CI » Topics » Policy for the Pre-Approval of Audit and Non-Audit Services

This excerpt taken from the CI DEF 14A filed Mar 19, 2009.
Policy for the Pre-Approval of Audit and Non-Audit Services
 
The Audit Committee pre-approves all audit services provided by CIGNA’s accounting firms and all non-audit services provided by the Company’s principal independent registered public accounting firm. Specifically:
 
• The full Audit Committee approves all audit, review and attests services and their related fees.
 
  •  At the first Audit Committee meeting of each calendar year, the head of internal audit for the Company presents to the full Audit Committee a schedule, accompanied by detailed documentation, listing all permissible non-audit services expected to be performed by the Company’s independent registered public accounting firm during the calendar year. In the case of any additional non-audit services concerning internal control over financial reporting and any tax service, the independent registered public accounting firm includes a written description of the scope of service and other information about the proposed service required by the Public Company Accounting Oversight Board rules. The Audit Committee reviews the schedule and documentation, and pre-approves the non-audit services it deems appropriate. For additional permissible non-audit services that arise during the calendar year, the head of internal audit presents an updated schedule reflecting the additional services for review and consideration for pre-approval by the Audit Committee. After the head of internal audit’s presentation of the schedules as described above and, if applicable, a discussion with the Company’s independent registered public accounting firm regarding the potential effects of any permissible tax services on the independence of the Company’s independent registered public accounting firm, the Audit Committee will approve those non-audit services it deems appropriate and necessary.
 
  •  The policy permits the pre-approval of additional permissible non-audit services to be delegated to one or more Audit Committee members so long as the proposed services do not exceed $250,000, individually. Any services approved in this manner must be reported to the full Audit Committee at its next regularly scheduled meeting.
 
  •  The head of internal audit reports to the Audit Committee at each meeting on all non-audit services performed by the independent registered public accounting firm and on fees incurred for any services performed by the independent registered public accounting firm. Annually, the head of internal audit reports to the Audit Committee the projected ratio between audit and non-audit fees of the independent registered public accounting firm.


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Table of Contents


Policy for the Pre-Approval of Audit and Non-Audit Services

The Audit Committee pre-approves all audit services provided by CIGNA's accounting firms and all non-audit services provided by the Company's principal independent auditors. Specifically:

    The full Audit Committee approves all audit, review and attest services and their related fees.

    At the first Audit Committee meeting of each calendar year, the general auditor for the Company presents to the full Audit Committee a schedule, accompanied by detailed documentation, listing all permissible non-audit services expected to be performed by the Company's independent registered public accounting firm during the calendar year. In the schedule, the independent auditors include a written description of the scope of service, fee structure and other arrangements relating to any permissible tax service. The Audit Committee reviews the schedule and documentation, and pre-approves the non-audit services it deems appropriate. For additional permissible non-audit services that arise during the calendar year, the general auditor periodically presents an updated schedule reflecting the additional services for review and consideration for pre-approval by the Audit Committee. After the general auditor's presentation of the schedules as described above and, if applicable, a discussion with the Company's independent registered public accounting firm regarding the potential effects of any permissible tax services on the independence of the Company's independent registered public accounting firm, the Audit Committee will approve those non-audit services it deems appropriate and necessary.

    The policy permits the pre-approval of additional permissible non-audit services by the Audit Committee Chair and/or another Audit Committee member designated by the Chair if the full Audit Committee is unavailable to review and approve these additional services. The Chair or his or her designee reports to the full Audit Committee any additional services approved in this manner at its next regularly scheduled meeting.

    The general auditor reports to the Audit Committee at each meeting on fees incurred for services performed.

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Fees to Independent Registered Public Accounting Firm

Aggregate fees billed for professional services rendered by PricewaterhouseCoopers LLP for the audit of financial statements for the fiscal years ended December 31, 2007 and December 31, 2006, and fees billed for other services rendered by PricewaterhouseCoopers LLP during those periods were as follows:

 
  2007
  2006
Audit Fees(1)   $ 8,522,000   $ 9,067,000
Audit-Related Fees     1,904,000     1,449,000
Tax Fees     62,000     109,000
All Other Fees     1,000     5,000
   
 
Total   $ 10,489,000   $ 10,630,000

(1)
Audit Fees for 2006 include fees for audit of 2006 financial statements that had not yet been billed at the time CIGNA's 2007 Proxy Statement was filed.

Audit fees include: the audit of annual financial statements; the review of quarterly financial statements; the performance of statutory audits; quarterly comfort letter work; audit of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act; and the evaluation of management's assertions concerning the effectiveness of internal controls over financial reporting, which procedure is no longer required for 2007.

Audit-related fees include: assurance and related services that were reasonably related to the audit of annual financial statements and reviews of quarterly financial statements, but not reported under "Audit Fees." Audit-related fees included: employee benefit plan audits; internal control reviews (e.g., Statement on Auditing Standards No. 70 reports); consultation concerning financial accounting and reporting standards; and regulatory examinations. In 2006, audit-related fees also included work paper review, actuarial work, and agreed upon procedures and in 2007, audit-related fees also included due diligence for an acquisition transaction.

Tax fees include: tax recovery services, tax consulting and tax compliance services.

All other fees include: professional services rendered by PricewaterhouseCoopers LLP not reported in any other category and include pre-approved business process advisory and consulting services.


Audit Committee Report

CIGNA has maintained an independent Audit Committee for many years. It operates under a written charter adopted by the Board of Directors. During 2007, John F. Olson, Esq., a partner at Gibson, Dunn & Crutcher, acted as independent counsel to the Audit Committee.

All of the members of the Audit Committee are independent (as defined in the listing standards of the New York Stock Exchange and applicable federal regulations, and CIGNA's independence standards).

CIGNA's management has primary responsibility for preparing CIGNA's financial statements and establishing and maintaining financial reporting systems and internal controls. Management is also responsible for reporting on the effectiveness of CIGNA's internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of CIGNA's consolidated financial statements and issuing a report on these financial statements. The independent registered public accounting firm is also responsible for, among other things, issuing an attestation report on the effectiveness of CIGNA's internal control over financial reporting based on their audit. As provided in its charter, the Audit Committee's responsibilities include oversight of these

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processes. As part of its oversight responsibilities, the Audit Committee meets with CIGNA's general auditor, Chief Accounting Officer and independent registered public accounting firm, with and without management present, to discuss the adequacy and effectiveness of CIGNA's internal controls and the quality of the financial reporting process.

In this context, before CIGNA filed its Annual Report on Form 10-K for the year ended December 31, 2007 with the Securities and Exchange Commission, the Audit Committee:

    Reviewed and discussed with CIGNA's management the audited financial statements included in the Form 10-K and considered management's view that the financial statements present fairly, in all material respects, the financial condition and results of operations of CIGNA.

    Reviewed and discussed with CIGNA's management and with the independent registered public accounting firm, PricewaterhouseCoopers LLP, the effectiveness of CIGNA's internal controls over financial reporting as well as management's report and PricewaterhouseCoopers LLP's attestation on the subject.

    Discussed with PricewaterhouseCoopers LLP, matters related to the conduct of their audit that are required to be communicated by auditors to audit committees and matters related to the fair presentation of CIGNA's financial condition and results of operations, including critical accounting estimates and judgments.

    Received the required communications from PricewaterhouseCoopers LLP that discloses all relationships that in PricewaterhouseCoopers LLP's professional judgment may reasonably be thought to bear on their independence and to confirm their independence. Based on these communications, the Audit Committee discussed with PricewaterhouseCoopers LLP its independence from CIGNA.

    Discussed with each of CIGNA's Chief Executive Officer and Chief Financial Officer their required certifications contained in CIGNA's Annual Report on Form 10-K for the year ended December 31, 2007.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that such audited financial statements be included in CIGNA's Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the Securities and Exchange Commission.

This excerpt taken from the CI DEF 14A filed Mar 22, 2007.

Policy for the Pre-Approval of Audit and Non-Audit Services

The Audit Committee pre-approves all audit services provided by CIGNA’s accounting firms and all non-audit services provided by the Company’s principal independent auditors. Specifically:

·       The full Audit Committee approves all audit, review and attest services and their related fees.

·       At the first Audit Committee meeting of each calendar year, the general auditor for the Company presents to the full Audit Committee a schedule, accompanied by detailed documentation, listing all permissible non-audit services expected to be performed by the Company’s independent auditors during the calendar year. In the schedule, the independent auditors include a written description of the scope of service, fee structure and other arrangements relating to any permissible tax service. The Audit Committee reviews the schedule and documentation, and pre-approves the non-audit services it deems appropriate. For additional permissible non-audit services that arise during the calendar year, the general auditor periodically presents an updated schedule reflecting the additional services for review and consideration for pre-approval by the Audit Committee. After the general auditor’s presentation of the schedules as described above and, if applicable, a discussion with the Company’s independent auditors regarding the potential effects of any permissible tax services on the independence of the Company’s independent auditors, the Audit Committee will approve those non-audit services it deems appropriate and necessary.

·       The policy permits the pre-approval of additional permissible non-audit services by the Audit Committee Chair and/or another Audit Committee member designated by the Chair if the full Audit Committee is unavailable to review and approve these additional services. The Chair or his or her designee reports to the full Audit Committee any additional services approved in this manner at its next regularly scheduled meeting.

·       The general auditor reports to the Audit Committee at least quarterly on fees incurred for services performed.

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This excerpt taken from the CI DEF 14A filed Mar 21, 2005.

Policy for the pre-approval of audit and non-audit services

 

The Audit Committee adopted its pre-approval policy in January of 2003, and revised it in December 2003 to reflect additional SEC guidance. Under this policy, the Audit Committee pre-approves all audit services provided by the Company’s accounting firms and all non-audit services provided by the Company’s principal independent auditors. Specifically:

 

  During the fourth quarter of a calendar year, the full Audit Committee approves all known audit, review and attest services and their related fees for the following calendar year. The Audit Committee considers at subsequent meetings the approval of additional audit, review and attest services that arise during a calendar year.
  At the first Audit Committee meeting of each calendar year, the General Auditor presents to the full Audit Committee a schedule, accompanied by detailed documentation, listing all known permissible non-audit services expected to be performed by the Company’s principal independent auditors during the calendar year. The Audit Committee reviews the schedule and documentation, and pre-approves the non-audit services it deems appropriate. For additional permissible non-audit services which arise during the calendar year, the General Auditor presents an updated schedule reflecting the additional services for review and consideration for pre-approval by the Audit Committee.
  The policy permits the pre-approval of additional permissible non-audit services by the Audit Committee Chairman and/or another Audit Committee member designated by the Chairman in the event the full Audit Committee is unavailable to review and approve these additional services. The Chairman or his or her designee reports to the full Audit Committee any additional services approved in this manner at its next regularly scheduled meeting.
  The General Auditor reports to the Audit Committee at least quarterly on fees incurred for non-audit services performed.

 

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