FMSB » Topics » REPORT OF THE AUDIT COMMITTEE AND AUDIT FEES

This excerpt taken from the FMSB DEF 14A filed Mar 16, 2007.
REPORT OF THE AUDIT COMMITTEE AND AUDIT FEES

 
 
The members of the Audit Committee are all independent directors as defined in SEC Rule 10A-3 and under the NASDAQ listing standards and rules and as determined by the Board of Directors in its business judgment.
 
Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements and for the effectiveness of internal control over financial reporting. Management and the internal auditing department are responsible for maintaining the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Independent Registered Public Accounting Firm is responsible for auditing the Company’s financial statements, expressing an opinion as to their conformity with accounting principles generally accepted in the United States and annually auditing management’s assessment of the effectiveness of internal control over financial reporting commencing with the fiscal year ending December 31, 2006.
 
The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2006 with management and has discussed with the Independent Registered Public Accounting Firm, Moss Adams LLP, the matters required by SAS 61, Communications with Audit Committees, as amended, received written communications from the Independent Registered Public Accounting Firm as to their independence as required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and has discussed the independence of the auditors with the Independent Registered Public Accounting Firm.
 
It should be noted that the members of the Audit Committee do not perform the functions of auditors or accountants and are not responsible for conducting the auditing or accounting reviews or establishing procedures or setting auditor independence standards. Members of the Committee necessarily rely on the information provided to them by management and the Independent Registered Public Accounting Firm. Accordingly, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with auditing standards established by the Public Company Accounting Oversight Board, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent.”
 
Based on its review and discussions with the Independent Registered Public Accounting Firm and with management, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Form 10-K filed by the Company.
 
The Board of Directors has adopted a written Charter for the Audit Committee. A copy of that Charter, as amended effective July 27, 2006, is posted on our web site, under About First Mutual — Investor Relations, Corporate Governance at www.firstmutual.com.


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A breakdown of the total fees paid to Moss Adams LLP for professional services rendered to the Company for fiscal years ended December 31, 2006 and 2005 follows:
 
                 
   
Year 2006
   
Year 2005
 
 
Audit Fees
  $ 242,000     $ 213,500  
Audit-Related Fees
  $ 36,770     $ 34,495  
Tax Fees
  $ 51,950     $ 25,150  
All other Fees
    None       None  
 
The Audit-Related Fees for years 2006 and 2005 were for the audit of the Employee Stock Ownership Plan (ESOP) and the 401(k) Retirement Plan and research and discussions regarding miscellaneous audit and accounting issues. These services were pre-approved by the Audit Committee.
 
Tax Fees were for the preparation of the federal income tax return and related tax planning and State tax-related items and related planning. Such tax consulting work was pre-approved by the Audit Committee.
 
The Audit Committee of the Board believes that the non-audit services provided by the Independent Registered Public Accounting Firm are compatible with maintaining the auditor’s independence.
 
The Audit Committee has reviewed the Independent Registered Public Accounting Firm’s performance and credentials (and those of the lead partner) determining they are well qualified for the job and has agreed to retain Moss Adams LLP as the Company’s Independent Registered Public Accounting Firm for the ensuing year.
 
The Audit Committee has reviewed and approved the Company’s internal audit and accounting controls. The Committee has established procedures for the confidential and anonymous submission of concerns regarding accounting and auditing matters and has not received any concerns in this regard. The procedures are communicated to the employees on an annual basis.
 
Submitted by the members of the Audit Committee:
 
Richard S. Sprague, Chair
James J. Doud, Jr.
Janine Florence
George W. Rowley, Jr.
 
Report of the Audit Committee and Audit Fees

      The Audit Committee’s Report to the Shareholders, which follows, was approved and adopted by the Committee on January 25, 2005. The members of the Audit Committee are all independent directors as defined in SEC Rule 10A-3 and under the NASDAQ listing standards and rules and as determined by the Board of Directors in its business judgment.

      Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements and for the effectiveness of internal control over financial reporting. Management and the internal auditing department are responsible for maintaining the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditors are responsible for auditing the Company’s financial statements, expressing an opinion as to their conformity with generally accepted accounting principles and annually auditing management’s assessment of the effectiveness of internal control over financial reporting commencing with the fiscal year ending December 31, 2004.

      The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2004 with management and has discussed with the independent auditors, Moss Adams LLP, the matters required by SAS 61, Communications with Audit Committees, as amended, received communications from the independent auditors as to their independence as required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and has discussed the independence of the auditors with the independent auditors.

      It should be noted that the members of the Audit Committee do not perform the functions of auditors or accountants and are not responsible for conducting the auditing or accounting reviews or establishing procedures or setting auditor independence standards. Members of the Committee necessarily rely on the information provided to them by management and the independent accountants. Accordingly, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with auditing standards established by the Public Company Accounting Oversight Board, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent.”

      Based on its review and discussions with the independent auditors and with management, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Form 10-K filed by the Company.

      The Audit Committee and the Board of Directors have adopted a written charter for the Audit Committee. A copy of that charter, as amended effective September 23, 2004, is attached as Appendix A.

      A breakdown of the total fees paid to Moss Adams LLP for professional services rendered to the Company for fiscal years ended December 31, 2004 and 2003 follows:

                 
Year 2004 Year 2003


Audit Fees
  $ 207,500     $ 109,200  
Audit-Related Fees
  $ 23,300     $ 41,080  
Tax Fees
  $ 40,300     $ 51,711  
All Other Fees
    None       None  

      The Audit-Related Fees for years 2004 and 2003 were for the audit of the Employee Stock Ownership Plan (ESOP) and the 401(k) Retirement Plan, review of information technology systems and security (for

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2003 only), and research and discussions regarding miscellaneous audit and accounting issues. These services were pre-approved by the Audit Committee.

      Tax Fees were for the preparation of the federal income tax return and related tax planning and State tax-related items and related planning. Such tax consulting work was pre-approved by the Audit Committee.

      The Audit Committee of the Board believes that the non-audit services provided by the independent auditors are compatible with maintaining the auditors’ independence.

      The Audit Committee has reviewed the independent auditors’ performance and credentials (and those of the lead partner) determining they are well qualified for the job and has agreed to retain Moss Adams LLP as the Company’s independent auditing firm for the ensuing year.

      The Audit Committee has reviewed and approved the Company’s internal audit and accounting controls. The Committee has established procedures for the confidential and anonymous submission of concerns regarding accounting and auditing matters and has not received any concerns in this regard. The procedures are communicated to the employees on an annual basis.

      Submitted by the members of the Audit Committee:

  Richard S. Sprague, Chair
  James J. Doud, Jr.
  Janine Florence
  George W. Rowley, Jr.

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