This excerpt taken from the GVHR DEF 14A filed Apr 12, 2007.
Audit Committee Report*
Gevitys audit committee is made up solely of independent directors, as defined by applicable NASDAQ and SEC rules, and the board has determined that each audit committee member has sufficient knowledge in financial and auditing matters to serve on the committee and is financially literate as required by NASDAQ rules. In addition, the board has determined that Mr. Cowie is an audit committee financial expert as defined by SEC rules. Shareholders should understand that this designation is a disclosure requirement of the SEC related to Mr. Cowies experience and understanding with respect to certain accounting and auditing matters. The designation does not impose upon Mr. Cowie any duties, obligations or liability that are greater than are generally imposed on him as a member of the audit committee and the board, and his designation as an audit committee financial expert pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the audit committee or the board. Upon Mr. Cowies departure, the board intends to designate another member as its audit committee financial expert.
The audit committee assists the board in fulfilling its responsibilities by overseeing Gevitys accounting and financial reporting processes, the audit of consolidated financial statements, the qualifications of the independent registered public accounting firm engaged as our independent auditor, and the performance of the internal auditors and independent auditors. In addition, the audit committee generally oversees our internal compliance programs and is responsible for establishing procedures for the receipt, retention and treatment of complaints received by Gevity regarding accounting, internal accounting controls or auditing matters, including the confidential, anonymous submission from our employees, received through established procedures, of concerns regarding questionable accounting or auditing matters. The audit committee operates under a written charter adopted by the board of directors that is available in the About Gevity Corporate Governance section of Gevitys website, gevity.com. The audit committee reviews its charter on an annual basis, and it was last revised as of October 24, 2006. A copy of the charter was last included as Exhibit A to our 2005 proxy statement.
The committee relies on the expertise and knowledge of management, Gevitys internal auditors and the independent auditor in carrying out its oversight responsibilities. Management is responsible for the preparation, presentation and integrity of our financial statements; accounting and financial reporting principles; internal controls; and procedures designed to reasonably assure compliance with accounting standards, applicable laws and regulations. Our internal auditors are responsible for objectively reviewing and evaluating the adequacy, effectiveness and quality of our system of internal control over financial reporting relating (for example, to the reliability and integrity of our financial information and the safeguarding of our assets) and reporting all findings to the audit committee and to management. Deloitte & Touche LLP, our independent auditing firm, is responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards, auditing managements assessment of the effectiveness of our internal control over financial reporting, and issuing reports with respect to such audits.
Among other matters, the audit committee monitors the activities and performance of our internal and independent auditors, including the audit scope, independent auditor fees, auditor independence matters and the extent to which the independent auditors may be retained to perform non-audit services. Our independent auditors provide the audit committee with the required written disclosures and the letter required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and the audit committee discusses with the independent auditors and management that firms independence.
In accordance with audit committee policy and the requirements of law, all services to be provided by Deloitte & Touche LLP are pre-approved by the audit committee. Pre-approval includes audit services, audit-related services, tax services and other services. In some cases, pre-approval is provided by the full audit committee
* The information in this report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933 as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporated language in any such filings.
for up to a year, relates to a particular defined task or scope of work and is subject to a specific budget. In other cases, the chairman of the audit committee has the delegated authority from the audit committee to pre-approve additional services, and such pre-approvals are then communicated to the full audit committee. To avoid certain potential conflicts of interest, the law prohibits a publicly-traded company from obtaining certain non-audit services from its auditing firm. We obtain these services from other service providers as needed. For a description of the services performed by, and the related fees paid to, Deloitte & Touche LLP during 2005 and 2006, see Fees Paid to Deloitte & Touche LLP.
During 2006, the audit committee fulfilled its duties and responsibilities generally as outlined in its charter, including reviewing and discussing (including in executive sessions) the following with management, our internal auditors, and our independent auditor:
Management represented to the audit committee that our consolidated financial statements were prepared in accordance with generally accepted accounting principles; and the independent auditors represented that their presentations included the matters required to be discussed with the independent auditors by Statement on Auditing Standards No. 114, The Auditors Communication with Those Charged with Governance. This review included a discussion with management of the quality, not merely the acceptability, of Gevitys accounting principles, the reasonableness of significant estimates and judgments, and the clarity of disclosure in our financial statements, including the disclosures related to critical accounting estimates. In reliance on these views and discussions, and the report of the independent auditors, the audit committee recommended to the board, and the board approved, the inclusion of the audited financial statements in Gevitys Annual Report on Form 10-K for the year ended December 31, 2006 for filing with the SEC.
This report is submitted by the
George B. Beitzel, Chairperson
Darcy E. Bradbury
James E. Cowie
Jonathan H. Kagan