Audit Committee

Purpose

The primary function of the Audit Committee is to assist the Board of Directors (the "Board") in fulfilling its oversight responsibilities regarding: the integrity of the financial statements and other financial information provided by TRW Automotive Holdings Corp. (the "Company") to the public; the Company's compliance with legal and regulatory requirements; the Company's systems of disclosure controls and internal controls regarding finance, accounting, legal and regulatory compliance and ethics that management and the Board have established; the independent auditor's qualifications, independence and performance; the assessment of business risk management; the performance of the Company's internal audit function; and the Company's auditing, accounting and financial reporting processes generally. While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations.

Membership

The Audit Committee shall consist of at least three directors appointed by the Board. Each Audit Committee member must meet any then applicable independence requirements and must have such additional qualifications and experience as may from time to time be required by the Securities Exchange Act of 1934 or the New York Stock Exchange or any other applicable rules and standards of the Securities and Exchange Commission or other applicable regulatory bodies.

Each director serving on the Audit Committee shall be "financially literate," as such qualification is interpreted by the Board in its business judgment, or such director must become financially literate within a reasonable period of time after his or her appointment to the Audit Committee.

The Audit Committee shall have at least one member who is an "audit committee financial expert" as defined by the Securities and Exchange Commission. The existence of such member shall be disclosed in periodic filings as required by the Securities and Exchange Commission. Audit Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Company or an outside consultant.

An independent director appointed by the Board shall chair the Audit Committee. He or she shall be responsible for leadership of the Audit Committee, including determining the agenda for Audit Committee meetings (with input from Audit Committee members and in consultation with management, the Vice President of Internal Audit and the independent auditor), presiding over the meetings, and reporting to the Board. No member of the Audit Committee shall be employed by or currently affiliated with the Company's independent auditor.

Meetings

The Audit Committee shall meet in person or by telephone at least four times annually, or more frequently as circumstances dictate. The Audit Committee shall meet periodically with the Company's Vice President of Internal Audit, the independent auditor and management in separate executive sessions to discuss any matters that the Audit Committee or any of these groups believes should be discussed privately. In addition, the Audit Committee or a designated member thereof should meet with the independent auditor and management quarterly to review the Company's financial reporting consistent with Section IV. 8 and Section IV.10 below.

The Audit Committee may request any officer or employee of the Company or the Company's outside counsel or independent auditor to attend a meeting of the Audit Committee or to meet with any members of, or consultants to, the Audit Committee and provide pertinent information as necessary.

A quorum of the Audit Committee shall be declared when a simple majority of the appointed members of the Audit Committee are in attendance. Meetings shall be scheduled at the discretion of the Audit Committee or a designated member thereof. Notice of the meetings shall typically be provided at least five days in advance, but less notice may be provided as circumstances dictate.

The independent auditor, the Vice President of Internal Audit or the General Counsel may request a meeting with the Audit Committee at any time.

Responsibilities and Duties

To fulfill its responsibilities and duties the Audit Committee shall:

1. Select, appoint and retain, and terminate if appropriate, the independent auditor; set the independent auditor's compensation; and oversee the work of the independent auditor (including resolution of any disagreements between management and the independent auditor regarding financial reporting) engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. The independent auditor shall report directly to the Audit Committee.
2. Pre-approve all audit and permitted non-audit services to be performed by the independent auditor and establish policies and procedures for the engagement of the independent auditor to provide permitted non-audit services. The Audit Committee may delegate pre-approval authority to one or more of its members.
3. Receive and review at least annually: (a) a report by the independent auditor describing (i) the independent auditor's internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditing firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues and (iii) all relationships between the independent auditor and the Company (in order that the Audit Committee may assess the independent auditor's independence); and (b) other required reports from the independent auditor.
4. At least annually, consider the independence of the independent auditor, including whether the provision by the independent auditor of permitted non-audit services is compatible with independence, obtain and review a report from the independent auditor describing all relationships between the auditor and the Company, and recommend, if necessary, that the Board take certain actions to satisfy itself of the independence of the auditor.
5. Review with the independent auditor: (a) the scope and results of their audits; (b) any problems or difficulties that the independent auditor encountered in the course of the audit work, and management's response; and (c) any questions, comments or suggestions the independent auditor may have relating to the internal controls, and accounting practices and procedures, of the Company or its subsidiaries.
6. Review, at least annually, the scope and results of the then current and future internal audit programs, including procedures for implementing accepted recommendations made by the internal auditors, the internal audit charter, plans, activities, staffing, budget and organizational structure of the internal audit function and any significant matters contained in reports from the Company's Vice President of Internal Audit. Review and approve the appointment and removal of the Vice President of Internal Audit.
7. Review with the independent auditor, the Company's Vice President of Internal Audit, and management: (a) the adequacy and effectiveness of the systems of internal controls and the Company's compliance with the Sarbanes-Oxley Act (including any significant deficiencies or material weaknesses and significant changes in internal controls reported to the Audit Committee by the independent auditor or management), accounting practices, and disclosure controls and procedures (and management reports thereon), of the Company and its subsidiaries; and (b) current accounting trends and developments, and take such action with respect thereto as may be deemed appropriate.
8. Meet to review and discuss with management and the independent auditor the annual audited and quarterly financial statements of the Company, including: (a) the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations"; (b) any material changes in accounting principles or practices used in preparing the financial statements prior to the filing of a report on Form 10-K or 10-Q with the Securities and Exchange Commission; (c) the items required by Statement of Auditing Standards 61 as in effect at that time in the case of the annual statements; (d) management's report on internal control over financial reporting and certification of disclosure as required by the rules relating to Section 404 of the Sarbanes-Oxley Act; and (e) the Chief Executive Officer and Chief Financial Officer certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act.
9. Recommend to the Board, based on the review described in paragraphs 4 and 8 above, whether the financial statements should be included in the annual report on Form 10-K.
10. Review and discuss earnings press releases, as well as Company policies with respect to earnings press releases, financial information and earnings guidance provided to analysts and rating agencies.
11. Discuss Company policies with respect to risk assessment and risk management, and review contingent liabilities and risks that may be material to the Company and major legislative and regulatory developments which could materially impact the Company's contingent liabilities and risks.
12. Review: (a) the status of compliance with laws, regulations, and internal procedures; and (b) the scope and status of systems designed to promote Company compliance with laws, regulations and internal procedures, through receiving reports from management, legal counsel and third parties as determined by the Audit Committee.
13. Prepare an audit committee report as required by the Securities and Exchange Commission to be included in the Company's annual proxy statement.
14. Establish procedures for the confidential and anonymous receipt, retention and treatment of complaints regarding the Company's accounting, internal accounting controls and auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
15. Conduct a performance evaluation at least annually, possibly via a self-evaluation, of the Audit Committee and evaluate at least annually the adequacy of its charter and present to the Board for its formal review and approval any proposed changes to the charter.
16. Set hiring policies for employees and former employees of the Company's independent auditor that meet Securities and Exchange Commission regulations and New York Stock Exchange listing standards.
17. Review expenses reported by the Board and the executive officers of the Company.
18. Review reports and disclosures of related party transactions, and approve or ratify any such transaction, if determined appropriate by the Audit Committee.
19. With respect to the independent auditor, oversee the rotation, as required by Securities and Exchange Commission rules or other law, of the audit partners including the lead (or coordinating) audit partner having primary responsibility for the audit.
20. Perform such other duties and responsibilities as may be assigned to the Audit Committee by law, the Company's restated certificate of incorporation or the Board.

Reports

The Audit Committee shall provide a high level summary of its activities to the Board after each Audit Committee meeting and report its recommendations to the Board. When presenting any recommendation or advice to the Board, the Audit Committee will provide such background and supporting information as may be necessary for the Board to make an informed decision. The Audit Committee will keep minutes of its meetings and will make such minutes available to the full Board for its review.

Authorizations

The Audit Committee is authorized to confer with Company management and other employees to the extent it may deem necessary or appropriate to fulfill its duties. The Audit Committee is authorized to conduct or authorize investigations into any matters within the Audit Committee's scope of responsibilities. The Audit Committee also is authorized to seek outside legal or other advice to the extent it deems necessary or appropriate.

Funding

The Audit Committee shall have the authority to engage independent counsel and other advisers as it deems necessary to carry out its duties. The Audit Committee shall determine the appropriate amount of funding for payment of compensation to the independent auditor and to any advisors that the Audit Committee chooses to engage as well as for payment of ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties. The Company shall provide funding for such payments.

AS ADOPTED BY THE BOARD OF DIRECTORS ON JANUARY 23, 2004 AND AMENDED AUGUST 9, 2005 AND AUGUST 8, 2008

Download PDF   89.8 KB