TCC Audit Committee Charter
Section 1. PURPOSE
To assist the Board of Directors of Trinity Capital Corporation (TCC) and that of its fully owned subsidiary, Los Alamos National Bank (LANB) (collectively “the Company”) in fulfilling their oversight responsibilities for the accounting and financial reporting process, the system of internal control, the audit process, and the Company's process for monitoring compliance with laws and regulations and the code of conduct.
Section 2. AUTHORITY
The Audit Committee has authority to conduct or authorize investigations. It is empowered to:
- Appoint, compensate, and oversee the work of any independent registered public accounting firm (“external auditors”) employed by the Company.
- Resolve any disagreements between management and the external auditors regarding financial reporting.
- Pre-approve all auditing and non-audit services.
- Retain auditors, accountants, consultants, independent counsel or others to perform audit related services or advise the Audit Committee or assist in the conduct of an investigation.
- Seek any information it requires from employees-all of whom are directed to cooperate with the Audit Committee's requests-or external parties.
- Meet with Company officers, external auditors, internal auditors, consultants, legal counsel, or others as necessary.
Section 3. COMPOSITION
The Audit Committee will consist of at least three members of the TCC Board of Directors. The Board or its Nominating and Governance Committee will appoint Audit Committee members and the Audit Committee Chair. So long as LANB is a fully owned subsidiary of TCC and the Board members of TCC and LANB are the same, the Audit Committee for each entity will be the same and meet jointly.Each Audit Committee member will be both independent and financially literate. At least one member shall be designated as the "financial expert," as defined by applicable legislation and regulation.
Section 4. MEETINGS
The Audit Committee will meet at least four times a year, with authority to convene additional meetings. All Audit Committee members are expected to attend each meeting, in person or via tele- or video-conference. The Audit Committee will invite members of management, external auditors, internal auditors or others to attend meetings and provide pertinent information, as necessary. It will hold private meetings with external auditors (see below) and executive sessions with members of management or others. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Minutes will be prepared.
Section 5. RESPONSIBILITIES
The Audit Committee will carry out the following responsibilities:
- Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
- Review with management and the external auditors the results of the audit, including any difficulties encountered.
- Review with legal counsel legal matters that may have a material impact on the financial statements and review with the chief risk officer and legal counsel, as appropriate, any material reports or inquiries received from regulators or government agencies raising significant issues as to compliance with applicable laws.
- Review the annual financial statements, and consider whether they are complete, consistent with information known to Audit Committee members, and reflect appropriate accounting principles.
- Review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information.
- Review with management and the external auditors all matters required to be communicated to the Audit Committee under generally accepted auditing standards.
- Understand how management develops interim financial information, and the nature and extent of internal and external auditor involvement.
- Review interim financial reports with management and the external auditors before filing with regulators, and consider whether they are complete and consistent with the information known to committee members.
- Pursuant to provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) relating to independent audits and reporting requirements, and related FDIC regulations, review with management and the external auditors the basis for annual reports required by FDICIA and otherwise perform the duties of the audit committee under such regulations.
- Consider the effectiveness of the Company's internal control system, including information technology security and control.
- Understand the scope of internal and external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.
- Approve the internal audit charter.
- Approve decisions regarding the appointment and removal of the Director of Internal Audit. Ensure there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement, or dismissal of the Director of Internal Audit.
- Approve the annual audit plan and all major changes to the plan. Review the internal audit activity’s performance relative to its plan.
- Review with the Director of Internal Audit the internal audit budget, resource plan, activities, and organizational structure of the internal audit function.
- At least once per year, review the performance of the Director of Internal Audit and concur with the annual compensation and salary adjustment.
- Review the effectiveness of the internal audit function, including conformance with The Institute of Internal Auditors' the Definition of Internal Auditing, Code of Ethics and the International Standards for Professional Practice of Internal Auditing.
- On a regular basis, meet separately with the Director of Internal Audit to discuss any matters that the Audit Committee or internal audit believes should be discussed privately.
- Review the external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit.
- With respect to appointment of the external auditors, ensure that engagement letters and related agreements do not contain limitations of liability provisions prohibited under FDICIA, the PCAOB or the SEC.
- On a regular basis, meet separately with the external auditors to discuss any matters that the Audit Committee or auditors believe should be discussed privately.
- Obtain a report from the independent auditors at least annually regarding (a) the auditors’ internal quality-control procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review of the auditors, 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 auditors, (c) any steps taken to deal with such issues, and (d) all relationships between the auditors and the Company so that the Audit Committee may assess the auditors independence.
- Review and confirm the independence of the external auditors by obtaining statements from the auditors on all relationships between the auditors and the company, including non-audit services, and discussing the relationships with the auditors.
- Review the performance of the external auditors, and exercise final approval on the appointment or discharge of the auditors.
- Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) of any instances of noncompliance.
- Ensure the company has procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, and auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
- Review the findings of any examinations by regulatory agencies, and any auditor observations.
- Review the process for communicating the code of conduct to company personnel, and for monitoring compliance therewith.
- Obtain regular updates from management and legal counsel regarding compliance matters.
- Regularly report to the Board of Directors about committee activities, issues, and related recommendations.
- Provide an open avenue of communication between internal audit, the external auditors, and the Board of Directors.
- Report annually to the shareholders, describing the Audit Committee's composition, responsibilities and how they were discharged, and any other information required by rule, including approval of non-audit services.
- Review any other reports the Company issues that relate to Audit Committee responsibilities.
- Approve all audit services for the Company (the Chair of the Audit Committee shall have the authority to grant any required approvals, subject to the Chair reporting any such approvals to the Audit Committee at its next scheduled meeting).
- Approve all non-audit services by the external auditors for the Company (the Chair of the Audit Committee shall have the authority to grant any required approvals, subject to the Chair reporting any such approvals to the Audit Committee at its next scheduled meeting).
- Perform other activities related to this charter as requested by the Board of Directors.
- Institute and oversee special investigations as needed.
- Review and assess the adequacy of this charter annually, requesting Board approval for proposed changes, and ensure appropriate disclosure as may be required by law or regulation.
- Confirm annually that all responsibilities outlined in this charter have been carried out.
- Evaluate the Audit Committee's and individual members' performance on a regular basis.