Committee Members

  • W. Richard Anderson
  • Bruce W. McCullough
  • Loren Singletary

pdf  Audit Committee Charter

VANGUARD NATURAL RESOURCES, LLC
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
OF THE BOARD OF DIRECTORS
(ADOPTED OCTOBER 30, 2013)

The Audit Committee (the “Committee“) has been established and appointed by the Board of Directors (the “Board“) of Vanguard Natural Resources, LLC (the “Company“) with authority, responsibility and specific duties as described in this Audit Committee Charter (this “Charter“).

I. Purpose

The purposes of the Committee are to:

  1. Oversee the accounting and financial reporting processes of the Company and audits of the Company’s financial statements.
  2. Assist the Board in fulfilling its oversight responsibilities regarding the:
    • Integrity of the financial statements of the Company.
    • Qualifications, independence and performance of the independent registered public accounting firm engaged for the purpose of preparing and issuing an audit report and performing any other audit review or attestation services for the Company (the ” independent registered public accounting firm”).
    • Effectiveness and performance of the Company’s internal audit function, including systems of internal controls over financial reporting and disclosure controls and procedures.
    • Compliance by the Company with legal and regulatory requirements.
  3. Annually, prepare an Audit Committee Report and publish the report on the Company’s proxy statement for its annual meeting of common unitholders, in accordance with the applicable rules and regulations.
  4. Perform such other functions as the Board may assign to the Committee from time to time.

II. Membership

The Committee shall consist of at least three members of the Board. Committee members and the Chairman shall be appointed and may be removed by an affirmative vote of the Board, provided that the Board must, at all times, assure that the Committee will have a Chairman and sufficient members to satisfy the requirements set forth in this Paragraph II relating to the number and qualifications of the Committee members.

Each member must meet the independence and experience requirements of the NASDAQ Stock Market, LLC, the requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any other standards prescribed by applicable law or regulation and must not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years. Each member of the Committee shall be financially literate, as such qualification is interpreted by the Board in its business judgment, or must become financially literate within a reasonable period of time after appointment to the Committee. At least one member of the Committee shall have accounting or related financial management expertise, as the Board interprets such qualification in its business judgment. The Board may presume that a person who satisfies the definition of “audit committee financial expert” as stated in Item 407 of Regulation S-K of the Exchange Act has the requisite accounting or related financial management expertise.

III. Meetings

  1. The Committee will meet at the call of its Chairman, two or more members of the Committee or the Chairman of the Board. The Committee shall meet as often as it determines, and generally should meet not less frequently than quarterly (prior to the filing of the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K with the Securities and Exchange Commission (“SEC”)). Meetings of the Committee will be held at such time and place, and upon such notice as its Chairman may from time to time determine. The Committee shall conduct special meetings as determined by the Chairman of the Committee or at the request of the Chief Executive Officer, President or Chief Financial Officer or the independent registered public accounting firm. Meetings may be in person, by telephone or videoconference as needed to conduct the business of the Committee. The Committee may also take action by unanimous written consent to the fullest extent permitted by the Delaware Limited Liability Company Act and the limited liability company agreement of the Company, as may be amended or restated from time to time (the “LLC Agreement“).
  2. Meetings may, at the discretion of the Committee, include other directors, members of the Company’s management, independent advisors and consultants, representatives of the Company’s independent registered public accounting firm, the Company’s internal auditor, any other financial personnel employed or retained by the Company or any other persons whose presence the Committee believes to be necessary or appropriate. Those in attendance may observe meetings of the Committee, but may not participate in any discussion or deliberation unless invited to do so by the Committee, and in any event are not entitled to vote. Notwithstanding the foregoing, the Committee may also exclude from its meetings any persons it deems appropriate, including, but not limited to, any director that is not a member of the Committee.
  3. The Committee shall meet periodically with management, the internal auditors and the independent registered public accounting firm in separate executive sessions and have such other direct and independent interaction with such persons from time to time as the Committee deems appropriate.
  4. A majority of the members of the Committee will constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which there is a quorum shall be the act of the Committee.
  5. The Chairman shall schedule and preside at all meetings of the Committee. In the absence of the Chairman, a majority of the members of the Committee present at a meeting shall appoint a member to preside at the meeting or designate a Chairman pro tempore in the absence of its Chairman. The Committee may designate a secretary of the Committee at the meeting.
  6. The Chairman of the Committee shall report to the Board following each Committee meeting, and as otherwise required by the Chairman of the Board.
  7. The Committee shall review periodically with the full Board (a) any issues that arise concerning the quality or integrity of the Company’s financial statements, (b) the Company’s compliance with legal or regulatory requirements, (c) the performance and independence of the Company’s independent registered public accounting firm and (d) the performance of the internal audit function.
  8. The Committee may determine additional rules and procedures.
  9. The Committee will maintain minutes of its meetings and make regular oral or written reports to the Board, directly or through its Chairman, of its actions and any recommendations to the Board. These reports will include a discussion of any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent registered public accounting firm, the performance of the Company’s internal audit function or any other matter the Committee determines is necessary or advisable to report to the Board.
  10. Each member of the Committee as well as the Chairman will be paid the fee set by the Board for his or her services as a member, or Chairman, as the case may be, of the Committee. Subject to the Company’s Corporate Governance Guidelines and other policies, Committee members, including the Chairman, will be reimbursed by the Company for all reasonable expenses incurred in connection with their duties as Committee members, or as Chairman.

IV. Authority

The Committee has the authority to:

  1. Conduct or authorize investigations into any matter, including, but not limited to, complaints relating to accounting, internal accounting controls or auditing matters, within the scope of the responsibilities delegated to the Committee as it deems appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Committee or any advisors engaged by the Committee.
  2. The Committee is authorized to engage independent legal, accounting or other advisors as it deems necessary to carry out its duties. The Company shall provide appropriate funding, as determined by the Committee, for payment of compensation to the independent registered public accounting firm, compensation to any advisors engaged by the Committee and ordinary administrative expenses of the Committee that it deems necessary or appropriate in carrying out its duties.
  3. Delegate to its Chairman, any one of its members or any subcommittee it may form, the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. However, subcommittees do not have the authority to engage independent legal counsel, accounting experts or other advisors unless expressly granted such authority by the Committee. Each subcommittee will keep minutes and regularly report to the Committee.

V. Duties and Responsibilities

The Committee’s responsibility is oversight, and it recognizes that the Company’s management is responsible for preparing the Company’s financial statements and complying with applicable laws and regulations. In addition, the Committee recognizes that the Company’s management, the independent registered public accounting firm and the Company’s compliance officer have more knowledge and more detailed information about the Company than do the members of the Committee. Consequently, in carrying out its oversight responsibilities, it is not the duty of the Committee to plan or conduct audits or determine that the Company’s financial statements are complete and accurate or are in accordance with generally accepted accounting principles (“GAAP“) and applicable laws, rules and regulations. This is the responsibility of management, the internal auditor and the independent registered public accounting firm.

It is not the intent of this Charter to subject individual members of the Committee to any increased exposure to liabilities in excess of those generally imposed on members of the Board under applicable laws.

The following functions shall be the common recurring activities of the Committee in carrying out its oversight responsibility. The Committee shall have and may exercise all powers and authority of the Board in connection with carrying out its functions and responsibilities. These functions are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate. The Committee shall carry out the following responsibilities:

A. Independent Registered Public Accounting Firm. The independent registered public accounting firm shall report directly to the Committee.

The Committee shall:

    1. Have sole authority to appoint, retain and terminate the independent registered public accounting firm. The Committee shall be directly responsible for the compensation and oversight of the work of the independent registered public accounting firm for the purpose of preparing or issuing an audit report or related work. The Committee and the independent registered public accounting firm will discuss the firm’s responsibilities and the responsibilities of management in the audit process. The independent registered public accounting firm will report directly to the Committee and the Committee will routinely review such firm’s performance. In addition, the committee will oversee the resolution of any disagreements between the Company’s management and the independent registered public accounting firm regarding financial reporting.
    2. Review and approve in advance all audit and lawfully permitted non-audit services to be provided by the independent registered public accounting firm and the fees for such services. The Committee may delegate to one or more Committee members the authority to pre-approve auditing and non-auditing services that are otherwise permitted by law, provided that such pre-approval shall be presented to the full Committee at its next scheduled meeting. Preapproval of non-audit services (other than review and attestation services) shall not be required if such services fall within any exception to be established or that has been established by the SEC, including the de minimis exception provided in Section 10A of the Exchange Act.
    3. At least annually, evaluate the qualifications, performance, independence and quality control procedures of the independent registered public accounting firm, including the performance of the lead audit partner and other senior personnel, giving consideration to the range of audit and non-audit services performed, at least annually. The Committee shall ensure the regular rotation of the lead audit partner, as required by the rules and regulations of the SEC. In conducting its review, the committee will:

(a) Obtain and review a report prepared by the independent registered public accounting firm regarding (i) the firm’s internal quality control procedures and (ii) any material issues that are 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.

(b) Discuss with representatives of the independent registered public accounting firm its independence from the Company, and obtain annually from the independent registered public accounting form a formal written statement prepared by the firm delineating all relationships between the independent registered public accounting firm and the Company, consistent with the applicable requirements of the Public Company Accounting Oversight Board. The Committee is responsible for actively engaging in a dialogue with the independent registered public accounting firm with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent registered public accounting firm and for taking, or recommending that the full Board take, appropriate action to oversee the independence of the independent registered public accounting firm.

(c) If applicable, consider whether the provision by the independent registered public accounting firm of any permitted information technology services or other non-audited services to the Company is compatible with maintaining the independence of the independent registered public accounting firm.

(d) Confirm with the independent registered public accounting firm that the firm is in compliance with the partner rotation requirements established by the SEC.

(e) Consider whether, in order to assure continuing independence of the independent registered public accounting firm, it is appropriate to adopt a policy of rotating the independent registered public accounting firm on a regular basis.

(f) Review and evaluate the lead partner of the independent registered public accounting firm.

    1. Review and discuss the following items with management, the internal auditor and the independent registered public accounting firm at the completion of the annual audit of the Company’s financial statements included in the Company’s Annual Report on Form 10-K (the “Form 10-K“) prior to its filing:

(a) The scope of the audit and the procedures followed and the staffing of the audit.

(b) The scope and staffing of the next year’s audit as well as the procedures to be followed.

(c) The Company’s annual financial statements, including disclosures made in management’s discussion and analysis, and related footnotes.

(d) The results of the independent registered public accounting firm’s audit of the financial statements and its report with respect thereto.

(e) Major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of any material control deficiencies; any analyses prepared by management of the independent registered public accounting firm setting forth significant financial reporting issues and judgment made in connection with the preparation of the Company’s financial statements, including analyses of the effects of alternative treatments of financial information within GAAP on the Company’s financial statements; and the effect of regulatory and accounting initiatives on the Company’s financial statements.

(f) Any serious difficulties or disputes with management encountered during the course of the audit.

(g) Other matters related to the conduct of the audit which are to be communicated to the Committee under generally accepted auditing standards, including discussions relating to the independent registered public accounting firm’s judgments about such matters as the quality, not just the acceptability, of the Company’s accounting practices and other items set forth in SAS 61 (Communication with Audit Committees) or other such auditing standards that may in time modify, supplement or replace SAS 61.

    1. Review and discuss with management and the independent registered public accounting firm:

(a) The Company’s internal control over financial reporting and the report assessing the effectiveness of internal control over financial reporting.

(b) The independent registered public accounting firm’s attestation of management’s report assessing the effectiveness of internal control over financial reporting prior to filing of the Form 10-K.

(c) Steps adopted in light of any material control deficiencies.

    1. Review with management and the independent registered public accounting firm, the financial information contained in each of the Company’s Quarterly Reports on Form 10-Q prior to its filing and the results of the independent registered public accounting firm’s review of the interim financial information.
    2. Review and discuss quarterly with management, the internal auditor and the independent registered public accounting firm:

(a) The quarterly financial statements including the Company’s disclosures under “Management Discussion and Analysis of Financial Condition and Results of Operations.”

(b) All critical accounting policies and practices.

(c) All alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the independent registered public accounting firm.

(d) Other material written communications between the independent registered public accounting firm and management, such as any management letter or schedule of unadjusted differences.

(e) Material issues on which the national office of the independent registered public accounting firm was consulted by the Company’s audit team.

(f) A summary of fees and expenses in a format sufficient for the Company to meet its reporting obligations under applicable laws, rules and regulations.

B. Compliance.

The Committee shall:

  1. Establish and review the Company’s “whistleblower” policies and procedures at least annually, including for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company regarding questionable accounting or auditing matters.
  2. Obtain reports from management regarding any complaints that have been received by the Company regarding accounting, internal accounting controls or auditing matters and communicate the same as appropriate to the Board.
  3. Obtain, review and investigate any complaints submitted pursuant to the Company’s “whistleblower” policies and procedures.
  4. Obtain reports from management and the independent registered public accounting firm that the Company and its subsidiary entities are in conformity with applicable legal requirements.
  5. Review the Company’s compliance policies and procedures and advise the Board as to whether any changes to any policy or procedure is recommended.
  6. Discuss with the Company’s general counsel legal matters that are required to be disclosed in any reports filed pursuant to the Exchange Act and any material inquiries received from regulators or governmental agencies.

C. Other Authority and Responsibilities.

The Committee shall:

    1. Have the authority, to the extent that it deems necessary or appropriate, to engage and determine funding for independent legal, accounting or other advisors.
    2. Review any letters sent by the independent registered public accounting firm to management and management’s response to any such letters and/or reports.
    3. Maintain a channel of communication between the Board and each of the Company’s (i) independent registered public accounting firm, (ii) principal financial and accounting officers and (iii) compliance officer, and provide sufficient opportunity for each to meet with the members of the Committee to discuss any matter within the scope of each of their respective responsibilities.
    4. Discuss quarterly with management any report or certification made by the Chief Executive Officer, Chief Financial Officer or other members of management required to be included in the Company’s quarterly reports on Form 10-Q or annual report on Form 10-K including with respect to:

(a) The design and operation of internal control over financial reporting.

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls.

(c) Any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

    1. Recommend to the Board whether the Company’s annual audited financial statements and accompanying notes should be included in the Form 10-K.
    2. Prepare and review the Audit Committee Report for inclusion in the proxy statement for the Company’s annual meeting of unitholders. In addition to all of the other items required to be included in such report by the rules promulgated by the SEC or other applicable law, the Audit Committee Report must state whether the Committee has:

(a) Reviewed and discussed the audited financial statements with management.

(b) Discussed with the independent registered public accounting firm the matters required to be discussed by SAS 61, as may be modified or supplemented.

(c) Received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence.

(d) Recommended to the Board, based on the review and discussions referred to in items (a) through (c) above, that the Company’s audited financial statements be included in the Annual Report on Form 10-K for the last fiscal year for filing with the SEC.

  1. Review the appointment and/or replacement of the Company’s chief financial officer, chief accounting officer and compliance officer.
  2. Discuss with the independent registered public accounting firm and management the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.
  3. Consider major changes and other major questions respecting the appropriate auditing and accounting practices to be used in the preparation of the financial statements when presented by the independent registered public accounting firm or management.
  4. Discuss with management and the independent registered public accounting firm the Company’s earnings announcements and press releases, paying particular attention to the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be in general terms (i.e. discussion of the types of information to be disclosed and the types of presentations to be made).
  5. Discuss with management and the independent registered public accounting firm any correspondence from or with regulators or government agencies, any employee complaints or any published reports that raise material issues regarding the Company’s financial statements, financial reporting process, accounting policies or internal audit function.
  6. Discuss with management the Company’s major financial risk exposures and the steps that management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
  7. Review the policy for the hiring of employees or former employees of the independent registered public accounting firm and recommend changes to the Board for approval.
  8. Review and reassess the adequacy of this Committee Charter on an annual basis and recommend any proposed changes to the Board for approval.
  9. Conduct an annual performance evaluation of the Committee, as administered by the Nominating and Corporate Governance Committee.
  10. Review the Company’s Code of Business Conduct and Ethics and Code of Ethics for Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer and its enforcement.
  11. Review the adequacy and succession planning of the Company’s accounting and financial personnel.
  12. Perform any other activities consistent with this Charter, the Company’s LLC Agreement, and governing law, as the Board deems necessary or appropriate.

V. Privileged Communications

Any communications between the Committee and legal counsel in the course of obtaining legal advice shall be considered privileged communications of the Company. The Committee shall take all necessary steps to preserve the privileged nature of those communications.

VI. Posting Requirement

The Company will make this Charter available on or through the Company’s website as required by the applicable rules and regulations. In addition, the Company will disclose in its proxy statement for its annual meeting of unitholders or in its Form 10-K, as applicable, that a copy of this Charter is available on the Company’s website and provide the website address.

While the Committee members have the duties and responsibilities set forth in the Charter, nothing contained in this Charter is intended to create, or should be construed as created, any responsibility or liability of the Committee members, except to the extent otherwise provided under applicable federal or state law.