UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report November 12, 2004
SURGICARE, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 001-16587 58-1597246
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10700 Richmond Ave., Suite 300
HOUSTON, TEXAS 77042
(Address of principal executive offices)
(713) 973-6675
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
ITEM 8.01. OTHER EVENTS.
On November 12, 2004, the Board of Directors of SurgiCare, Inc. (the "Company")
approved the Company's Charter of the Audit Committee attached as an exhibit
hereto (the "Charter"). The Company will post the Charter on its website,
www.surgicareinc.com.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SURGICARE, INC.
Date: November 12, 2004 By: /s/ Keith LeBlanc
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Keith LeBlanc
President and Chief Executive Officer
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SurgiCare, Inc.
Charter of the Audit Committee
Organization
The audit committee of the board of directors shall consist of at least three
independent directors who are generally knowledgeable in financial and auditing
matters. The committee shall include at least one member with accounting or
related financial management expertise, who qualifies as an audit committee
financial expert under Item 401(h) of Regulation S-K of the U.S. Securities and
Exchange Commission. Each member shall be free of any relationship that, in the
opinion of the board, would interfere with his or her individual exercise of
independent judgment. Applicable laws and regulations shall be followed in
evaluating a member's independence, including the rules of the Securities and
Exchange Commission and the American Stock Exchange. The chairperson shall be
appointed by the full board.
Statement of Policy
The audit committee assists the corporate directors in fulfilling their
responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices of the
corporation, and the quality and integrity of the financial reports of the
corporation. It is the responsibility of the audit committee to maintain free
and open means of communication between the directors, the independent auditors,
the internal accounting staff, and the financial management of the corporation.
Relationship with Auditors The audit committee is responsible for the
engagement, supervision, compensation and termination of the company's
independent auditors. The independent auditors shall report directly to the
audit committee. The audit committee is responsible for determining the
independence of the company's outside auditor and must approve in advance, all
audit and non-audit services provided by the outside auditor.
Relationship with Management
The audit committee consults with management to review critical accounting
policies and alternative accounting treatment of financial reporting issues. In
the event of a dispute between management and the company's independent auditors
over accounting and financial reporting, the audit committee will resolve
disputes after consulting with both management and the independent auditors.
Relationship with the Board of Directors
The audit committee regularly reports to the full board on internal auditing,
the performance of the auditors, and all significant accounting and financial
reporting issues. Members of the audit committee are not, however, expected to
bear greater responsibility or liability for assuring compliance with accounting
rules and federal and state securities laws than other members of the board of
directors.
Authority
In discharging its oversight role, the audit committee is empowered to
investigate any matter brought to its attention, with full power to retain and
compensate outside counsel or other experts for this purpose. The company must
sufficiently fund the audit committee to discharge its duties, including
retention of experts. Specific Responsibilities The committee has the following
specific responsibilities:
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Review of Documents and Reports
1. At the completion of the annual audit, review with management and the
independent auditor the following:
- The annual financial statements and related footnotes and financial
information to be included in the company's annual report to
shareholders on Form 10-K including: (i) the selection and disclosure
of all critical accounting policies and practices used; (ii) any
required management certifications; and (iii) any certification,
report, opinion or review rendered by the independent auditor.
- Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the year
in accounting principles and their application.
- Significant developments in accounting guidelines, policies and
procedures including any changes in generally accepted accounting
principles which may impact the company's accounting policies or
financial results.
- Other communications as required to be communicated by the independent
auditor by Statement of Auditing Standards (SAS) 61 as amended by SAS
90 relating to the conduct of the audit. Further, receive a written
communication provided by the independent auditor concerning their
judgment about the quality of the company's accounting principles, as
outlined in SAS 61 as amended by SAS 90, and that they concur with
management's representation concerning audit adjustments.
If deemed appropriate after such review and discussion, the committee shall
recommend to the board that the financial statements be included in the
company's annual report on Form 10-K.
2. After preparation by management and review by independent auditor, approve
the report required under SEC rules to be included in the company's annual
proxy statement.
3. Review and reassess the adequacy of the audit committee charter on an
annual basis. The audit committee charter is to be published as an appendix
to the proxy statement every three years.
4. Review with the company's management and the independent auditor prior to
filing the company's interim financial information, earnings press release
and the financials information contained in the company's quarterly reports
on Form 10-Q, including: (i) the selection, application and disclosure of
the critical accounting policies and practices used; and (ii) any
management certifications related thereto. The chairperson may represent
the committee for purposes of review.
5. Review with the company's management and the independent auditor all
significant accounting and reporting principles, practices and procedures
applied by the company in preparing its financial statements. Discuss with
the independent auditor their judgments about the quality, not just the
acceptability, of the company's accounting principles used in financial
reporting.
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6. Review any reports submitted by the independent auditor, including a
report, if prepared, relating to: (i) all critical accounting policies and
practices used; (ii) 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 independent auditor; and
(iii) other material written communications between the independent auditor
and management, such as any management letter or schedule of unadjusted
differences.
7. Review disclosures made by CEO and CFO during the Forms 10-K and 10-Q
certification process about significant deficiencies in the design or
operation of internal controls or any fraud that involves management or
other employees who have a significant role in the company's internal
controls.
8. Generally as part of the review of the annual financial statements, receive
an oral report(s), at least annually, from legal counsel concerning legal
and regulatory matters that may have a material impact on the financial
statements.
Control Process
8. Review with the company's management and the independent auditor the
company's accounting and financial reporting controls. Obtain annually in
writing from the independent auditor their letter as to the adequacy of
such controls.
9. Require that the independent auditor will advise management and the
committee, through its chairperson, of any matters identified through the
procedures followed for interim quarterly financial statements that may
adversely affect the quality or the acceptability of the quarterly
financial reports. This notification is required under standards for
communication with audit committees regarding the effect on quality for
significant events, transactions, and changes in accounting estimates, is
to be made prior to the related press release or, if not practicable,
prior to filing Form 10-Q with the SEC.
10. Meet with management and the independent auditor to discuss any relevant
significant recommendations that the independent auditor may have,
particularly those characterized as "material" or "serious". Typically,
such recommendations will be presented by the independent auditor in the
form of a letter of comments and recommendations to the committee. The
committee should review responses of management to the letter of comments
and recommendations from the independent auditor and receive follow-up
reports on action taken concerning the aforementioned recommendations.
11. Discuss the independent auditor the quality of the company's financial and
accounting personnel. Also elicit the comments of management regarding the
responsiveness of the independent auditor to the company's needs.
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Internal Audit
12. Review with the company's management the annual internal audit plan; any
significant findings during the year and management's responses thereto;
and the effectiveness and adequacy of the internal audit function.
13. Review with the company's management and the independent auditor
significant changes to the audit plan, if any, and any serious disputes or
difficulties with management encountered during the audit. Inquire about
the cooperation received by the independent auditor and whether there have
been any disagreements with management which is not satisfactorily
resolved, would have caused them to issue a nonstandard report on the
company's financial statements.
External Audit
14. Pre-approve in accordance with applicable law (including SEC and American
Stock Exchange rules) all audit and permissible non-audit services
provided to the Company by the independent auditor. The committee may
delegate this responsibility to one or more members of the committee.
15. Review the scope and general extent of the independent auditor's annual
audit. The committee's review should include an explanation from the
independent auditor of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent auditor should confirm to the committee that no limitations
have been placed on the scope or nature of their audit procedures.
16. At least annually, obtain and review a report by the independent auditor
describing: (i) the independent auditor's internal quality control
procedures: (ii) any material issues raised by the most recent internal
quality control review, or peer review, of the registered public
accounting 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 accounting firm,
and any steps taken to deal with any such issues; and (iii) all
relationships between the independent auditor and the company (to assess
the independent auditor's independence).
17. Inquire as to the independence of the independent auditor and obtain from
the independent auditor, at least annually, a formal written statement
delineating all relationships and services between the independent auditor
and the company as contemplated by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committee.
18. Actively engage in a dialogue with the independent auditor with respect to
any disclosed relationships or services that may impact the objectivity
and independence of the auditor and take, or recommend that the full Board
take, appropriate action to oversee the independence of the independent
auditor.
19. Review any reports submitted to the committee by the independent auditor.
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Compliance
20. As the committee may deem appropriate, obtain, weigh and consider expert
advice as to audit committee related rules of the American Stock Exchange,
Statements on Auditing Standards and other accounting, legal and
regulatory provisions.
21. Review with management and the independent auditor the methods used to
establish and monitor the company's policies with respect to unethical or
illegal activities by company employees that may have a material impact on
the financial statements.
22. Establish procedures for: (i) the receipt, retention and treatment of
complaints received by the listed issuer regarding accounting, internal
accounting control, or auditing matters; and (ii) the confidential,
anonymous submission by employees of the listed issuer of concerns
regarding questionable accounting or auditing matters in compliance with
applicable law, including SEC rules.
23. Review and investigate any matters pertaining to the integrity of
management, including conflicts of interest, or adherence to standard of
conduct, as required by the code of conduct policy adopted by the board
and any other policies of the company governing the integrity and conduct
of management which the board determines should be overseen by the
committee. This code of conduct will be applicable to all directors,
officers and employees and shall be made publicly available in accordance
with SEC and American Stock Exchange rules.
Other Responsibilities
24. Make reports and recommendations to the board on matters within the scope
of the committee's functions.
25. Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the board for approval. This should be done in
compliance with applicable SEC and American Stock Exchange audit committee
requirements.
26. Should the company receive an audit opinion that contains a going concern
qualification, the committee will assure that the company makes a timely
public announcement through the public news media disclosing the receipt
of such qualification and provides the text of the public announcement to
the appropriate American Stock Exchange department in accordance with
American Stock Exchange rules.
27. Review and approve, where appropriate, all related-party transactions as
are required to be disclosed pursuant to SEC Regulation S-K, Item 404.
28. Engage independent counsel and other advisors, as the committee deems
necessary or appropriate to carry out its duties, with funding provided by
the company.
29. Perform other activities related to this charter as requested by the
board.
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Audit Committee Checklist
The audit committee checklist delineates the committee's specific
responsibilities. The committee relies on expertise from management, the
independent auditors and the corporate staff in carrying out its
responsibilities. Management of the company is responsible to determine that the
company's financial statements are complete, accurate, and in accordance with
generally accepted accounting principles. The public accounting firm is
responsible for auditing the company's financial statements. It is not the audit
committee's duty to plan or conduct audits, to determine that the financial
statements are complete, accurate and in accordance with generally accepted
accounting principles, to conduct investigations, or to assure compliance with
laws and regulations or the company's internal procedures or controls.
Audit Committee Checklist
------------------------- Qtr Qtr Qtr Qtr As
1 2 3 4 Needed
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1. Meet 4 times per year or more frequently as circumstances
require. Each meeting must include time for an executive
session of the committee. The committee may invite members X X X X X
of management or others to attend parts of the meeting as
necessary.
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2. Prepare written agenda in consultation between the committee X X X X X
chairperson, management and the independent auditors.
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3. Provide open communications between the independent
auditors, management and the board. Report committee X
actions to the board as the committee deems appropriate.
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4. Verify that at least one committee member qualifies as an
"audit committee financial expert" under Item 401(h) of SEC X
regulation S-K.
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5. Verify the committee consists of a minimum of 3 independent X
directors, who are financially literate.
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6. Review and reassess the audit committee charter and update X
the audit committee checklist annually.
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7. Include copy of the committee charter as an appendix to the X
proxy statement at least once every 3 years.
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8. Appoint, approve the compensation of, and provide oversight X X X X
of the independent auditor.
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9. Confirm annually the independence of the independent X
auditor.
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10. Quarterly review non-audit services provided by the X X X X
independent auditor.
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11. Inquire of management and the independent auditor of
significant risks or exposures and assess steps management X
has taken to minimize such risk to the company.
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12. Consider and review with the independent auditor:
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a. Adequacy of the company's internal controls. X
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b. Any related significant findings and recommendations of
the independent auditor together with management's X
responses.
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13. Review with the independent auditor and management any X
significant changes to GAAP policies or standards.
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Audit Committee Checklist
------------------------- Qtr Qtr Qtr Qtr As
1 2 3 4 Needed
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14. Review with the independent auditors and management at the
completion of the annual audit:
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a. The financial statements and accompanying notes. X
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b. The auditors' report. X
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c. Any significant changes required in the audit plan. X
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d. Any difficulties or disputes between the auditors and X
management encountered during the course of the audit.
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e. Other matters related to the conduct of the audit which
are communicated to the committee under generally accepted X
accounting standards.
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15. Review with management and the auditors the company's X X
critical accounting policies.
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16. Review policies and procedures with respect to transactions
between the company and its officers, directors and X
affiliates that are not a normal part of the company's
business.
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17. Review with management and the auditors:
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a. Any significant findings by auditors and management's X
responses thereto.
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b. Any difficulties encountered in the course of audits,
including any restrictions on the scope of their work or X
access to required information.
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c. Any changes required in planned scope of their audit. X
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18. Review periodic reports of the company with management and X X X X X
the auditors prior to filing with the SEC.
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19. In connection with the review of periodic reports, review
management's disclosure to the committee of any X X X X
deficiencies in disclosure controls or internal controls
under Section 302 of the Sarbanes-Oxley Act.
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20. Monitor as appropriate the standards adopted as a code of X
conduct for the company.
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21. Meet with the auditors in executive session to discuss any
matters that the committee or auditor believe should be X
discussed privately with the audit committee.
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22. Meet with management in executive session to discuss any
matters that the committee or auditor believe should be X
discussed privately with the audit committee.
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23. Review and make recommendations to the board of directors
concerning any matters reported to the committee by the
company's legal counsel concerning material violations of X
securities law or breaches of fiduciary duty by the
company, its officers, directors or employees.
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24. Provide for receipt, retention and treatment of complaints
received by the issuer regarding accounting, internal
accounting controls or auditing matters, including X
providing for confidential and anonymous submissions by
employees of the issuer to the chairperson of the committee
regarding questionable accounting or auditing matters.
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