This excerpt taken from the K DEF 14A filed Mar 16, 2005.
Report of the Audit Committee
The Audit Committee oversees the Companys financial reporting process on behalf of the Board of Directors. The Committee is composed of four independent (as defined by the New York Stock Exchange Listing Standards) directors, met eight times in 2004, and operates under a written charter last amended by the Board of Directors in February 2005, which is posted on the Companys website at www.kelloggcompany.com/corporate governance. As provided in the Charter, the Committees oversight responsibilities include monitoring the integrity of the Companys financial statements (including reviewing financial information, the systems of internal controls, the audit process and the independence and performance of the Companys internal and external auditors) and the Companys compliance with legal and regulatory requirements. However, management has the primary responsibility for the financial statements and the reporting process, including the Companys systems of internal controls. In fulfilling its oversight responsibilities, the Committee reviewed and discussed the audited financial statements to be included in the 2004 Annual Report on Form 10-K with management, including a discussion of the quality and the acceptability of the Companys financial reporting and controls.
The Committee reviewed with the independent auditors, PricewaterhouseCoopers LLP, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality and acceptability of the Companys financial reporting, internal control and such other matters as are required to be discussed with the Committee under generally accepted auditing standards. In addition, the Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, Communications With Audit Committees, No. 89, Audit Adjustments and No. 90 Audit Committee Communications.
The Committee has discussed with the independent auditors the auditors independence from the Company and its management, including matters in the written disclosures and the letter from the independent auditors required by Independent Standards Board Standard No. 1, Independence Discussions With Audit Committees. The Committee also has considered whether the provision by the auditors of non-audit professional services is compatible with maintaining the auditors independence.
The Committee also discussed with the Companys internal and independent auditors the overall scope and plans for their respective audits. The Committee meets periodically with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Companys internal controls, and the overall quality of the Companys financial reporting. The Committee also meets privately with the General Counsel, Corporate Controller, and Vice President of Internal Audit at each in-person meeting.
In reliance on the reviews and the discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year
ended January 1, 2005, for filing with the SEC. The Committee also reappointed the Companys independent auditors for the Companys 2005 fiscal year.