Audit Committee

Audit Committee

Wesco Aircraft Holdings, Inc.

Audit Committee Charter

This Audit Committee Charter (the “Charter”) was adopted by the Board of Directors (the “Board”) of Wesco Aircraft Holdings, Inc. (the “Company”) on June 6, 2011.

I. Purpose

The purpose of the Audit Committee is to oversee the accounting and financial reporting processes of the Company and its subsidiaries and the audits of their financial statements provided by the Company to any governmental body or the public, and to prepare the report of the Audit Committee to be included in the Company’s annual proxy statement.

In addition, the Audit Committee shall further assist the Board in discharging its oversight responsibilities regarding:

(a) the integrity of the Company’s financial statements;

(b) monitoring the Company’s compliance with legal, ethical and regulatory requirements;

(c) the independent auditor’s qualifications and independence; and

(d) the performance of the Company’s internal audit functions.

The Audit Committee’s primary objectives include: providing an independent, direct and open avenue of communication among the Company’s independent auditor, management, internal auditing department, and the Board; serving as an independent and objective party to review the Company’s financial reporting processes and internal control systems; overseeing with management the reliability and integrity of the Company’s accounting policies and financial reporting and disclosure practices; and reviewing and considering the work of the Company’s independent auditor.

II. Membership

The Audit Committee shall be comprised of three or more Directors; provided, that if at any time there is a vacancy on the Audit Committee and the remaining members meet all membership requirements, then the Audit Committee may consist of two (2) members until the earlier of the Company’s next annual stockholders meeting or one (1) year from the occurrence of the vacancy; provided further, however, that if the annual stockholders meeting occurs no later than 180 days following the occurrence of the vacancy, the Audit Committee may consist of two (2) members until 180 days following the occurrence of the vacancy. Each of the members of the Audit Committee shall be a member of the Board and shall satisfy the independence and experience requirements of the New York Stock Exchange and Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in each case subject to any applicable transition rules; provided, that if a member of the Audit Committee ceases to be independent for reasons outside the member’s reasonable control, then the member may remain on the Audit Committee until the earlier of the Company’s next annual stockholders meeting or one (1) year from the occurrence of the event that caused the member to cease to be independent.

All members of the Audit Committee shall have a requisite working familiarity with basic finance and accounting practices and shall have such other requisite experience or qualifications as may be necessary to be in compliance with the rules of the Securities and Exchange Commission (the “SEC”) as then in effect. In addition, if no member of the Audit Committee is an “audit committee financial expert” as defined by the SEC, the Company must disclose its reasons for not having such an expert in its periodic reports required pursuant to the Exchange Act.

If an Audit Committee member simultaneously serves on the audit committees of more than three public companies, the Board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the Audit Committee and must disclose such determination either on or through the Company’s website or in the annual proxy statement, or the annual report on Form 10-K filed with the SEC.

The members of the Audit Committee shall be appointed by the Board, and may be removed by the Board. Unless a Chairman is elected by the full Board, the members of the Audit Committee shall designate a Chairman by majority vote of the full Audit Committee membership.

III. Meetings and Procedures

The Audit Committee shall meet periodically (as often as may be deemed necessary or appropriate in its judgment) with the Corporation’s management, senior internal auditing executive and independent auditor. In conjunction with these meetings, separate executive sessions shall be held with management, the independent auditor and the senior internal auditing executive. Following each meeting, the Audit Committee shall report to the Board at the next regularly scheduled Board meeting, or sooner as circumstances may dictate.

In addition, the Chairman of the Audit Committee may meet in person or by telephone with the Company’s independent auditor and any of the Company’s executive officers, as he deems necessary.

IV. Duties and Responsibilities

The Audit Committee, in its capacity as a committee of the Board, shall have the sole authority to appoint, replace, compensate and oversee the independent auditor (including resolution of disagreements between management and the auditor regarding financial reporting), and shall pre-approve the fees and other terms of all engagements for audit and non-audit services provided by the independent auditor. The Audit Committee expects that the independent auditor will communicate any concerns to management as well as the Audit Committee.

The Audit Committee also shall pre-approve the engagement of any other accounting firm by the Company or any of its subsidiaries.

The Audit Committee shall consult with management but shall not delegate these responsibilities. The Audit Committee may otherwise form subcommittees and delegate authority to those subcommittees when appropriate.

The Audit Committee shall have the authority to conduct or authorize investigations into any matters within its scope of responsibilities, contact and request information from any of the Company’s advisors or other third parties, and retain outside advisors to assist the Committee in the conduct of any investigation.

The Company must provide for funding, as reasonably determined by the Audit Committee: for payment of compensation to the independent auditor; and for payment to any party engaged by the Audit Committee for special investigations and for ordinary administrative expenses of the Audit Committee necessary or appropriate in carrying out its duties.

The Audit Committee shall make regular reports to the Board, and shall review with the Board any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the performance and independence of the Company’s independent auditor, and the performance of the internal audit function.

The Audit Committee shall review and reassess the adequacy of this Charter, at least annually, and shall recommend any proposed changes to the Board for approval.

The Audit Committee shall:

Financial Statement and Disclosure Matters

1. Review and discuss with management and the independent auditor accounting policies and financial reporting issues and judgments that may be viewed as critical; review, and discuss analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of financial statements, including analyses of the effects of alternative GAAP methods on the financial statements; consider and approve, when appropriate, any significant changes in the Company’s accounting and auditing policies; review and discuss any accounting and financial reporting proposals that may have a significant impact on the Company’s financial reports; and review and discuss major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies;

2. Review and discuss with management and the independent auditor the annual audited financial statements, and recommend to the Board whether the audited financial statements should be included in the Annual Report on Form 10-K the Company may be required to file;

3. Review with the Chief Executive Officer and the Chief Financial Officer the Company’s disclosure controls and procedures and review periodically, but in no event less frequently than quarterly, management’s conclusions about the efficacy of such disclosure controls and procedures;

4. Review and discuss with management and the independent auditor the Company’s earnings release and quarterly financial statements, including the results of the independent auditor’s reviews of the quarterly financial statements and financial information and earnings guidance provided to analysts and rating agencies, and the disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” prior to the filing of the Form 10-Q that the Company may be required to file;

5. Review and discuss with management and the independent auditor: any material financial or non-financial arrangements of the Company which do not appear on the financial statements of the Company; and any transactions or courses of dealing with parties related to the Company, which transactions are significant in size or involve terms or other aspects that differ from those that would likely be negotiated with independent parties and which are relevant to an understanding of the Company’s financial statements;

6. Discuss with management and the independent auditor the effect of regulatory and accounting initiatives;

7. Review with the independent auditor and management the nature and effect of any off-balance sheet financings, special purpose financing and trading vehicles, derivatives and other complex transactions;

8. Meet periodically with management to discuss the Company’s major financial risk exposures and the steps management is taking to monitor and control such exposures, including the Company’s risk assessment and risk management policies;

9. Review with the Company’s General Counsel legal matters or other contingent liabilities that may have a material impact on the financial statements, any significant reports to or inquiries received from regulators or governmental agencies, and any “whistle-blower” letters or communications which allege fraud, wrongdoing, or financial mismanagement;

10. Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61, as modified or supplemented;

11. Provide the Company with the report of the Audit Committee with respect to the audited financial statements required by Item 306 of Regulation S-K, for inclusion in each of the Company’s annual proxy statements;

Oversight of the Company’s Relationship with the Independent Auditor

12. Obtain from the independent auditor and review a written statement delineating all relationships between the auditor and the Company, and such other reports and information as the Audit Committee deems appropriate, to assess the independence of the independent auditor, including that of the independent auditor’s lead partner. Based on a review of such reports and information, discuss with the independent auditor any disclosed relationships or services that might impact the objectivity and independence of the auditor and recommend to the Board any appropriate action to satisfy the independence requirements;

13. Evaluate the qualifications, experience, performance and independence of the senior members of the independent auditor team, including that of the independent auditor’s lead partner, taking into consideration the opinions of management and the internal auditors; present its conclusions with respect to such evaluations to the full Board;

14. Review hiring policies for employees or former employees of the independent auditors, taking into account pressures that may exist for auditors consciously or subconsciously seeking a job with the Company;

15. Discuss with the independent auditor its ultimate accountability to the Audit Committee;

16. Assure the regular rotation of the lead, concurring, and other audit partners as required by law and SEC regulations, and consider whether there should be regular rotation of the independent auditing firm itself, in order to assure continuing independence of the independent auditor;

Process Improvement

17. Establish regular and separate systems of reporting to the Audit Committee by the Company’s management, the independent auditor and the internal auditors regarding any significant judgments made in management’s preparation of the financial statements, and the view of each as to the appropriateness of such judgments;

18. Review and discuss with the independent auditor the audit planning and procedures, including the scope, fees, staffing and timing of the audit; review and discuss the results of the audit and management letters, and any reports of the independent auditor with respect to any interim period;

19. Review with the Company’s internal auditors and the independent auditor the coordination of their audit efforts to assure completeness of coverage, reduction of redundant efforts and effective use of audit resources;

20. Review separately with the Company’s management, the independent auditor, and the internal auditing department, following completion of the Company’s annual audit, any significant difficulties encountered during the course of the audit, including: difficulties with management’s response; any restrictions on the scope of work or access to required information; and the nature and extent of any significant changes in accounting principles or the application therein;

21. Review any significant disagreement among the Company’s management and its independent auditor or the internal auditing department in connection with the preparation of the Company’s financial statements;

22. Review with the independent auditor any audit problems or difficulties and management’s response, including any accounting adjustments that were noted or proposed by the auditor but were “passed” (as immaterial or otherwise); review any “management” or “internal control” letters issued, or proposed to be issued, by the audit firm to the Company and any communications with the independent auditor’s national office respecting auditing or accounting issues presented by the engagement;

23. Review with the Company’s independent auditor, the internal auditing department and management the extent to which changes or improvements in financial or accounting practices and standards, as approved by the Audit Committee, have been implemented, with such review to be conducted at an appropriate amount of time subsequent to implementation of any changes or improvements thereto;

Oversight of the Company’s Internal Audit Function

24. Review and approve the appointment, replacement, reassignment or dismissal of the Company’s senior internal auditing executive and review the appointment, replacement, reassignment or dismissal of the members of the Company’s internal auditing department, as well as the adequacy of internal controls that could significantly affect the Company’s financial statements;

25. Review with the internal auditing department, and approve, its responsibilities, budget, staffing and annual audit plan, as well as all internal audit reports to management and management’s responses;

26. Discuss with the independent auditor the internal auditing department’s responsibilities, budget and staffing, and any recommended changes in the planned scope of the internal annual audit plan;

Compliance Oversight Responsibilities

27. Obtain reports from management, the Company’s senior internal auditing executive, the General Counsel and the independent auditor as to the Company’s conformity with applicable legal requirements and the Company’s Code Ethics and Business of Conduct (the “Code of Ethics”); review reports and disclosures of insider and affiliated party transactions; and advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Ethics;

28. Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise material issues regarding the Company’s financial statements, accounting and/or internal control policies;

29. Review the distribution of and compliance with the Company’s Code of Ethics;

30. Establish procedures 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 of concerns regarding questionable accounting or auditing matters;

Other Matters

31. Receive from management and review analyst reports and press stories about the Company ‘s accounting and disclosures;

32. Be available to the independent auditor during the year, as may be requested by the independent auditor; and

33. Perform any other activities consistent with this Charter, the Certificate of Incorporation and Bylaws of the Company and governing law, as the Audit Committee or the Board deems necessary or appropriate.

V. Limitation on Audit Committee’s Role

The Audit Committee and its advisors shall be given full access to the Company’s internal auditing department, Board, corporate executive officers, outside counsel and independent auditor as necessary to carry out the responsibilities and powers set forth in this Charter. While the Audit Committee has the responsibilities and powers set forth in this Charter, the Audit Committee is not responsible for planning or conducting audits, preparing or certifying the Company’s financial statements, determining that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles, or guaranteeing the auditor’s report. The fundamental responsibility for the Company’s financial statements and disclosures and for maintaining appropriate internal controls over financial reporting rests with management. The Company’s independent auditor is responsible for auditing the financial statements. The Audit Committee is entitled to rely in good faith upon the information provided by the Company’s management and the judgment and advice of professional experts and advisors.

VI. Consistency with Certificate

To the extent that any provision or section of this Charter may be inconsistent with any article, provision or section of the Certificate of Incorporation or Bylaws of the Company or any applicable law or regulation, the Certificate of Incorporation or the Bylaws or the law or regulation, as appropriate, shall fully control.

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Randy J. Snyder Robert D. Paulson Jay L. Haberland Scott E. Kuechle
  • Member
  • Chair
  • Financial Expert
  • Independent Director