The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of SCANA Corporation (“SCANA”) is to assist the Board in overseeing the integrity of SCANA’s financial statements, SCANA’s compliance with legal and regulatory requirements, the independence and qualifications of SCANA’s independent registered public accounting firm (the “external auditors”) and the performance of its internal auditors (“Audit Services”) and external auditors. The Audit Committee will provide oversight of SCANA's systems of disclosure controls and procedures and systems of internal controls over financial reporting. The Audit Committee will also review the appointment, replacement or reassignment of the Internal Auditor or Corporate Compliance Officer and certain other Officer positions as appropriate.
The Audit Committee shall also constitute the Qualified Legal Compliance Committee (the "QLCC") of SCANA, as defined in 17 C.F.R. Part 205.2(k).
The Committee shall have such powers and perform such duties as the Board may from time to time delegate to it, including those set forth below.
Duties and Responsibilities
- Appoint or replace the external auditors, subject to shareholder ratification, and approve and review the scope of each year’s audit;
- Set, and authorize payment of, compensation for the external auditors who shall report directly to the Committee and pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed by the external auditors;
- Exercise oversight of the work of the external auditors (including resolution of disagreements between management and the external auditors regarding financial reporting) for the purpose of preparing or issuing audit reports or performing other audit, review or attest services;
- Obtain and review an annual report by the external auditors describing; (a) the firm's internal quality control procedures; (b) any material issues raised by the most recent internal quality control review, or peer review, of the firm, 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 firm, and any steps taken to deal with any such issues; and (c) all relationships between the external auditors and SCANA to assess the auditors' independence;
- Evaluate the external auditors' qualifications, performance and independence, including a review of the lead audit partner, taking into account the opinions of management and Audit Services;
- Assure regular rotation of the lead audit partner as required by law and consider whether there should be regular rotation of the external auditors;
- Review with the Board the independence and performance of the external auditors;
- Set SCANA's hiring policy regarding the employment of current or former employees of SCANA's external auditors;
- As appropriate or required, meet periodically and separately, with management, SCANA’s General Counsel, Audit Services, the external auditors, the Corporate Compliance Officer and Audit Services, and the Risk Management Officer;
- Review with management and the external auditors the matters required by applicable professional and auditing standards relating to the conduct of the audit, including: (a) major issues regarding accounting principles and financial statement presentation, any significant changes in SCANA's selection or application of accounting principles, any major issues as to the adequacy of SCANA's internal controls and any special audit steps adopted in light of material control deficiencies; (b) issues relating to, and analyses prepared by management and/or the external auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including the development, selection and disclosures of critical accounting estimates and analyses of the use of alternative assumptions, estimates or Generally Accepted Accounting Principles ("GAAP") methods and their effects on the financial statements; (c) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements; and (d) the type and presentation of information to be included in earnings press releases (paying particular attention to any use of “pro forma” or “adjusted” non-GAAP information) and the financial information used as the basis for earnings guidance and briefings to analysts and rating agencies;
- Review with the external auditors any audit problems or difficulties and management’s response, including: (a) any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, and any significant disagreements with management; (b) any accounting adjustments that were noted or proposed by the auditor but were “passed” (as immaterial or otherwise); (c) any communications between the external auditor and the external auditor’s national office respecting auditing or accounting issues presented by the engagement; (d) any material written communications between the external auditors and management; and (e) any “management” or “internal control” letter issued, or proposed to be issued by the audit firm to SCANA;
- Review annually SCANA's Corporate Risk Management program, its scope and effectiveness, and any other SCANA policies with respect to risk assessment and risk management;
- Discuss SCANA’s major financial risk exposures and the steps management has taken to monitor and control such exposures;
- Review with the external auditors and Audit Services the adequacy and effectiveness of SCANA’s internal controls over financial reporting;
- Review with any disclosure committee of SCANA the effectiveness of SCANA’s disclosure controls and procedures;
- Review with management its assessment of internal controls over financial reporting and disclosure controls and procedures;
- Review with the external auditors their opinion on management’s assessment of the effectiveness of internal control over financial reporting;
- Review and discuss with management and the external auditors the annual audited financial statements, including the disclosures to be made under "Management's Discussion and Analysis of Financial Condition and Results of Operations,” and recommend to the Board the inclusion of the audited financial statements in the Form 10-K, if appropriate;
- Review and discuss with management and the external auditors the quarterly financial statements, including disclosures to be made under "Management's Discussion and Analysis of Financial Condition and Results of Operations,” prior to the filing of each Form 10-Q, including the results of the external auditors' review of the quarterly financial statements;
- Review all reports required to be submitted by the external auditors to the Committee under Section 10A(k) of the Exchange Act, which requires the external auditors to report to the Committee (a) all critical accounting policies and practices to be used in connection with the audit; (b) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management officials of SCANA, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the external auditors; and (c) other material written communications between the external auditors and the management of SCANA, such as any management letter or schedule of unadjusted differences;
- Review all reports required to be submitted by the external auditors to the Committee under Section 10A(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), which requires that the external auditors inform the Committee of illegal acts that have been detected or otherwise come to the attention of the external auditors in the course of the audit, and require senior management to take timely and appropriate remedial action with respect to such illegal acts;
- Review Audit Services' responsibilities, effectiveness, budget, staffing and approve its annual audit plan, as well as any restrictions placed on Audit Services, with the Corporate Compliance, Audit Services and the external auditor;
- At least annually, review and approve decisions by the Corporation and its subsidiaries to enter into swap transactions (hereinafter referred to as “Swaps”) that are entered into in reliance upon the “end-user exception” to the mandatory clearing and trade execution requirements of Sections 2(h)(1) and 2(h)(8) of the Commodity Exchange Act and any related regulations, as enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Periodically review, on an annual basis, or more often in the event of a material change in hedging strategy, the Corporation’s policies for the use of Swaps that are entered into in reliance upon the end-user exception.
- Review reports from Corporate Compliance and Internal Auditing regarding SCANA’s conformity with applicable legal requirements and its Code(s) of Conduct.
- Review with the Board any issues that arise with respect to the quality or integrity of SCANA's financial statements, its compliance with legal, regulatory, or ethical requirements, the performance and independence of its external auditors or the performance of Audit Services;
- Prepare the Audit Committee report to be included in SCANA's annual proxy statement;
- Establish procedures for the receipt, retention and treatment of complaints received by SCANA regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
- Exercise all the authority and discharge all the duties of the QLCC;
- Review and assess annually the adequacy of the Committee’s Charter and recommend to the Board any improvements to the Charter that the Committee deems to be necessary or appropriate; and
- Conduct an annual performance evaluation to compare the performance of the Committee to the requirements of this charter and any other duties or responsibilities delegated to the Committee by the Board, and report to the Board the results of the evaluation, which may take the form of an oral presentation by a member of the Committee to the Board.
Composition and Qualification
- The Committee shall be comprised of three or more directors as shall be determined yearly upon recommendation of the Nominating and Governance Committee and by resolution of the Board at its regularly scheduled meeting following the Annual Meeting of Shareholders. Committee members will be appointed on an annual basis at this meeting to serve until the next annual Board meeting or their earlier demise, resignation or removal. Each Committee member shall meet the independence and financial literacy requirements of the New York Stock Exchange (the "NYSE") and any additional legal requirements applicable to SCANA as shall from time to time be in effect. At least one member of the Committee must have accounting or related financial management expertise. The Board shall, in the exercise of business judgment, and on the recommendation of SCANA’s General Counsel and the Nominating and Governance Committee, determine the "independence" and "financial literacy" of directors for this purpose.
- No committee member shall serve on the audit committee of more than three public companies.
- Vacancies on the Committee shall be filled by a majority vote of the entire Board, on the recommendation of the Nominating and Governance Committee, and a member of the Committee may be removed at any time by a majority vote of the entire Board.
- The Board, upon recommendation of the Nominating and Governance Committee, shall approve one of the members of the Committee to serve as Chairman.
Structure and Operation
- The Committee shall meet in person or telephonically from time to time as may be called by the Chief Executive Officer or any member of the Committee. Actions may also be taken by the Committee by unanimous written consent.
- The Committee shall meet in executive session without the presence of any member of management as often as it deems necessary or appropriate.
- The Committee shall have the ability to obtain advice and assistance from outside legal, accounting or other advisors as deemed appropriate to perform its duties and responsibilities, and to authorize appropriate compensation for such advisors. However, the Committee shall exercise its own business judgment regarding any recommendation made by such consultant or firm and shall not be bound by any report, recommendation or suggestion.
- The Committee may form and delegate authority to subcommittees when appropriate.
- A majority of the members of the Committee shall constitute a quorum.
- The Committee shall keep minutes of each of its meetings. The minutes of each meeting of the Committee shall be approved by the Committee at its next meeting, made available for review by the entire Board, and filed as permanent records with the Corporate Secretary.
- At each meeting of the Board following a meeting of the Committee, the Chairman of the Committee shall report to the Board the deliberations, actions and recommendations of the Committee.