The purpose of the Audit Committee (“Committee”) of the Board of Directors (“Board”) of Hanger, Inc. (the “Company”) is to assist the Board in carrying out its oversight responsibilities with respect to the Company’s (i) integrity of the financial statements and financial information provided to shareholders, (ii) compliance with legal and regulatory requirements, (iii) internal and external audit processes including the qualification and independence of the independent registered public accounting firm (the “Accounting Firm”), and (iv) internal financial and accounting controls.
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 to select (or nominate for shareholder approval), evaluate and, where appropriate, replace the Accounting Firm.2. The Committee shall obtain and review a report from the Accounting Firm at least annually regarding (a) the Accounting Firm 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 Accounting Firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the Accounting Firm and the Company, in accordance with the Public Company Accounting Oversight Board standards.3. The Committee will (i) monitor and pre-approve all fees paid to the Accounting Firm for consulting and other non-audit services; (ii) discuss with the Accounting Firm any such disclosed relationships and their impact on the Accounting Firm’s objectivity or independence; and (iii) take appropriate action in response to the Accounting Firm’s report with respect to relationships between the Accounting Firm and the Company references in Section (2)(d) to satisfy the Committee of the firm’s independence.4. The Committee will review and discuss with the Accounting Firm the annual audit plan and its scope.5. The Committee shall serve as the Board’s primary avenue of communication with the Accounting Firm and shall ensure understanding by the Accounting Firm and management that the Accounting Firm is ultimately accountable to the Committee.6. The Committee shall provide the opportunity for the Accounting Firm to meet with the full Board as deemed necessary and appropriate by the Committee.7. The Committee shall be responsible for establishing policies for the Company’s hiring of employees or former employees of the Accounting Firm.
8. The Committee shall serve as the Board’s primary avenue of communication with the Director of Internal Audit.9. The Committee shall review and concur in the appointment, replacement, reassignment or dismissal of the Director of Internal Audit.10. The Committee shall confirm and assure the independence of the internal auditors.11. The Committee shall review the scope of the annual internal audit plan and the degree of coordination with the Accounting Firm.12. The Committee shall review periodically the internal audit activities, staffing and budget.
13. The Committee shall inquire of the Accounting Firm 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.14. The Committee shall review and discuss with management and the Accounting Firm prior to releasing the year-end earnings and at the completion of the annual audit examination: • The Company’s financial statements and related financial disclosures, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as included in its filing on Form 10-K, • The Accounting Firm’s audit of the financial statements and its report, • Any significant changes in the audit plan, • The Statement of Auditing Standards No. 114 (“SAS 114”) communication, and • Any other matters required to be disclosed.15. The Committee will review with management and the Accounting Firm, prior to releasing the quarterly earnings, the Company’s quarterly financial statements including the “Management’s Discussion and Analysis of Financial Condition” to be included in the Company’s Quarterly Reports on Form 10-Q and review with the Accounting Firm the matters required to be discussed by SAS 114 as in effect at that time.
16. The Committee shall consider and review with the Accounting Firm, internal auditor and other members of management: • Adequacy of the Company’s internal controls. • Significant findings and recommendations of the Accounting Firm and internal auditor together with management’s proposed responsive actions.17. The Committee is responsible for establishing whistleblower procedures to receive, retain and address complaints regarding accounting and auditing matters, including procedures for employees’ anonymous submission of concerns.18. 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.
19. 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.20. The Committee shall report its activities to the Board on an annual basis and make recommendations to the Board with respect to matters within the purview of the Committee, as necessary or appropriate.21. The Committee will prepare a report each year for inclusion in the Company’s annual proxy statement stating whether (i) the Committee reviewed and discussed the audited financial statements with management, (ii) the Committee discussed with the Accounting Firm the matters required to be discussed by SAS 114 or, if applicable, any PCAOB standard that supersedes or replaces SAS 114, (iii) the Committee received the written disclosures from the 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.
22. The Committee shall meet separately and privately with the Accounting Firm, the internal auditor and with the Company’s Chief Financial Officer and accounting officers at least annually 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.23. The Committee shall have reasonable access to members of management, employees and any relevant information.
24. The Committee shall have the authority to engage outside legal, accounting and other advisors without Board approval.
25. The Committee shall review the Company’s earnings press releases and financial information and earnings guidance provided by the Company to shareholders, analysts and rating agencies.
26. The Committee shall review with management and the Accounting Firm compliance with laws, regulations and internal procedures and contingent liabilities and discuss policies with respect to risk assessment and risk management.Last Revised: February 7, 2013