I. Purpose And Overall Responsibilities
The primary purpose of the Audit Committee (the "Committee") of the Board of Directors (the "Board") of Gouverneur Bancorp, Inc. (the "Company") is to assist the Board in fulfilling its oversight responsibilities to shareholders, potential shareholders and the investment community by reviewing: (i) the periodic financial reports and other financial information provided by the Company to regulatory or governmental bodies, including the public; (ii) the Company’s system of internal controls established by management and the Board; and (iii) the Company’s auditing, accounting and financial reporting processes (both internal and external) in general. In addition, the Committee provides an avenue for communication between the Company’s independent accountants who provide internal audits, financial management, and the Board. The Committee should have a clear understanding with the independent accountants that they must maintain an open and transparent relationship with the Committee, and that the ultimate accountability of the independent accountants is to the Board and the Committee, as representatives of the Company’s shareholders. The Committee will make regular reports to the Board concerning its activities. Consistent with this function, the Committee should encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels.
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent accountants.
The Committee shall operate pursuant to a written charter setting forth its duties and responsibilities and this charter shall be reviewed for adequacy, modified as necessary, and approved by the full Board of Directors annually.
The Committee shall be comprised of at least three directors or more as determined by the Board. The members of the Committee shall be elected annually at the organizational meeting of the full Board held after the annual stockholders’ meeting. One of the members of the Committee will be elected Committee Chair by the Board.
The Committee is granted the authority to investigate any matter or activity involving financial accounting and financial reporting, as well as the internal controls of the Company. In that regard, the Committee will have the authority to approve the retention of external professionals to render advice and counsel in such matters. All employees must cooperate with any such investigation as requested by members of the Committee.
The Committee shall meet at least four times annually, or more frequently as the Committee may deem necessary. The Committee may also meet in separate executive sessions with the chief financial officer and independent accountants at other times when deemed appropriate. As necessary or desirable, the Committee Chair may request that members of management and representatives of the independent accountants be present at Committee meetings.
V. SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
- Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
- Review, with the Company’s management and independent accountants, the Company’s accounting, financial reporting and internal controls. Obtain annually in writing from the independent accountants, their letter as to the adequacy of such controls.
- Review, with the Company’s management and independent accountants significant accounting and reporting principles, practices, and procedures applied by the Company in preparing its financial statements. Discuss with the independent accountants their judgments about the appropriateness, quality and acceptability of the Company’s accounting principles used in financial reporting.
- Review the scope and general extent of the independent accountants annual audit. The Committee’s review should include an explanation from the independent accountants of the factors considered by the accountants in determining the audit scope, including the major risk factors. The independent accountants should confirm to the Committee that no limitations have been placed on the scope or nature of their audit procedures. The Committee will review annually with management the fee arrangement with the independent accountants.
- Confirm and ensure the independence and objectivity of the independent accountants and obtain from the independent accountants, at least annually, a formal written statement delineating all relationships and services and related fees between the independent accountants and the Company, Independence Discussions with Audit Committees, in order to ensure that such independence and objectivity are not impacted.
- Have a predetermined arrangement with the independent accountants that they will advise the Committee, through its Chair and management of the Company, of any matters identified through procedures followed for interim quarterly financial statements, and that such notification as required under standards for communication with audit committees Also receive a written confirmation provided by the independent accountants at the end of the first three quarters of the year that they have nothing to report to the Committee, if that is the case, or the written enumeration of required reporting issues.
- At the completion of the annual audit, review with management and the independent accountants the following:
- The annual financial statements, related footnotes, and financial information to be included in the Company’s annual report to shareholders.
- Results of the audit of the financial statements and the related notes thereon and, if applicable, a report on changes during the year in accounting principles and their application.
- Significant changes to the audit plan, if any, and any serious disputes or difficulties with management encountered during the audit, Inquire about the cooperation of management received by the independent accountants during their audit, including access to all requested records, data, and information. Inquire of the independent accountants whether there have been any disagreements with management, which, if not satisfactorily resolved, would have caused them to issue a nonstandard report on the Company’s financial statements.
- If deemed appropriate after such review and discussion, recommend to the Board that the financial statements be included in the Company’s annual report.
- After preparation by management and review by independent accountants, approve the report to be included in the Company’s annual proxy statement.
- Discuss with the independent accountants the quality of the Company’s financial and accounting personnel. Also, elicit the continents of management regarding the responsiveness of the independent accountants to the Company’s needs.
- Meet with management and the independent accountants to discuss any relevant significant recommendations that the independent accountants may have, particularly those characterized as ‘material or ‘serious.’ Typically, such recommendations will be presented by the independent accountants in the form of a Letter of Comments and Recommendations to the Committee. The Committee should review responses of management to the Letter of Comments and Recommendations from the independent accountants and receive follow-up reports on action taken concerning the aforementioned recommendations.
- Recommend to the Board the selection, retention or termination of the Company’s independent accountants, to ensure, among other things, that the audit engagement and is in accordance with generally accepted auditing standards.
- Approve all audit and permitted non-audit services performed by the independent accountants (including the fees and terms thereof), and implement policies and procedures for approving such services.
- Appoint, evaluate, retain and, when necessary, terminate and replace the independent accountants, ratified by a vote.
- Review with management and the independent accountants the methods used to establish and monitor the Company’s policies with respect to unethical or illegal activities by Company employees that may have a material impact on the financial statements.
- Inquire of management and the independent accountants as to significant risks or exposures and assess the steps management has taken to minimize such risks to the Company.
- Ensure compliance with the Company’s Code of Ethics for President and Chief Financial Officer and Treasurer; report any material violations thereof to the Board of Directors and recommend to the Board appropriate action. Report to the Board of Directors at least once each year regarding the general effectiveness of the Code of Ethics.
- Establish and follow procedures for the receipt and handling of complaints received from customers, shareholders, employees and other individuals regarding the accounting, internal accounting control and auditing matters, in the form attached hereto as Appendix A, as may be amended from time to time.
- Generally as part of the review of the annual financial statements, receive an oral report, at least annually, concerning legal and regulatory matters that may have a material impact on financial statements.
- As the Committee may deem appropriate, obtain, weigh and consider expert advice to Audit Committee related rules and other accounting, legal and regulatory provisions.
- Review with the independent accountants and management, the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented. (This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as decided by the Committee).
- Perform any other activities consistent with this Charter, the Company’s By-laws and governing law, as the Committee or the Board may deem necessary or appropriate.
Concerns Regarding Auditing or Accounting Matters
As required by the Sarbanes Oxley Act of 2002, employees of a corporation with publicly traded stock must be able to voice concerns regarding the auditing or accounting matters of the company. If an employee observes material irregularities or misstatements in Gouverneur Bancorp, Inc. or its affiliate’s financial accounting or auditing process, a confidential anonymous claim should be filed with the Chairperson of the Audit Committee. A sealed envelope addressed to the Chairperson of the Audit Committee may be delivered to:
Chairperson, Audit Committee ~ Gouverneur Bancorp, Inc
c/o Gouverneur Bancorp, Inc
42 Church Street
Gouverneur, New York 13642
or Compliance Officer. The sealed envelope will be delivered, intact, to the Chairperson, for evaluation.
Employees must be aware of complaints received from customers, shareholders and other individuals regarding material accounting, internal accounting controls and auditing matters of Gouverneur Bancorp and its affiliates. Complaints may be received in person or in writing. It is important that a complaint of this nature be immediately brought to the attention of the Chairperson of the Director’s Audit Committee. Employees must accept written concerns and complaints and immediately forward to the Compliance Officer for delivery to the Chairperson. Verbal complaints should be committed to writing either by the complainant or the employee and delivered as previously instructed to the Chairperson of the Audit Committee.
Written resolution from the Audit Committee will be sent to the individual voicing the concern or complaint, provided that the communication was signed and a return address indicated.
Anonymous complaints from employees will be handled in the same manner, however, no response will be sent. Instead, a file will be maintained by the Compliance Officer for the purpose of documenting resolution to each complaint. The file will be made available for employee review.