This excerpt taken from the HSY DEF 14A filed Mar 10, 2005.
AUDIT COMMITTEE REPORT
The role of the Audit Committee of the Board of Directors is to prepare this report and to assist the Board in its oversight of (i) the integrity of the Companys financial statements, (ii) the Companys compliance with legal and regulatory requirements, (iii) the independent auditors qualifications and independence, and (iv) the performance of the independent auditors and the Companys internal audit function. The Board, in its business judgment, has determined that all members of the Audit Committee are independent as required by applicable listing standards of the New York Stock Exchange, Rule 10A-3 under the Exchange Act and the Companys Corporate Governance Guidelines; that all members are financially literate; that at least one member of the Committee, Gary P. Coughlan, qualifies as an audit committee financial expert as defined in the applicable regulations of the Securities and Exchange Commission; and that Mr. Coughlan has accounting or related financial management expertise. The Audit Committee operates pursuant to a Charter that was last amended and restated by the Board on February 15, 2005. The Charter may be viewed on the Companys website at www.hersheys.com in the Investor Relations section.
Management of the Company is responsible for the preparation, presentation and integrity of the Companys financial statements, the Companys accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations, including the effectiveness of internal control over financial reporting. The internal audit department is responsible for performing independent, objective assessments of managements system of internal controls and policies and procedures and reporting on their degree of effectiveness. The independent auditors are responsible for auditing the Companys financial statements, expressing an opinion as to their conformity with accounting principles generally accepted in the United States and annually auditing managements assessment of the effectiveness of internal control over financial reporting (commencing in the fiscal year ending December 31, 2004).
In the performance of its oversight function, the Audit Committee has reviewed and discussed the audited financial statements with management and the independent auditors. The Audit Committee has also discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as currently in effect, and has discussed with the independent auditors the auditors independence.
The members of the Audit Committee are not full-time employees of the Company and are not performing the functions of auditors or accountants. It is not the duty or responsibility of the Audit Committee or its members to conduct field work or other types of auditing or accounting reviews or procedures or to set auditor independence standards. Members of the Audit Committee necessarily rely on the information provided to them by management and the independent auditors. Accordingly, the Audit Committees review and discussions referred to above do not assure that the audit of the Companys financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with accounting principles generally accepted in the United States or that the Companys auditors are in fact independent.
Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission on March 7, 2005.
SUBMITTED BY THE AUDIT COMMITTEE OF THE COMPANYS