Rules of Business Practice for the 2010–2015 USP Board of Trustees

7. Audit Committee

7.01 Composition

The Audit Committee shall consist of not less than three members of the Board, appointed by the Chair, no more than one of which shall be a member of the Operations Committee. The chair of the Audit Committee shall be appointed by the Chair from among such members; provided, however, that the chair shall not be the Treasurer.

7.02 Functions

The Audit Committee shall:

1. Perform the following functions with regard to independent audits of the organization:
   1. Recommend to the Board suitable accounting firms to conduct such audits. The Board shall vote annually to select the audit firm to conduct the annual audit. Such selection shall include appropriate rotation of the firm and individuals within the firm responsible for conducting the audit.
   2. Oversee the independent audit of the organization, including meeting with auditors to discuss the scope of the audit, reviewing and analyzing the audit results, discussing with auditors and management the adequacy and effectiveness of the accounting and financial controls, and discussing with the auditors and management any other problems, issues or concerns arising out of the audit.
   3. Approve any non-audit service to be provided by USP's audit firm. A non-audit service shall mean any service other than those related to the preparation, completeness, and accurate reporting of the financial statements. None of the following non-audit services may be approved for the audit firm: (i) bookkeeping or other services related to the accounting records or financial statements of USP; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions, or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resource functions; (vii) broker or dealer, investment adviser, or investment banking services; and (viii) legal and expert services unrelated to the audit. Any other non-audit services, including tax services, may be provided by USP's audit firm if approved by the Audit Committee.
   4. Annually, obtain and review a report by the independent auditors describing: (i) the firm's internal control procedures; (ii) any material issues raised by the most recent internal control review or other review inquiry or investigation by governmental or professional authorities within the preceding five years, respecting any independent audits carried out by the firm and any steps taken to deal with any such issues; and
      (iii) all relationships between the auditor and USP.
   5. Require the auditors to report to the Audit Committee in a timely fashion: (i) all critical accounting policies to be utilized; (ii) all alternative treatments of financial information that have been discussed with management, the ramifications thereof, and the preference of the auditor; and (iii) other material written communications between the independent auditor and senior management.
2. Review legal and regulatory matters that may have a material adverse impact on the organization's financial statements or reputation and any reports received by regulators.
3. Review and make recommendations to the Board regarding disclosures in IRS filings for the organization.
4. Oversee the development, implementation and enforcement of the USP Code of Ethics and such other policies and procedures as may be appropriate to ensure compliance with laws and regulations and the ethical conduct of the organization, including:
   1. Reviewing and recommending to the Board the adoption of and revisions to such Code of Ethics.
   2. Monitoring compliance with the Code of Ethics, including receiving and reviewing regular reports from USP's Compliance Committee.
   3. Establishing procedures for the receipt, retention and treatment of complaints received regarding accounting, internal controls or audit matters, and the confidential, anonymous submission by staff and volunteers of Concerns (as defined in USP's Whistleblower Policy).

7.03 Foreign Subsidiary Oversight

The Audit Committee also shall provide oversight to the company's foreign subsidiaries with respect to the functions described in this Section, in accordance with local laws and the governing documents of such subsidiaries.

7.04 Investigatory Authority

In performing its functions, the Audit Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the company and the authority to engage independent counsel and other advisers as it deems necessary to carry out its duties.