The purpose of the Audit Committee (“Committee”) of the Board of Directors (“Board”) of Hanger, Inc. (the “Company”) is to (A) assist the Board in oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications and independence of the independent registered public accounting firm (the “Independent Auditor”), and
The Committee will consist of not less than three members of the Board. Each member of the Committee will meet the requirements of the applicable rules of the New York Stock Exchange and the Securities and Exchange Commission and, accordingly, (i) will have no relationship to the Company that may interfere with the exercise of his or her independence from management and the Company nor receive consulting or other fees from the Company (other than Board or Committee fees), and (ii) will be financially literate, or be able to become financially literate within a reasonable period of time after appointment to the Committee. At least one member of the Committee shall be deemed to be an “audit committee financial expert” within the meaning of Securities and Exchange Commission rules and at least one member of the Committee must have accounting or related financial management expertise. The member of the Committee deemed to be an “audit committee financial expert” and the member having accounting or related financial management expertise may be the same member. No member will serve as a member of the audit committee of more than two other public company boards of directors.
The Committee shall meet at least four times per year or more frequently as circumstances require. The Committee may form and delegate authority to subcommittees when appropriate.
The Committee’s oversight responsibilities will include the following:
1. The Committee will have the ultimate authority and responsibility (a) to select (or nominate for shareholder approval), evaluate and, where appropriate, replace the Independent Auditor, (b) for the compensation of the Independent Auditor (the funding of which the Company shall provide), and (c) the oversight of the work of the Independent Auditor (including resolution of disagreements between management and the Independent Auditor regarding financial reporting).2. The Committee shall obtain and review a report from the Independent Auditor at least annually regarding (a) the Independent Auditor’s internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the 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 Independent Auditor, (c) any steps taken to deal with any such issues, and (d) all relationships between the Independent Auditor and the Company, in accordance with the Public Company Accounting Oversight Board standards.3. The Committee will (a) monitor and pre-approve all audit and non-audit services provided by the Independent Auditor and the respective fees paid to the Independent Auditor for such; (b) discuss with the Independent Auditor any such disclosed relationships and their impact on the Independent Auditor’s objectivity or independence; and (c) take appropriate action in response to the Independent Auditor’s report with respect to relationships between the Independent Auditor and the Company referenced in Section (2)(d) to satisfy the Committee of the firm’s independence.4. The Committee will review and discuss with the Independent Auditor the annual audit plan and its scope.5. The Committee shall review with the Independent Auditor any audit problems or difficulties and management’s response thereto.6. The Committee shall serve as the Board’s primary avenue of communication with the Independent Auditor, which shall report directly to the Committee, and shall ensure understanding by the Independent Auditor and management that the Independent Auditor is ultimately accountable to the Committee.7. The Committee shall provide the opportunity for the Independent Auditor to meet with the full Board as deemed necessary and appropriate by the Committee.
8. The Committee shall be responsible for establishing policies for the Company’s hiring of employees or former employees of the Independent Auditor.
9. The Committee shall serve as the Board’s primary avenue of communication with the Director of Internal Audit.10. The Committee shall review and concur in the appointment, replacement, reassignment or dismissal of the Director of Internal Audit.11. The Committee shall confirm and assure the independence of the internal auditors.12. The Committee shall review the scope of the annual internal audit plan and the degree of coordination with the Independent Auditor.13. The Committee shall review periodically the internal audit activities, staffing and budget.
14. The Committee shall inquire of the Independent Auditor and management as to the acceptability and appropriateness of financial accounting practices and disclosures used or proposed by the Company in connection with the preparation of the financial statements.15. The Committee shall review and discuss with management and the Independent Auditor at the completion of the annual audit examination: • The Company’s financial statements and related financial disclosures, including (a) the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (b) Sarbanes-Oxley Act Sections 302 and 906 internal controls disclosures and certifications, as included in its filing on Form 10-K,
• The Independent Auditor’s audit of the financial statements and its report, • Any significant changes in the audit plan, • The SAS 61 Communication (as hereinafter defined), and • Any other matters required to be disclosed.16. The Committee shall review with management and the Independent Auditor the Company’s quarterly financial statements including (a) the “Management’s Discussion and Analysis of Financial Condition” and (b) Sarbanes- Oxley Act Sections 302 and 906 internal controls disclosures and certifications, to be included in the Company’s Quarterly Reports on Form 10-Q and review with the Independent Auditor the matters required to be discussed by Statement on Auditing Standards AU Section 722 as in effect at that time.
17. The Committee shall review and approve related-party transactions that are required to be disclosed in accordance with Securities and Exchange Commission regulations and discuss with management the business rationale for such transactions, if any.
18. The Committee shall consider and review with the Independent Auditor, internal auditor and other members of management: • Adequacy of the Company’s internal controls. • Significant findings (“material weaknesses” and “significant deficiencies”) and recommendations of the Independent Auditor and internal auditor together with management’s proposed responsive actions.19. The Committee is responsible for establishing whistleblower procedures to receive, retain and address complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, including procedures for employees’ confidential and anonymous submission of concerns.20. The Committee shall discuss with the Company’s general counsel legal matters that may have a material impact on the Company’s financial statements or the Company’s compliance policies and internal controls; and consult with the Board’s Quality and Technology Committee with respect to the Company’s healthcare standards compliance policies.
21. The Committee will review its own performance and the adequacy of this Charter on an annual basis and recommend changes, as necessary, to the Board.22. The Committee shall report its activities to the Board on a regular basis and make recommendations to the Board with respect to matters within the purview of the Committee, as necessary or appropriate.23. The Committee will prepare a report each year for inclusion in the Company’s annual proxy statement stating whether (a) the Committee reviewed and discussed the audited financial statements with management, (b) the Committee discussed with the Independent Auditor the matters required to be discussed by Auditing Standards No. 61 (AICPA, Professional Standards, Vol. 1. AU Section 380), as amended, as adopted by the Public Company Accounting Oversight Board in Auditing Standards No. 1301 (the “SAS 61 Communication”), (c) the Committee received the written disclosures and letter from the Independent Auditor required by the Public Company Accounting Oversight Board, and (iv) based on the foregoing review and discussions, the Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K.
24. The Committee shall meet periodically, separately and privately with the Independent Auditor, the internal auditor and with the Company’s Chief Financial Officer and accounting officers to discuss any matters the Committee or these groups believe should be discussed privately with the Committee. The Committee will also inquire if management has placed any restrictions on the scope of activity of the independent or internal auditors.25. The Committee shall have reasonable access to members of management, employees and any relevant information.
26. The Committee shall have the authority to engage outside legal, accounting and other advisors without Board approval. The Company shall provide funding for such engagements and any ordinary administrative expenses of the Committee.
27. The Committee shall, prior to releasing, review the Company’s earnings press releases and financial information and earnings guidance provided by the Company to shareholders and analysts.
28. The Committee shall review with management and the Independent Auditor compliance with laws, regulations and internal procedures and contingent liabilities and discuss policies with respect to risk assessment and risk management.As adopted by the Board of Directors on August 14, 2018