee at its next scheduled meeting. COMPOSITION The Audit Cmmittee will cnsist f at least three members f the bard f directrs. The bard nminating cmmittee will appint cmmittee members and the cmmittee chair. Each cmmittee member will be bth independent as such term is defined in the rules and regulatins f the SEC and Nasdaq, and financially literate. At least ne member shall be designated as the "financial expert," as defined by the rules and regulatins f the SEC and Nasdaq. MEETINGS The cmmittee will meet at least fur times a year, with authrity t cnvene additinal meetings, as circumstances require. All cmmittee members are expected t attend each meeting, in persn r via cnference call. The cmmittee will invite members f management, auditrs r thers t attend meetings and prvide pertinent infrmatin, as necessary. It will meet separately, peridically, with management, with internal auditrs and with external auditrs. It will als meet peridically in executive sessin. Meeting agendas will be prepared and prvided in advance t members, alng with apprpriate briefing materials. Minutes will be prepared. RESPONSIBILITIES The cmmittee will carry ut the fllwing respnsibilities: Financial Statements Review significant accunting and reprting issues and understand their impact n the financial statements. These issues include: 1. Cmplex r unusual transactins and highly judgmental areas, 2. Majr issues regarding accunting principles and financial statement presentatins, including any significant changes in the Cmpany's selectin r applicatin f accunting principles, and 3. The effect f regulatry and accunting initiatives, as well as ff-balance sheet structures, n the financial statements f the Cmpany. Review analyses prepared by management and/r the independent auditr setting frth significant financial reprting issues and judgments made in cnnectin with the preparatin f the financial statements, including analyses f the effects f alternative GAAP methds n the financial statements. Review with management and the external auditrs the results f the audit, including any difficulties encuntered. This review will include any restrictins n the scpe f the independent auditr's activities r n access t requested infrmatin, and any significant disagreements with management.

3 Discuss the annual audited financial statements and quarterly financial statements with management and the external auditrs, including the Cmpany's disclsures under "Management's Discussin and Analysis f Financial Cnditin and Results f Operatins." Review disclsures made by CEO and CFO during the Frms 10-K and 10-Q certificatin prcess abut significant deficiencies in the design r peratin f internal cntrls r any fraud that invlves management r ther emplyees wh have a significant rle in the Cmpany's internal cntrls. Discuss earnings press releases (particularly use f "pr frma," r "adjusted" nn-gaap, infrmatin). This review may be general (i.e., the types f infrmatin t be disclsed and the type f presentatins t be made). The Audit Cmmittee des nt need t discuss each release in advance. Internal Cntrl Cnsider the effectiveness f the Cmpany's internal cntrl system, including infrmatin technlgy security and cntrl. Understand the scpe f internal auditr ' review f internal cntrl ver financial reprting, and btain reprts n significant findings and recmmendatins, tgether with management's respnses. Internal Audit Review with management and the chief audit executive the charter, plans, activities, staffing, and rganizatinal structure f the internal audit functin. Ensure there are n unjustified restrictins r limitatins, and review and cncur in the appintment, replacement, r dismissal f the chief audit executive. Review the effectiveness f the internal audit functin, including cmpliance with The Institute f Internal Auditrs' Standards fr the Prfessinal Practice f Internal Auditing. On a regular basis, meet separately with the Head f Internal Audit t discuss any matters that the cmmittee r internal audit believes shuld be discussed privately. External Audit Review the external auditrs' prpsed audit scpe and apprach, including crdinatin f audit effrt with internal audit. Review the perfrmance f the external auditrs, and exercise final apprval n the appintment r discharge f the auditrs. In perfrming this review, the cmmittee will: At least annually, btain and review a reprt by the independent auditr describing such firm s internal quality cntrl prcedures any material issues raised by the mst recent internal quality-cntrl review, r peer review, f the firm, r by any inquiry r investigatin by gvernmental r prfessinal authrities, within the preceding five years, respecting ne r mre independent audits carried ut by the

4 firm, and any steps taken t deal with any such issues; and (t assess the auditr's independence) all relatinships between the independent auditr and the cmpany, Take int accunt the pinins f management and internal audit, Review and evaluate the lead partner f the independent auditr, and Present its cnclusins with respect t the external auditr t the Bard. Cmpliance Ensure the rtatin f the lead audit partner every five years and ther audit partners every seven years, and cnsider whether there shuld be regular rtatin f the audit firm itself. Present its cnclusins with respect t the independent auditr t the full bard. Set clear hiring plicies fr emplyees r frmer emplyees f the independent auditrs. On a regular basis, meet separately with the external auditrs t discuss any matters that the cmmittee r auditrs believe shuld be discussed privately. Review the effectiveness f the system fr mnitring cmpliance with laws and regulatins and the results f management's investigatin and fllw-up (including disciplinary actin) f any instances f nncmpliance. Establish prcedures fr: (i) the receipt, retentin, and treatment f cmplaints received by the listed issuer regarding accunting, internal accunting cntrls, r auditing matters; and (ii) the cnfidential, annymus submissin by emplyees f the listed issuer f cncerns regarding questinable accunting r auditing matters. Review the findings f any examinatins by regulatry agencies, and any auditr bservatins. Review the prcess fr cmmunicating the cde f cnduct t Cmpany persnnel, and fr mnitring cmpliance therewith. Obtain regular updates frm management and Cmpany legal cunsel regarding cmpliance matters. Reprting Respnsibilities Obtain regular updates frm management and Cmpany legal cunsel regarding cmpliance matters. Regularly reprt t the bard f directrs abut cmmittee activities and issues that arise with respect t the quality r integrity f the Cmpany's financial statements, the Cmpany's cmpliance with legal r regulatry requirements, the perfrmance and independence f the Cmpany's independent auditrs, and the perfrmance f the internal audit functin.

5 Prvide an pen avenue f cmmunicatin between internal audit, the external auditrs, and the bard f directrs. Reprt annually t the sharehlders, describing the cmmittee's cmpsitin, respnsibilities and hw they were discharged, and any ther infrmatin required by rule, including apprval f nn-audit services. Review any ther reprts the Cmpany issues that relate t cmmittee respnsibilities. Other Respnsibilities Discuss with management the Cmpany's majr plicies with respect t risk assessment and risk management. Perfrm ther activities related t this charter as requested by the bard f directrs. Institute and versee special investigatins as needed. Review and assess the adequacy f the cmmittee charter annually, requesting bard apprval fr prpsed changes, and ensure apprpriate disclsure as may be required by law r regulatin. Cnfirm annually that all respnsibilities utlined in this charter have been carried ut. Evaluate the cmmittee's and individual members' perfrmance at least annually.