Rochester Institute of Technology Audit Committee of the Board of Trustees Charter

Delegation of Authority to the Audit Committee

Topic: The Bylaws of the Rochester Institute of Technology (the "Institute"), Article XVII, Section 2, delegate to the Audit Committee of the Board of Trustees (the "Committee") authority "to perodically appraise the internal control and accounting systems of the Institute." By adopting this Audit Committee Charter, the Board of Trustees (the "Board") makes more specific the charge it gives to the Committee.
Charge: By virtue of its delegated authority, the Committee is charged to assist the Board of Trustees in fulfilling its responsibility to oversee the Administrative Management's (the "Management") conduct of the Institute's system of internal control, reporting and accounting systems, which includes overview of the financial statements and other financial information provided by the Institute and its subsidiaries to any governmental or regulatory body, the public, financial institutions and the Institute's internal community. The Committee is charged to recommend to the Board and engage upon Board approval, the independent auditors for the Institute annually and to give oversight to the annual Independent audit of the Institute's financial statements. The Committee is also charged to oversee as well the general compliance of the Institute with applicable laws and regulations, and policies and procedures established by the Board.
Access to Information: The Committee may request any independent auditor, expert, officer, trustee, agent or employee of the Institute to appear before it to report on the financial condition of the Institute or any other aspect of the Institute's operation and answer any questions the Committee might have. The Committee has full access to all records and facilities for this purpose.

Audit Committee Role and Responsibility

Oversight Scope Defined: The role and responsibility of the Committee is oversight. Management is responsible for preparing the financial statements, governmental and other reports of the Institute, for operating the Institute, including its financial and accounting systems, and for assuring compliance with applicable laws and regulations and with policies and procedures approved by the Board. The internal auditors have responsibility for the examination and evaluation of the adequacy and effectiveness of the Institute's governance, risk management process, and system of internal controls in carrying out assigned responsibilities to achieve the Institute's stated goals, standards, and objectives. The external auditors are responsible for auditing the Institute's financial statements and such other functions as they are specifically approved and engaged to audit by the Committee.
Reliance on Management, Auditor, and Advisory Information: It is recognized that Management, the internal auditors, and the external auditors have more time, knowledge and detailed information about the Institute than the volunteer members of the Committee. Consequently, in carrying out its oversight function, the Committee is not providing expert or special assurance as to the Institute's financial statements or professional certification as to the work of the Institute's staff or of the outside auditors. In discharging their duties, the members of the Committee may rely on information, opinions, reports or statements, including financial statements or other financial data, prepared or presented by officers, employees, internal or external counsel, public accountants, committees of the Board duly designated with authority in particular areas, or other persons whom the members believe are reliable and competent in the matters presented, provided that in so relying the member is acting in good faith and with that degree of diligence, care and skill which ordinarily prudent audit committee members would exercise under similar circumstances. The Chief Audit Executive is charged with presenting all significant deficiencies and material weaknesses to the Committee including expedient contact with the Committee Chairperson when such deficiencies and weaknesses have not been satisfactorily resolved by Institute Management.

Customary Activities of the Audit Committee

The following functions are appropriate common recurring activities of the Committee in carrying out its oversight function. These functions are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate under the circumstances.

External Audit:
- Select, recommend to the Board, and engage upon Board approval, the Institute's external auditors taking into account the recommendation of the Senior Vice President for Finance and Administration and pre-approve external auditor's plans and fees for all audit and significant non-audit services.
- Review reports of external auditors.
- Evaluate the performance of the external auditors.
- Review and confirm the independence of the external auditors for the performance of both audit and non-audit services.
- Evaluate the report of the external auditors regarding the results of the annual audit including, but not limited to:
  - The audited financial statements and management letter recommendations and the Management's responses thereto.
  - The adequacy of the Institute's system of internal controls.
  - The Administration's cooperation with the external auditors.
  - The adequacy of the Institute's accounting policies and practices, including the level of compliance with governmental regulations and with recent professional pronouncements and their impact on the financial statements.
Internal Audit:
- Review annually and recommend and approve changes to the Internal Audit Department Charter.
- Review and concur in the appointment or removal of the Chief Audit Executive as recommended by the Senior Vice President for Finance & Administration.
- Review and evaluate:
  - Organization and reporting structure of the Internal Audit Department, including the independence of the Chief Audit Executive, staff, and internal audit service vendors.
  - Significant deficiencies or material weaknesses from compliance audits, special investigations and projects.
  - Scope of audit coverage and coordination with external auditors.
  - Implementation and status of annual audit plan.
  - Budget allocations for the internal audit function.
  - Professional credentials and continuing education of the Chief Audit Executive and staff.
- Request special investigations, projects, and evaluation of audit services.
- On a regular basis, meet separately with the Chief Audit Executive to discuss any matters that the committee or Internal Audit believes should be discussed privately.
Financial Management:
- Review and approve implementation of significant new or modified accounting policies.
- Review and approve significant estimates and/or assumptions utilized in financial statement preparation.
- Review and evaluate the extent to which Management has implemented recommendations made by external and internal auditors.
- Review results of consultants engaged for specific purposes.
Other Functions of the Audit Committee:
- Periodically review and evaluate the adequacy of the Institute's compliance with the Research Oversight Review Policy adopted by the Board.
- Periodically review and evaluate the adequacy of the Institute's oversight of its subsidiaries.
- Periodically review and evaluate the adequacy of the Institute's risk management program, including its controls to prevent fraud or other misconduct.
- Periodically review and evaluate the results of the Institute's Compliance Program to ensure compliance with regulatory reporting requirements of governmental authorities, including timely submission of required reports and review the results of Management's follow-up of any instances of non-compliance.
- Review the results of compliance audits or examinations conducted by governmental authorities.
- Initiate special investigations and seek the advice of internal or external Institute legal counsel as deemed necessary or appropriate.
- Provide advice and counsel to the President, Vice President for Finance and Administration, and the Chief Audit Executive.
- Perform such specific oversight functions as expressly requested by the Board.
- Review the Audit Committee Charter with the Chief Audit Executive annually and update as necessary.
- Confirm annually that all Audit Committee Charter responsibilities have been carried out.
- The Committee will review annually the close-out and completion of all construction project related party transactions previously approved by the Board's Conflict of Interest Committee. Related party transactions are not limited to, but shall include, transactions between the Institute and Board members, Management or employees of the Institute.
- The Committee shall review summary Ethics Hotline report and follow-up activity in connection with the operation of the Institute's "Whistle Blower Hot Line."

Committee Structure

Composition: The Committee shall be composed of not less than five Trustees who have no relationship with the Institute that may interfere with the exercise of their independence from Management and the Institute or the external auditors and who will be appointed by the Chairman of the Board and approved by the Board at its annual meeting to serve for a term of one year, or until their successors shall have been appointed. The Chairman of the Board, the Vice Chairman of the Board, and the President shall not be members of the Committee but may, upon invitation of the Committee, attend any meeting. The Senior Vice President for Finance and Administration shall not be a member of the Committee but shall be invited to all meetings at the discretion of the Chairman of the Committee. The Chief Audit Executive will act as staff of the Committee to provide Institute information to assist the Committee in fulfilling their responsibilities.
Appointments, Terms, Meeting Frequency, and Financial Literacy: The Chairman of the Board shall appoint the Chairman of the Committee. The Chairman of the Committee will be approved by the Board at its annual meeting to serve for a term of one year, or until his or her successor has been appointed. The Committee shall meet at such times and places upon such notice as it may determine, at least twice per year. All Committee members shall be financially literate (or shall become financially literate within a reasonable period of time after appointment to the Committee), and at least one member shall have accounting or related financial management expertise. The Chairman of the Committee and the Chief Audit Executive will ensure that Committee members are provided with a proper Committee orientation.
Private and Executive Sessions: A private session of the Committee may be held at the conclusion of general meetings of the Committee, with the Chief Audit Executive, the external auditors, counsel or such others as the Committee may request to discuss privately any concerns or issues not appropriate for discussion with all participants present at the general meeting. Each private session shall be attended only by the members of the Committee and the individual(s) requested to attend the private session. An executive session may be held at the conclusion of all meetings of the Committee, attended by only the members of the Committee in order to offer Committee members the opportunity to reflect privately on any concerns or issues raised in the meeting.
Minutes: Committee meeting minutes shall be prepared and distributed to all Committee members. A copy of the minutes shall be sent to the Secretary of the Institute to be kept with the official minutes of Board committees. A report of each Committee meeting may be presented at the next succeeding meeting of the Board during its executive session with the President, as determined by the Chair of the Committee.

Approved by the RIT Board of Trustees February 2010.