[16261]
July 2, 2003
TO: ACCOUNTING/TREASURERS COMMITTEE No. 26-03
CLOSED-END INVESTMENT COMPANY COMMITTEE No. 42-03
SEC RULES COMMITTEE No. 63-03
RE: JULY 14 CONFERENCE CALL ON DRAFT MODEL AUDIT COMMITTEE CHARTER
Attached is a draft model audit committee charter that the Institute has developed for
the benefit of its member firms. Also attached is a drafting guide, which explains the regulatory
bases of many of the charter’s provisions. The model audit committee charter was developed
with the assistance of a working group of member firms and outside counsel.
The Institute first published a model audit committee charter in 1999 as part of the
Report of the Advisory Group on Best Practices for Fund Directors. The attached model audit
committee charter reflects regulatory developments that have taken place since that time.
The model audit committee charter is intended to cover both open-end and closed-end
funds. Section 301 of the Sarbanes-Oxley Act imposes certain requirements on exchange-listed
funds. While these requirements do not apply to open-end funds, SEC staff has stated that
these requirements are worthy of consideration by all mutual fund boards. Accordingly, we
have included the Section 301 requirements in the model audit committee charter. Certain
audit committee requirements that apply only to closed-end funds are omitted from the charter
and are described in the drafting guide. Closed-end funds may wish to incorporate these
requirements into their charters.
We have scheduled a conference call on Monday, July 14th at 3:00 pm EDT to discuss the
draft model audit committee charter and the drafting guide. If you plan to participate in this
conference call, please contact Stephanie Holly (202/326-5814 or sholly@ici.org) by Friday, July
11. The dial-in number for the conference call is 1-800-857-5735, the passcode is audit charter
and the undersigned is the moderator. If you cannot participate in the conference call and you
have comments on the drafts, please provide them to the undersigned (202/326-5851 or
smith@ici.org) by Friday, July 11.
Gregory M. Smith
Director - Operations/Compliance & Fund
Accounting
Attachments (in .pdf format)