Purpose

Membership

Auditor oversight

• The independent auditors are accountable to the Committee.  The Committee has the authority and responsibility for the appointment, compensation, retention and oversight of the work of the independent auditors.  The Committee also has responsibility for resolving any disagreements between management and the independent auditors.  The Committee (or one or more of its members to whom authority has been delegated) will pre-approve all audit and permitted non-audit services to be performed by the independent auditors.
• Annually, the Committee will review a written report from the Company's independent auditors that:
  • Delineates all relationships between the auditors and the Company.
  • Describes the independent auditor's quality-control procedures.
  • Describes any material issues raised by the most recent internal quality-control review, or peer review, of the auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the auditor, and any steps taken to deal with any such issue.
• Annually, the Committee will discuss with the independent auditors any disclosed relationships and their impact on the auditor's independence and take appropriate action in response to the auditor's report to satisfy itself of the auditor's independence.
• Annually, the Committee will review this statement of responsibilities and conduct a performance evaluation.

Other duties and responsibilities of the committee

1. The Committee will review the Company's annual reports to the Securities and Exchange Commission, including audited financial statements to be included in such reports, and recommend appropriate action by the Board.
   
   
2. The Committee will periodically advise the Board and will also:
   1. Review annually:
      1. The scope of the annual audit for TI and subsidiary companies recommended by the independent auditors.
      2. The annual corporate internal audit plans for TI and subsidiary companies recommended by the Company's director of audit services.
      3. The scope of annual TI employee benefit trusts audits.
   2. Review and discuss with management and the independent auditors the Company's audited financial statements and accompanying "Management's Discussion and Analysis," including a discussion with the independent auditors regarding any matters they are required to review with them under applicable legal, regulatory or NASDAQ requirements, and any audit problems or difficulties encountered and management's response thereto.
   3. Review and discuss with management and the independent auditors the Company's quarterly reports to the Securities and Exchange Commission, including a discussion of the interim financial statements and accompanying "Management's Discussion and Analysis."
   4. Review and discuss with management before issuance the Company's news releases regarding annual and interim financial results, with the Committee acting as a whole or through its chair; and generally review and discuss with management any earnings guidance that may be provided to analysts and rating agencies.
   5. Review and discuss with management and the independent auditors the adequacy of the Company's system of internal accounting controls and other factors affecting the integrity of published financial reports, consulting as appropriate with the internal audit staff, the independent auditors (both of which shall have direct access to the Committee), and others concerning, among other things, the internal accounting controls in effect, any major weaknesses discovered (including any fraud, whether or not material, involving internal controls or employees with responsibility for internal controls) and related corrective actions.
   6. Review and discuss the Company's policies with respect to risk assessment and risk management.
   7. Review the Company's compliance and ethics program.
   8. Review a report of compliance of management and operating personnel with TI's code of business conduct, including TI's conflict of interest policy.
   9. Review the Company's non-employee-related insurance programs.
   10. Review changes, if any, in major accounting policies of the Company.
   11. Review trends in accounting policy changes proposed or adopted by organizations such as the American Institute of Certified Public Accountants, the Securities and Exchange Commission, and the Financial Accounting Standards Board, or by comparable bodies outside the United States that are relevant to the company.
   12. Review the Company's policy regarding investments and financial derivative products.
   13. Establish hiring policies for employees or former employees of the independent auditors.
   14. Engage in any activities that the Committee deems to be necessary or appropriate in furtherance of its purpose, functions and responsibilities.
       
       
3. Establish procedures for:
   1. The receipt, retention and treatment of complaints on accounting, internal accounting controls or auditing matters; and
   2. Confidential, anonymous submissions by Company employees of concerns regarding questionable accounting or auditing matters.
      
      
4. The agenda for each Committee meeting will provide sufficient opportunity for the independent and internal auditors to meet with the members of the Audit Committee without members of management present.