Audit Committee of the Board of Directors Charter | RadNet
button-radnet

As Revised on May 9, 2017

I. PURPOSE AND PRINCIPAL DUTIES

The primary purpose of the Audit Committee (the “Committee” or “Audit Committee”) of the Board of Directors (“Board”) of RadNet, Inc. (the “Company”) is to oversee, on behalf of the Board, the accounting and financial reporting processes of the Company. The Committee's principal duties are to (i) oversee the integrity of the Company's financial statements and other financial information provided by the Company to its stockholders, any governmental or regulatory body and others; (ii) monitor the auditing, accounting and financial reporting processes and systems of internal control that are conducted by the Company's independent auditors, internal audit function and the Company's financial and senior management; (iii) oversee the engagement, qualifications, independence, compensation, retention and performance of the Company's independent auditors and the conduct of the annual independent audit of the Company's financial statements; and (iv) prepare the report of the Audit Committee required by the rules of the Securities and Exchange Commission (the “SEC”) to be included in the Company's annual proxy statement.

II. MEMBERSHIP

The Committee shall consist of three or more members of the Board, or such lower number as may be allowed by the listing standards of the NASDAQ Stock Market LLC (“NASDAQ”) or such other national securities exchange on which the Company's securities are then listed, as the same may be amended from time to time (the “listing standards”). Subject to the requirements of the listing standards and the Bylaws of the Company, the members of the Committee shall be appointed by and serve at the discretion of the Board. Committee members may be removed, without cause, by the affirmative vote of the majority of the Board at any time. Any Committee member may resign effective upon giving oral or written notice to the Chairman of the Board, the Corporate Secretary or the Board (unless the notice specifies a later time for the effectiveness of such resignation).Vacancies occurring on the Committee shall be filled by the Board. The Chairman of the Committee shall also be appointed by the Board.

Each member of the Committee must (i) be an “independent director” as defined in the listing standards, (ii) satisfy the independence requirements applicable to Audit Committee members set forth in the rules and regulations promulgated by the SEC, (iii) not have participated in the preparation of the financial statements of the Company at any time during the past three years, (iv) be free from any relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment as a Committee member, and (v) meet any other requirements imposed by applicable laws, rules, regulations and listing standards, subject to any applicable exemptions and transition provisions.

Each member of the Committee shall be able to read and understand financial statements, including the Company’s balance sheet, income statement and cash flow statement. At least one member of the Committee shall have prior experience in accounting, financial management, financial oversight, requisite professional certification in accounting, or any other comparable experience or background, and qualify as a “financial expert” as defined under the rules promulgated by the SEC and satisfy the financial sophistication or other similar requirements of the listing standards, as in effect from time to time.

No member may be a member of more than three public company audit committees (including the Committee) unless the Board has determined that doing so will not impair the member's ability to serve effectively on the Committee, which determination is properly disclosed in the Company’s annual proxy statement.

III. MEETINGS AND PROCEDURES

The Audit Committee shall meet in person or by telephone at least four times annually, or more frequently as determined appropriate by the Committee. The Committee will regularly report to the Board on significant matters related to the Committee’s responsibilities, and as requested by the Board with respect to other matters.  The Committee will maintain written minutes of its meetings and will make such minutes available to the Board. In addition, as part of its primary function, to foster independent, direct, and open communications, the Audit Committee shall meet at least annually with management and the Company's independent auditors in separate executive sessions to discuss any matters that the Audit Committee or each of these groups believe should be discussed privately.

The Committee will be governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.

IV. RESPONSIBILITIES AND AUTHORITY

The following are general guidelines establishing the responsibilities and authority of the Committee.  This list is not intended to be exhaustive, and the Committee may modify the list as appropriate, establishing policies and procedures as required or recommended to meet its purpose and carry out its principal functions.

  1. Review the Company’s annual financial statements and related notes thereto and any reports or other financial information submitted to any governmental body or the public, including any certification, report, analysis, opinion or review rendered by the Company’s independent auditors.

  2. Review the regular internal quarterly reports to management.

  3. Review filings made with the SEC and other published documents containing the Company’s financial statements and consider whether the information contained in such documents is consistent with the information contained in the Company's financial statements.

  4. Include in the Company’s statements relating to annual meetings of stockholders at which directors are to be elected (or special meetings or written consents in lieu of such meetings) a report of the Audit Committee that complies with the SEC’s regulations for such reports.

  5. Review (or cause the Chairperson of the Audit Committee to review) with the Company’s independent auditors and the Company’s chief financial officer each quarterly report on Form 10-Q and all financial statements and related notes thereto (or any successor report thereto under the rules and regulations of the SEC) prior to its filing with the SEC or prior to the public release of the Company’s earnings.

  6. Recommend to the Board the selection, evaluation and, where appropriate, replacement of the Company’s independent auditors, consider the independence and effectiveness of the independent auditors and approve the fees and other compensation to be paid to the independent auditors and the range and cost of audit and non-audit services performed by the independent auditors.

  7. On an annual basis, the Audit Committee shall review and discuss with the independent auditors all significant relationships the independent auditors have with the Company in order to determine such independent auditors' independence. This shall include receiving a formal written statement from the independent auditors regarding their relationships with the Company.

  8. Discuss any items required to be communicated by the independent auditors in accordance with the applicable auditing guidance.  These discussions should include, among other things, the independent auditors’ judgments about the quality and appropriateness of the Company’s accounting principles, the reasonableness of significant judgments, the clarity of the disclosures in the Company’s financial statements and any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

  9. Provide independent, direct, and open communications among the Company’s independent auditors, financial and senior management, and the Board.

  10. Periodically consult with the Company’s independent auditors out of the presence of management about internal controls and the fullness and accuracy of the Company’s financial statements.

  11. In consultation with the Company’s independent auditors, review the integrity of the Company's financial reporting processes, both internal and external; confer with the independent auditors concerning the scope of their examinations of the books and records of the Company and its subsidiaries; review and approve the independent auditor’s annual engagement letter; review and approve the Company’s annual audit plans and budgets; direct the special attention of the independent auditors to specific matters or areas deemed by the Audit Committee to be of special significance; and authorize the independent auditors to perform such supplemental reviews or audits as the Audit Committee may deem appropriate.

  12. Consider the Company’s independent auditors’ judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.

  13. Consider and approve, if appropriate, major changes to the Company’s auditing and accounting principles and practice as suggested by the Company’s independent auditors or management.

  14. Establish regular and separate systems of reporting to the Audit Committee by each of management and the Company’s independent auditors regarding any significant judgments made in management's preparation of the financial statements and the view of each as to the appropriateness of such judgments.

  15. Following completion of the Company’s annual audit, review separately with each of management and the Company’s independent auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information and the nature and extent of any significant changes in accounting principles or the application thereto.

  16. Review any significant disagreement among management and the Company's independent auditors in connection with the preparation of the financial statements.

  17. Review with the Company’s independent auditors and management the extent to which changes or improvement in financial or accounting practices, as approved by the Audit Committee, have been implemented. (This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as decided by the Committee.)

  18. Inquire of management and the Company’s independent auditors about significant risks or exposures and assess the steps that management has taken to minimize such risks to the Company.

  19. The Committee shall have the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the Committee may deem appropriate in its sole discretion.

  20. Annually review, evaluate and assess the Committee’s own performance and compliance with this Charter.

  21. Annually review this Charter and periodically revise, as determined appropriate by the Committee.

  22. In performing its responsibilities, the Committee shall have the authority to engage and obtain advice, reports or opinions from independent legal counsel and other advisors, as it determines necessary, to carry out its duties.  The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any legal counsel and other adviser retained by the Committee and will have sole authority to approve related fees and retention terms for any legal counsel and advisors retained by the Committee.  The Company will provide the Committee with appropriate funding, as the Committee determines, for the payment of compensation to any legal counsel and other advisors as it deems appropriate.

  23. Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law, as the Audit Committee or the Board deems necessary or appropriate.

V. LIMITATIONS ON AUDIT COMMITTEE RESPONSIBILITIES

Notwithstanding the responsibilities and powers of the Committee set forth in this Charter, the Committee does not have the responsibility of planning or conducting audits of the Company’s financial statements or determining whether the Company's financial statements are complete, accurate or prepared in accordance with GAAP.  Such responsibilities are those of management and, to the extent of the independent auditors’ responsibilities, those of the independent auditors.  Each member of the Committee is entitled to rely on the integrity of those persons and organizations within and outside the Company that provide information to the Committee and the accuracy and completeness of the financial and other information provided to the Committee by such persons and organizations absent actual knowledge to the contrary.  In addition, the members of the Committee are not independent auditors and the term “review” as used in this Charter is not intended to be interpreted to suggest that the members of the Committee can or should follow the procedures required of auditors performing a review of financial statements.

VI. CONSISTENCY WITH CERTIFICATE OF INCORPORATION AND BYLAWS

To the extent that any provision or section of this Charter may be inconsistent with any article, provision or section of the Certificate of Incorporation or Bylaws of the Company, the Certificate of Incorporation or Bylaws, as appropriate, shall fully control.