FINRA Manual: Contents
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By-Laws of the Corporation
ARTICLE IX COMMITTEES
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Sec. 5. (a) The Board shall appoint an Audit Committee. The Audit Committee shall consist of four or five Governors, none of whom shall be officers or employees of the Corporation. The Audit Committee shall include at least two Public Governors. A Public Governor shall serve as Chair of the Committee. An Audit Committee member shall hold office for a term of one year.
(b) The Audit Committee shall perform the following functions: (i) ensure the existence of adequate controls and the integrity of the financial reporting process of the Corporation; (ii) recommend to the Board, and monitor the independence and performance of, the certified public accountants retained as outside auditors by the Corporation; and (iii) direct and oversee all the activities of the Corporation's internal review function, including but not limited to management's responses to the internal review function.
(c) No member of the Audit Committee shall participate in the consideration or decision of any matter relating to a particular member, company, or individual if such Audit Committee member has a material interest in, or a professional, business, or personal relationship with, that member, company, or individual, or if such participation shall create an appearance of impropriety. An Audit Committee member shall consult with the General Counsel of the Corporation to determine if recusal is necessary. If a member of the Audit Committee is recused from consideration of a matter, any decision on the matter shall be by a vote of a majority of the remaining members of the Audit Committee.
(d) The Audit Committee shall have exclusive authority to: (i) hire or terminate the Director of Internal Review; (ii) determine the compensation of the Director of Internal Review; and (iii) determine the budget for the Office of Internal Review. The Office of Internal Review and the Director of Internal Review shall report directly to the Audit Committee. The Audit Committee may, in its discretion, direct that the Office of Internal Review also report to senior management of the Corporation on matters the Audit Committee deems appropriate and may request that senior management perform such operational oversight as necessary and proper, consistent with preservation of the independence of the internal review function.
(e) At all meetings of the Audit Committee, a quorum for the transaction of business shall consist of a majority of the Audit Committee, including not less than 50 percent of the Public committee members. In the absence of a quorum, a majority of the committee members present may adjourn the meeting until a quorum is present.
Amended by SR-NASD-2007-023 eff. July 30, 2007.
Adopted by SR-NASD-97-71 eff. Jan. 15, 1998.