Audit Committee Charter Energy Transfer Partners, L.P.
1
Contents
Purpose
Membership
Authority and Responsibilities
Communication and Reporting
Independent Auditors
Internal Auditing Function
Earnings Releases and Earnings Guidance
Financial Statements
Internal Controls and Interface with Independent Auditors
Miscellaneous
Meetings
Reporting
PURPOSE
Energy Transfer Partners, L.L.C.
(the "Company"), as the general partner of Energy Transfer Partners GP,
L.P., the general partner of Energy Transfer Partners, L.P. (the "Partnership"),
is responsible for the management of the Partnership. In such capacity, the Company is responsible
for the preparation, integrity and objectivity of the financial statements of
the Partnership and for establishing and maintaining a system of internal
accounting and disclosure controls of the Partnership. It is the responsibility
of the independent auditors to express an opinion as to the conformance of the
Partnership’s financial statements with generally accepted accounting
principles based upon their audit. The Audit Committee is a standing committee
of the Board of Directors of the Company (the "Board"). Its primary
purpose is to assist the Board in its oversight of (1) the integrity of the
financial statements of the Partnership, (2) the compliance by the Company and
the Partnership with legal and regulatory requirements, and the Partnership’s
Code of Business Conduct and Ethics and Code of Ethics for Senior Financial
Officers, (3) the independent auditor’s qualifications and independence and
(4) the performance of the Partnership’s internal audit function and
independent auditors.
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MEMBERSHIP
The Audit Committee shall be composed of not fewer than
three members, all of whom (i) meet the independence criteria set forth in the
Partnership’s Corporate Governance Guidelines, as well as the independence and
experience requirements of the New York Stock Exchange (the "NYSE"),
Section 10A(m)(3) of the Securities Exchange Act of 1934, and the rules and
regulations of the Securities and Exchange Commission (the "SEC") and (ii) are financially literate and
have sufficient financial experience and ability to enable them to discharge
their responsibilities as specified in this Charter. In addition, at least one member of the Audit
Committee shall meet the requirements of and be considered an “audit committee
financial expert” as defined by the SEC. An Audit Committee member may simultaneously
serve on the Audit Committees of more than two other public companies if the
Board determines that such simultaneous service will not impair the ability of
such member to effectively serve on the Audit Committee and such determination
is disclosed in the Partnership’s annual proxy statement or, if the Partnership
does not file an annual proxy statement, in the Partnership’s annual report on
Form 10-K filed with the SEC. Members shall be elected annually by the
Board for terms of one year, or until their successors shall be duly elected
and qualified. Audit Committee members
may be replaced by the Board.
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AUTHORITY AND RESPONSIBILITIES
The Audit Committee is empowered to investigate any matter
brought to its attention with full access to all books, records, facilities and
personnel of the Company and the Partnership. The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate to carry out its duties, to retain independent legal,
accounting or other advisors. The
Company shall provide the Audit Committee with appropriate funding, as
determined by the Audit Committee in its capacity as a committee of the Board,
for payment of (1) compensation to any registered public accounting firm
engaged for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company or the Partnership, (2)
compensation to any independent counsel or other advisors engaged by the Audit
Committee, and (3) ordinary administrative expenses of the Audit Committee that
are necessary or appropriate in carrying out its duties.
In fulfilling their responsibilities, it is recognized that
members of the Committee are not full-time employees of the Company. It is not
the duty or responsibility of the Committee or its members to conduct "field
work" or other types of auditing, legal, or accounting reviews or procedures.
The Company’s management is responsible for preparing the Company’s financial
statements for the Company and the Partnership and the independent auditors are
responsible for auditing those financial statements.
Unless he or she believes to the contrary (in which case,
he or she will advise the Committee of such belief), each member of the
Committee shall be entitled to assume and rely on (1) the integrity of those
persons and organizations within and outside the Company that it receives
information from and (2) the accuracy of the financial, legal, safety, health
and environment, and other information provided to the Committee by such
persons or organizations.
The following shall be the usual recurring activities of
the Audit Committee to assist the Board in fulfilling the oversight
responsibilities described above. The Audit Committee may modify these
activities (consistent with the requirements of the SEC and the NYSE) as particular circumstances warrant. Specifically, the Audit Committee shall from
time to time as required and otherwise when the Audit Committee deems
appropriate:
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Communication and Reporting
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Provide a direct and independent line of
communication between the Partnership’s internal auditors, its independent
auditors, and the Board.
-
Report regularly to the Board regarding any
issues that arise with respect to the Partnership’s financial statements or
other financial information, compliance with applicable laws, rules,
regulations, and the Company’s Code of Business Conduct and Ethics and Code of
Ethics for Senior Financial Officers; the independence and qualifications of
the Partnership’s independent auditors; and the performance of the
Partnership’s independent auditors.
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Independent Auditors
-
Have the sole authority to appoint, retain or
replace the Partnership’s independent auditors.
-
Be directly responsible for the compensation and
oversight of the Partnership’s independent auditors and each other registered
public accounting firm engaged (including resolution of disagreements between
management and such independent auditors or registered public accounting firms
regarding financial reporting) for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the Company or
the Partnership, in each case in a manner that is consistent with the standards
of independence and other qualifications established by applicable laws, rules
and regulations of the SEC and the NYSE. The Partnership’s independent auditors and each such other registered
public accounting firm shall report directly to the Audit Committee.
-
Pre-approve all audit, review or attest
engagements, internal control related services and permitted non-audit services
(including the fees and terms thereof) to be performed by the Partnership’s
independent auditors, subject to de minimis or other exceptions for
non-audit services permitted under applicable laws, rules and regulations of
the SEC (including Section
10A(i)(1)(B) of the Exchange Act) and the NYSE, which non-audit services are
approved by the Audit Committee prior to the completion of the audit.
-
At least annually, obtain and review a report by
the independent auditors describing:
-
the firm’s internal quality-control procedures;
-
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 firm,
and any steps taken to deal with any such issues; and
-
all relationships between the independent auditor and
the Company or the Partnership in order to assess the auditor’s independence.
-
At least annually, review and confirm the
independence of the independent auditors by (i) obtaining written
statements (as set forth in the applicable requirements of the Public Company
Accounting Oversight Board) from the Partnership’s independent auditors
concerning any relationships between the auditors and the Company or the
Partnership or any other relationships, including the provision of non-audit
services, that may adversely affect the independence of the auditors; (ii)
actively engaging the independent auditors in a dialogue with respect to any
disclosed relationships for services that may impact the objectivity and
independence of the independent auditors; (iii) assessing the independence of
the independent auditors of the Company and the Partnership, including an
assessment of whether the independent auditor’s performance of permissible
non-audit services is compatible with their independence, (iv) reviewing and
evaluating the qualifications and performance of the lead partner of the
independent auditors, taking into account the opinions of management and the
internal auditors, (v) ensuring the rotation of the lead partner, as required
by law, and considering whether there should be regular rotation of the audit
firm.
-
Review the qualifications, experience and
performance of the independent auditor.
-
Meet with the independent auditor prior to the
audit to discuss the planning and staffing of the audit.
-
Recommend to the Board clear policies regarding
the hiring by the Company or the Partnership of employees or former employees
of the Partnership’s independent auditors.
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Internal Auditing Function
-
Review the appointment and replacement of the
senior internal auditing executive.
-
Review the significant reports to management
prepared by the internal auditing function relating to internal controls and
management’s responses.
-
Review the internal audit plan and significant
changes in planned activities; review significant findings resulting from
audits and managements’ responsiveness to the findings.
-
Review the internal auditors’ assessment of the
effectiveness of, or weaknesses in, internal control systems.
-
Evaluate the performance and independence of the
internal auditors.
-
Review and discuss with the independent auditor
the responsibilities, budget and staffing of the Company’s internal audit
function.
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Earnings Releases and Earnings Guidance
-
Discuss with management the general types of
information to be disclosed, and the types of presentation to be made, related
to earnings press releases as well as financial information or financial
guidance provided to analysts and rating agencies including, in each case, the
use of "pro forma" or "adjusted" non-GAAP information, recognizing that such
discussion need not be conducted in advance of any particular earnings release
or any particular presentation of financial information or financial guidance
provided to analysts or rating agencies.
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Financial Statements
-
Review with management and the Partnership’s
independent auditors:
-
The Partnership’s annual audited and
quarterly financial statements and related footnotes and the independent
auditors’ report thereon or review thereof, as applicable, including the effect
of off-balance sheet structures on the Partnership’s financial statements and
the specific disclosures under "Management’s Discussion and Analysis of
Financial Condition and Results of Operations" in the Partnership’s annual and
quarterly reports to be filed with the SEC prior to the filing of same.
-
Recommend to the Board whether the
Partnership’s annual audited financial statements and accompanying notes should
be included in the Partnership’s Annual Report on Form 10-K.
-
Any significant difficulties or disputes
with management encountered by the independent auditors during the course of
the audit or interim reviews and any instances of second opinions sought by
management.
-
Any significant financial reporting
issues and judgments made in connection with the preparation of the
Partnership’s financial statements, including any significant changes in the
Partnership’s selection or application of accounting principles.
-
Any significant findings and
recommendations made by the independent auditors with respect to the
Partnership’s financial policies, procedures and internal accounting controls,
together with management’s responses thereto and any special steps adopted in
light of material control deficiencies;
-
The form of opinion the independent
auditors propose to render to the Board and the Audit Committee.
-
The critical accounting policies and
estimates used in preparing the financial statements of the Partnership.
-
The effect of regulatory and accounting
initiatives.
-
Other material written communications
between the Partnership’s independent auditors and management, such as any
management letter or schedule of unadjusted differences.
-
All alternative treatments of financial
information within generally accepted accounting principles that have been
discussed with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the Partnership’s
independent auditors.
-
Any correspondence with regulators or
governmental agencies and any published reports which raise material issues
regarding the Partnership’s financial statements or accounting policies.
-
Any disclosures made to the Audit
Committee by the Company’s Chief Executive Officer2 and Chief Financial Officer
during their certification process for the Form 10-K and Form 10-Q about any
significant deficiencies in the design or operation of internal controls or
material weaknesses therein, and any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Partnership’s internal accounting and disclosure controls.
-
The internal audit function
responsibilities, budget and staffing and any recommended changes in the
planned scope of the internal audit.
-
Other matters required to be discussed
by Statement on Auditing Standards (SAS) No. 61 and SAS No. 100, as the same
may be amended in the future, relating to the conduct of the audit, including
any difficulties encountered in the course of the audit work, any restrictions
on the scope of activities or access to requested information, and any
significant disagreements with management.
-
Other matters related to the
Partnership’s interim financial results to be included in the quarterly reports
to be filed with the SEC and the
matters to be communicated under SAS No. 100, as the same may be amended in the
future.
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Internal Controls and Interface with Independent Auditors
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Consider and review with management, internal
auditors and the independent auditors, the adequacy and effectiveness of the
Partnership’s system of internal controls over financial reporting, disclosure
controls and procedures, the adequacy of disclosures about the foregoing, and
the safeguarding of assets, including any significant deficiencies which could
adversely affect the Partnership’s ability to record, process, summarize and
report financial data.
-
Review in private discussion with the
independent auditors whether there have been (and, if so, the nature of) any
audit problems or difficulties and any related responses by management. This
review shall include:
-
Confirmation that management is not
placing any restrictions on the scope of the independent auditors’ work or
their access to information;
-
Inquiry as to any accounting adjustments
noted or proposed by the independent auditors but "passed" (as immaterial or
otherwise) and any communications between the audit team and the audit firm’s national office regarding auditing
or accounting issues raised in connection with the Partnership’s audit; and
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Discussion of any "management" or
"internal control" letters issued or proposed to be issued by the independent
auditors to the Partnership, as well as any other material written
communications between the independent auditors and management that the
independent auditors or management bring to the Audit Committee’s attention.
-
Discuss with the national office of the
Partnership’s independent auditors issues on which the Audit Committee was
consulted by the Partnership’s audit team and matters of audit quality and
consistency.
-
Establish procedures for receipt, retention and
treatment of complaints received by the Partnership regarding accounting,
internal accounting controls, or auditing matters, and the confidential,
anonymous submissions by employees of concerns regarding questionable
accounting or auditing matters or discrimination or harassment alleged to
result from employees’ complaints regarding such matters.
-
For each of the Partnership’s Annual Report on
Form 10-K and Quarterly Report on Form 10-Q, review (i) the certification of
the Chief Executive Officer and Chief Financial Officer related to internal
controls, and (ii) the independent auditors attestation report related to
internal controls.
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Miscellaneous
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Discuss with management, the Partnership’s
independent auditors and legal counsel for the Company the Partnership’s risk
assessment and risk management policies, including the Partnership’s major
financial risk exposures and the steps management has taken to monitor and mitigate
such risks.
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Discuss with management the status of policies
and practices covering the following financial matters: securities issuances,
cash management, leasing, off-balance sheet and structured financing, major
financial exposures, investment and funding of employee benefit plans, major
insurance programs and significant tax strategies.
-
Review and investigate any matters pertaining to
the integrity of management, conflicts of interest, or adherence to standards
of business conduct as required by the Partnership’s or the Company’s policies.
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Obtain advice and assistance from legal counsel,
accounting and other advisors regarding compliance with laws, regulations and
internal procedures, and contingent liabilities that may be material to the
Partnership.
-
Review, prior to submission, all certification
letters and other documents required to be submitted by the Partnership to the
NYSE concerning the composition of the Audit Committee, the Charter of the Audit
Committee, or related matters.
-
Review the Audit Committee Charter annually to
ensure that it meets all applicable legal and NYSE requirements, and recommend
any necessary or desirable revisions to the Board.
-
Conduct a self-evaluation of the Audit Committee’s
performance at least annually.
-
Obtain assurance from the independent auditor
that Section 10A(b) of the Exchange Act has not been implicated.
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Oversee compliance with the Company’s or the
Partnership’s policies, the Code of Business Conduct and Ethics and the Code of
Ethics for Senior Financial Officers including:
-
Confirmation that the policies of the
Company and the Partnership, the Code of Business Conduct and Ethics and the
Code of Ethics for Senior Financial Officers are formalized in writing and that
procedures are in place to communicate such policies and codes to appropriate
management, supervisory and other key employees.
-
Periodic review of the policies of the
Company and the Partnership, the Code of Business Conduct and Ethics and the
Code of Ethics for Senior Financial Officers, with particular focus on related
party transactions and conflicts of interest involving, directly or indirectly,
any director or executive officer, and consider whether any changes are needed.
-
Review of the program for monitoring compliance
with the policies of the Company and the Partnership, the Code of Business
Conduct and Ethics and the Code of Ethics for Senior Financial Officers, and
obtaining periodic updates from management regarding compliance.
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Evaluation, approval, and monitoring on an
ongoing basis of any related party transactions covered by the policies of the
Company and the Partnership, the Code of Business Conduct and Ethics and the
Code of Ethics for Senior Financial Officers.
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Determination of whether to grant any waivers of
or approve any other deviations from the policies of the Company and the
Partnership, the Code of Business Conduct and Ethics and the Code of Ethics for
Senior Financial Officers, and documenting and monitoring any such approval or
waiver.
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Evaluate annually whether the Partnership should
change its independent auditors or the partner in charge of performing or
reviewing the Partnership’s audit or other audit team personnel. Such
evaluation shall be based on all relevant circumstances known to the Audit
Committee, including qualifications of and quality of services performed by the
independent auditing firm and the primary audit partner, opinions of the
Company’s management regarding the independent auditors, length of tenure,
factors having the potential to impact objectivity, the SEC
requirement to rotate at least every five years the primary audit partner in
charge of performing (or overseeing the performance of) the Partnership’s audit
and the primary audit partner in charge of reviewing the Partnership’s audit,
the possible desirability of regular rotation of the independent auditing firm,
any reported issues regarding the independent auditing firm’s internal controls
or audits of other companies, and the independent auditing firm’s efficiencies
and relevant expertise regarding the Partnership. The Audit Committee shall
present to the Board a summary of the Audit Committee’s evaluation and
conclusions.
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MEETINGS
The Audit Committee shall convene on at least a quarterly
basis, either in person or telephonically, with and without management present.
Such quarterly meetings, in any event, shall be held following the end of each
fiscal quarter of the Partnership prior to the release of quarterly or annual
earnings to review the financial results of the Partnership for the preceding fiscal
quarter, or preceding fiscal year, as applicable. The Audit Committee shall
meet periodically with management, the Partnership’s internal auditors (or
other personnel responsible for the internal audit function such as the
internal auditors of the Company) and the Partnership’s independent auditors in
separate executive sessions. Quarterly
and other meetings of the Audit Committee may be called by the chairman of the Audit
Committee, the Chairman of the Board, the Chief Executive Officer, or the Chief
Financial Officer. The Audit Committee
may request any officer, employee or advisor of the Company or the Partnership
to participate in an Audit Committee meeting or to meet with any members of, or
advisors to, the Audit Committee.
If a chairman of the Audit Committee is not designated or
present, the members of the Audit Committee present at the meeting may
designate a Chairman by majority vote. A majority of the members present at a
meeting shall constitute a quorum to properly convene a meeting. The Audit
Committee chairman, in consultation with the Company’s Chief Financial Officer,
other Audit Committee members and the Partnership’s independent auditors, shall
prepare and circulate among the members an agenda in advance of each quarterly
meeting.
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REPORTING
Formal meeting minutes shall be maintained, distributed to Committee members, and
filed with the Company’s Secretary. In addition, the chairman of the Audit
Committee shall provide regular reports to the Board.
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1 Energy Transfer Partners, L.P. is a publicly
traded limited partnership. It is managed by Energy Transfer Partners, L.L.C. (the "Company"), as the general partner of Energy Transfer Partners GP,
L.P., the general partner of Energy Transfer Partners, L.P. (the "Partnership"). The Partnership has no
board of directors, but under its partnership agreement, "Board of Directors"
is defined to mean the Board of the Company. References herein are to the Audit Committee of the Board of Directors
of the Company, which functions as the Audit Committee of the Partnership.
2 If there is no Chief Executive Officer,
any references to Chief Executive Officer shall include the President or any
such other person performing the functions of the chief executive officer.
Audit Committee Charter Energy Transfer Equity, L.P. 1
Contents
Purpose
Membership
Authority and Responsibilities
Communication and Reporting
Independent Auditors
Internal Auditing Function
Earnings Releases and Earnings Guidance
Financial Statements
Internal Controls and Interface with Independent Auditors
Miscellaneous
Meetings
Reporting
PURPOSE
LE GP, LLC (the "Company"),
as the general partner of Energy Transfer Equity, L.P. (the "Partnership"),
is responsible for the management of the Partnership. In such capacity, the Company is responsible
for the preparation, integrity and objectivity of the financial statements of
the Partnership and for establishing and maintaining a system of internal
accounting and disclosure controls of the Partnership. It is the responsibility
of the independent auditors to express an opinion as to the conformance of the
Partnership’s financial statements with generally accepted accounting
principles based upon their audit. The Audit Committee is a standing committee
of the Board of Directors of the Company (the "Board"). Its primary
purpose is to assist the Board in its oversight of (1) the integrity of the
financial statements of the Partnership, (2) the compliance by the Company and
the Partnership with legal and regulatory requirements, and the Partnership’s
Code of Business Conduct and Ethics and Code of Ethics for Senior Financial
Officers, (3) the independent auditor’s qualifications and independence and
(4) the performance of the Partnership’s internal audit function and
independent auditors.
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MEMBERSHIP
The Audit Committee shall be composed of not fewer than
three members, all of whom (i) meet the independence criteria set forth in the
Partnership’s Corporate Governance Guidelines, as well as the independence and
experience requirements of the New York Stock Exchange (the "NYSE"),
Section 10A(m)(3) of the Securities Exchange Act of 1934, and the rules and
regulations of the Securities and Exchange Commission (the "SEC").
In addition, at least one member of the Audit Committee shall meet the
requirements of and be considered an "audit committee financial expert" as
defined by the SEC. An Audit Committee member may simultaneously
serve on the Audit Committees of more than two other public companies if the
Board determines that such simultaneous service will not impair the ability of
such member to effectively serve on the Audit Committee and such determination
is disclosed in the Partnership’s annual proxy statement or, if the Partnership
does not file an annual proxy statement, in the Partnership’s annual report on
Form 10-K filed with the SEC. Members shall be elected annually by the
Board for terms of one year, or until their successors shall be duly elected
and qualified. Audit Committee members
may be replaced by the Board.
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AUTHORITY AND RESPONSIBILITIES
The Audit Committee is empowered to investigate any matter
brought to its attention with full access to all books, records, facilities and
personnel2 of the Company and the
Partnership. The Audit Committee shall
have the authority, to the extent it deems necessary or appropriate to carry
out its duties, to retain independent legal, accounting or other advisors. The Company shall provide the Audit Committee
with appropriate funding, as determined by the Audit Committee in its capacity
as a committee of the Board, for payment of (1) compensation to any registered
public accounting firm engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the Company or
the Partnership, (2) compensation to any independent counsel or other advisors
engaged by the Audit Committee, and (3) ordinary administrative expenses of the
Audit Committee that are necessary or appropriate in carrying out its duties.
In fulfilling their responsibilities, it is recognized that
members of the Committee are not full-time employees of the Company. It is not
the duty or responsibility of the Committee or its members to conduct "field
work" or other types of auditing, legal, or accounting reviews or procedures.
The Company’s management is responsible for preparing the Company’s financial
statements for the Company and the Partnership and the independent auditors are
responsible for auditing those financial statements.
Unless he or she believes to the contrary (in which case,
he or she will advise the Committee of such belief), each member of the
Committee shall be entitled to assume and rely on (1) the integrity of those
persons and organizations within and outside the Company that it receives
information from and (2) the accuracy of the financial, legal, safety, health
and environment, and other information provided to the Committee by such
persons or organizations.
The following shall be the usual recurring activities of
the Audit Committee to assist the Board in fulfilling the oversight
responsibilities described above. The Audit Committee may modify these
activities (consistent with the requirements of the SEC
and the NYSE) as particular circumstances warrant. Specifically, the Audit Committee shall from
time to time as required and otherwise when the Audit Committee deems
appropriate:
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Communication and Reporting
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Provide a direct and independent line of
communication between the Partnership’s internal auditors, its independent
auditors, and the Board.
-
Report regularly to the Board regarding any
issues that arise with respect to the Partnership’s financial statements or
other financial information, compliance with applicable laws, rules,
regulations, and the Company’s Code of Business Conduct and Ethics and Code of
Ethics for Senior Financial Officers; the independence and qualifications of
the Partnership’s independent auditors; and the performance of the
Partnership’s independent auditors.
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Independent Auditors
-
Have the sole authority to appoint, retain or
replace the Partnership’s independent auditors.
-
Be directly responsible for the compensation and
oversight of the Partnership’s independent auditors and each other registered
public accounting firm engaged (including resolution of disagreements between
management and such independent auditors or registered public accounting firms
regarding financial reporting) for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the Company or
the Partnership, in each case in a manner that is consistent with the standards
of independence and other qualifications established by applicable laws, rules
and regulations of the SEC and the
NYSE. The Partnership’s independent auditors and each such other registered
public accounting firm shall report directly to the Audit Committee.
-
Pre-approve all audit, review or attest
engagements, internal control related services and permitted non-audit services
(including the fees and terms thereof) to be performed by the Partnership’s
independent auditors, subject to de minimis or other exceptions for
non-audit services permitted under applicable laws, rules and regulations of
the SEC (including Section
10A(i)(1)(B) of the Exchange Act) and the NYSE, which non-audit services are
approved by the Audit Committee prior to the completion of the audit.
-
At least annually, obtain and review a report by
the independent auditors describing:
-
the firm’s internal quality-control procedures;
-
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 firm,
and any steps taken to deal with any such issues; and
-
all relationships between the independent auditor and
the Company or the Partnership in order to assess the auditor’s independence.
-
Review and confirm the independence of the
independent auditors by (i) obtaining written statements (as set forth in the
applicable requirements of the Public Company Accounting Oversight Board) from
the Partnership’s independent auditors concerning any relationships between the
auditors and the Company or the Partnership or any other relationships,
including the provision of non-audit services, that may adversely affect the
independence of the auditors; (ii) actively engaging the independent auditors
in a dialogue with respect to any disclosed relationships for services that may
impact the objectivity and independence of the independent auditors; (iii)
assessing the independence of the independent auditors of the Company and the
Partnership.
-
Review the qualifications, experience and performance of the independent auditor.
-
Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
-
Recommend to the Board clear policies regarding the hiring by the Company or the Partnership of employees or former employees of the Partnership’s independent auditors.
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Internal Auditing Function
-
Review the appointment and replacement of the senior internal auditing executive.
-
Review the significant reports to management
prepared by the internal auditing function relating to internal controls and
management’s responses.
-
Review the internal audit plan and significant
changes in planned activities; review significant findings resulting from
audits and managements’ responsiveness to the findings.
-
Review the internal auditors’ assessment of the effectiveness of, or weaknesses in, internal control systems.
-
Evaluate the performance and independence of the internal auditors.
-
Review and discuss with the independent auditor
the responsibilities, budget and staffing of the Company’s internal audit
function.
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Earnings Releases and Earnings Guidance
-
Discuss with management earnings press releases
(including any use of "pro forma" or "adjusted" non-GAAP information) prior to
their release, as well as financial information and earnings guidance provided
to analysts and rating agencies.
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Financial Statements
-
Review with management and the Partnership’s independent auditors:
-
The Partnership’s annual audited and
quarterly financial statements and related footnotes and the independent
auditors’ report thereon or review thereof, as applicable, including the effect
of off-balance sheet structures on the Partnership’s financial statements and
the specific disclosures under "Management’s Discussion and Analysis of
Financial Condition and Results of Operations" in the Partnership’s annual and
quarterly reports to be filed with the SEC prior to the filing of same.
-
Recommend to the Board whether the
Partnership’s annual audited financial statements and accompanying notes should
be included in the Partnership’s Annual Report on Form 10-K.
-
Any significant difficulties or disputes
with management encountered by the independent auditors during the course of
the audit or interim reviews and any instances of second opinions sought by
management.
-
Any significant financial reporting
issues and judgments made in connection with the preparation of the
Partnership’s financial statements, including any significant changes in the
Partnership’s selection or application of accounting principles.
-
Any significant findings and
recommendations made by the independent auditors with respect to the
Partnership’s financial policies, procedures and internal accounting controls,
together with management’s responses thereto and any special steps adopted in
light of material control deficiencies;
-
The form of opinion the independent
auditors propose to render to the Board and the Audit Committee.
-
The critical accounting policies and
estimates used in preparing the financial statements of the Partnership.
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The effect of regulatory and accounting
initiatives.
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Other material written communications
between the Partnership’s independent auditors and management, such as any
management letter or schedule of unadjusted differences.
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All alternative treatments of financial
information within generally accepted accounting principles that have been
discussed with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the Partnership’s
independent auditors.
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Any correspondence with regulators or
governmental agencies and any published reports which raise material issues
regarding the Partnership’s financial statements or accounting policies.
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Any disclosures made to the Audit
Committee by the Company’s Chief Executive Officer3 and Chief Financial Officer
during their certification process for the Form 10-K and Form 10-Q about any
significant deficiencies in the design or operation of internal controls or
material weaknesses therein, and any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Partnership’s internal accounting and disclosure controls.
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The internal audit function
responsibilities, budget and staffing and any recommended changes in the
planned scope of the internal audit.
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Other matters required to be discussed
by Statement on Auditing Standards (SAS) No. 61 and SAS No. 100, as the same
may be amended in the future, relating to the conduct of the audit, including
any difficulties encountered in the course of the audit work, any restrictions
on the scope of activities or access to requested information, and any
significant disagreements with management.
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Other matters related to the
Partnership’s interim financial results to be included in the quarterly reports
to be filed with the SEC and the matters to be communicated under SAS No. 100, as the same may be amended in the
future.
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Internal Controls and Interface with Independent Auditors
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Consider and review with management, internal
auditors and the independent auditors, the adequacy and effectiveness of the
Partnership’s system of internal controls over financial reporting, disclosure
controls and procedures, the adequacy of disclosures about the foregoing, and
the safeguarding of assets, including any significant deficiencies which could
adversely affect the Partnership’s ability to record, process, summarize and
report financial data.
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Review in private discussion with the
independent auditors whether there have been (and, if so, the nature of) any
audit problems or difficulties and any related responses by management. This
review shall include:
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Confirmation that management is not
placing any restrictions on the scope of the independent auditors’ work or
their access to information;
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Inquiry as to any accounting adjustments
noted or proposed by the independent auditors but "passed" (as immaterial or
otherwise) and any communications between the audit team and the audit firm’s national office regarding auditing
or accounting issues raised in connection with the Partnership’s audit; and
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Discussion of any "management" or
"internal control" letters issued or proposed to be issued by the independent
auditors to the Partnership, as well as any other material written
communications between the independent auditors and management that the
independent auditors or management bring to the Audit Committee’s attention.
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Discuss with the national office of the
Partnership’s independent auditors issues on which the Audit Committee was
consulted by the Partnership’s audit team and matters of audit quality and consistency.
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Establish procedures for receipt, retention and
treatment of complaints received by the Partnership regarding accounting,
internal accounting controls, or auditing matters, and the confidential,
anonymous submissions by employees of concerns regarding questionable
accounting or auditing matters or discrimination or harassment alleged to
result from employees’ complaints regarding such matters.
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For each of the Partnership’s Annual Report on
Form 10-K and Quarterly Report on Form 10-Q, review (i) the certification of
the Chief Executive Officer and Chief Financial Officer related to internal
controls, and (ii) the independent auditors attestation report related to
internal controls.
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Miscellaneous
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Discuss with management, the Partnership’s
independent auditors and legal counsel for the Company the Partnership’s risk
assessment and risk management policies, including the Partnership’s major
financial risk exposures and the steps management has taken to monitor and
mitigate such risks.
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Discuss with management the status of policies
and practices covering the following financial matters: securities issuances,
cash management, leasing, off-balance sheet and structured financing, major
financial exposures, investment and funding of employee benefit plans, major
insurance programs and significant tax strategies.
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Review and investigate any matters pertaining to
the integrity of management, conflicts of interest, or adherence to standards
of business conduct as required by the Partnership’s or the Company’s policies.
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Obtain advice and assistance from legal counsel,
accounting and other advisors regarding compliance with laws, regulations and
internal procedures, and contingent liabilities that may be material to the
Partnership.
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Review, prior to submission, all certification
letters and other documents required to be submitted by the Partnership to the
NYSE concerning the composition of the Audit Committee, the Charter of the Audit
Committee, or related matters.
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Review the Audit Committee Charter annually to
ensure that it meets all applicable legal and NYSE requirements, and recommend
any necessary or desirable revisions to the Board.
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Conduct a self-evaluation of the Audit Committee’s
performance at least annually.
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Obtain assurance from the independent auditor that
Section 10A(b) of the Exchange Act has not been implicated.
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Oversee compliance with the Company’s or the
Partnership’s policies, the Code of Business Conduct and Ethics and the Code of
Ethics for Senior Financial Officers including:
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Confirmation that the policies of the
Company and the Partnership, the Code of Business Conduct and Ethics and the
Code of Ethics for Senior Financial Officers are formalized in writing and that
procedures are in place to communicate such policies and codes to appropriate
management, supervisory and other key employees.
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Periodic review of the policies of the
Company and the Partnership, the Code of Business Conduct and Ethics and the
Code of Ethics for Senior Financial Officers, with particular focus on related
party transactions and conflicts of interest involving, directly or indirectly,
any director or executive officer, and consider whether any changes are needed.
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Review of the program for monitoring compliance
with the policies of the Company and the Partnership, the Code of Business
Conduct and Ethics and the Code of Ethics for Senior Financial Officers, and
obtaining periodic updates from management regarding compliance.
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Evaluation, approval, and monitoring on an
ongoing basis of any related party transactions covered by the policies of the
Company and the Partnership, the Code of Business Conduct and Ethics and the
Code of Ethics for Senior Financial Officers.
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Determination of whether to grant any waivers of
or approve any other deviations from the policies of the Company and the
Partnership, the Code of Business Conduct and Ethics and the Code of Ethics for
Senior Financial Officers, and documenting and monitoring any such approval or
waiver.
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Evaluate annually whether the Partnership should
change its independent auditors or the partner in charge of performing or
reviewing the Partnership’s audit or other audit team personnel. Such
evaluation shall be based on all relevant circumstances known to the Audit
Committee, including qualifications of and quality of services performed by the
independent auditing firm and the primary audit partner, opinions of the
Company’s management regarding the independent auditors, length of tenure,
factors having the potential to impact objectivity, the SEC requirement to rotate
at least every five years the primary audit partner in
charge of performing (or overseeing the performance of) the Partnership’s audit
and the primary audit partner in charge of reviewing the Partnership’s audit,
the possible desirability of regular rotation of the independent auditing firm,
any reported issues regarding the independent auditing firm’s internal controls
or audits of other companies, and the independent auditing firm’s efficiencies
and relevant expertise regarding the Partnership. The Audit Committee shall
present to the Board a summary of the Audit Committee’s evaluation and
conclusions.
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MEETINGS
The Audit Committee shall convene on at least a quarterly
basis, either in person or telephonically, with and without management present.
Such quarterly meetings, in any event, shall be held following the end of each
fiscal quarter of the Partnership prior to the release of quarterly or annual
earnings to review the financial results of the Partnership for the preceding
fiscal quarter, or preceding fiscal year, as applicable. The Audit Committee
shall meet periodically with management, the Partnership’s internal auditors
(or other personnel responsible for the internal audit function such as the
internal auditors of the Company) and the Partnership’s independent auditors in
separate executive sessions. Quarterly
and other meetings of the Audit Committee may be called by the chairman of the Audit
Committee, the Chairman of the Board, the Chief Executive Officer, or the Chief
Financial Officer. The Audit Committee
may request any officer, employee or advisor of the Company or the Partnership
to participate in an Audit Committee meeting or to meet with any members of, or
advisors to, the Audit Committee.
If a chairman of the Audit Committee is not designated or
present, the members of the Audit Committee present at the meeting may
designate a Chairman by majority vote. A majority of the members present at a
meeting shall constitute a quorum to properly convene a meeting. The Audit
Committee chairman, in consultation with the Company’s Chief Financial Officer,
other Audit Committee members and the Partnership’s independent auditors, shall
prepare and circulate among the members an agenda in advance of each quarterly
meeting.
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REPORTING
Formal meeting minutes shall be maintained, distributed to Committee members, and
filed with the Company’s Secretary. In addition, the chairman of the Audit
Committee shall provide regular reports to the Board.
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1 Energy Transfer Equity, L.P. is a master
limited partnership. It is managed by LE
GP, LLC (the "Company"), as its general
partner. The Partnership has no board of
directors, but under its partnership agreement, "Board of Directors" is defined
to mean the Board of the Company. References herein are to the Audit Committee of the Board of Directors
of the Company, which functions as the Audit Committee of the Partnership.
2 References to officers or employees of the Partnership also include persons performing such functions for the Partnership pursuant to the Shared Services agreement between the Partnership and Energy Transfer Partners, L.P.
3 If there is no Chief Executive Officer, any references to Chief Executive Officer shall include the President or any such other person performing the functions of the chief executive officer.