Ingles Corporate Information
Audit Committee Charter

I) INTRODUCTION

Ingles Markets, Incorporated's executive management is primarily responsible for the completeness and accuracy of its financial reporting and the adequacy of its internal financial and operating controls. Its Board of Directors has responsibility to oversee management's exercise of these responsibilities. To assist the Board, the Company has established, through its bylaws, an Audit Committee ("the Committee") whose authority and responsibilities are described by this Charter.

A) Purpose
This Charter is created in order to define the Audit Committee's objectives, the range of its authority, the scope of its activities and its duties and responsibilities. It is intended to give Audit Committee members, management and external auditors a clear understanding of their respective roles. The Audit Committee will review and assess the adequacy of this Charter annually and the Board of Directors will perform an evaluation of the performance of the Committee annually.

B) Mission Statement
The purpose of the Audit Committee is to assist the Board with its oversight responsibilities regarding (i) the financial statements and other financial information provided by the Company to its stockholders, the public and others, (ii) the Company's compliance with legal and regulatory requirements, (iii) the independent auditors' qualifications and independence and (iv) the performance of the Company's internal audit function and independent auditors. In carrying out this purpose, the Committee will maintain and facilitate free and open communication between directors, the independent auditors, internal auditors and the financial management of the Company.

II) MEETINGS

The Committee will meet on a quarterly basis in connection with the quarterly meetings of the Board of Directors and special meetings may be called when circumstances require, including upon the request of the external auditors. As part of its job to foster open communication, the Audit Committee will meet periodically with management, the Director of Internal Audit and the independent auditors in separate executive sessions.

III) ORGANIZATION

A) Size, Composition and Term of Appointment
The Audit Committee shall consist of no fewer than three directors each of whom are independent of management and the Company . Each member shall be financially literate and at least one of member shall have accounting or related financial management expertise as defined by the relevant rules promulgated by the Financial Accounting Standards Board ("FASB"), Securities and Exchange Commission ("SEC"), and the National Association of Securities Dealers ("NASD") or other regulatory body. The Board of Directors shall appoint the Audit Committee's Chairperson and members annually.

B) Oversight by the Board of Directors
The Committee will report its activities to the full Board on a regular basis so that the Board is kept informed of its activities on a current basis. The Committee will perform all duties determined by the Board.

The Board will determine annually that the Committee's members are independent, as defined by the relevant rules promulgated by FASB, the SEC and the NASD, and that the Committee has fulfilled its duties and responsibilities.

IV) AUTHORITY AND RESPONSIBILITY

The Committee derives its authority from the By Laws of the Company and is hereby given all resources and authority necessary to properly discharge its duties and responsibilities.

The Committee acts on the Board's behalf in the matters outlined below.

A) External Auditors

1) The Committee, as representatives of the shareholders, shall be directly responsible and have sole authority to select, evaluate and, where appropriate, replace the independent public accountants, or to nominate the independent public accountants to be proposed for shareholder approval in the proxy statement. The Committee will consider management's recommendation of the appointment of the independent public accountants. The Committee will review with management the performance, appointment and/or termination of the independent public accountants.

 

2) The Committee shall be responsible to review and pre-approve all non-audit related services engaged with the Company's independent public accountants and all non-audit services engaged with other accountants/consultants in excess of $15,000.

 

3) The Committee will ensure that the independent public accountants provide a formal written statement to the Committee setting forth all relationships between the independent public accountants and the Company, consistent with the Independence Standards Board Standard No. 1. The Committee will discuss with the independent public accountants any disclosed relationships or services which may impact the objectivity and independence of the independent public accountants. The Committee will take, or recommend that the full Board take, appropriate action to ensure the independence of the independent public accountants.

 

4) The Committee will review with management and the independent public accountants the annual audit scope and approach, significant accounting policies, audit conclusions regarding significant accounting estimates/reserves, other communications as required by GAAS, and proposed fee arrangements for ongoing and special projects.

 

5) The Committee will review with management and the independent public accountants their assessments of the adequacy of internal controls, and the resolution of identified material weaknesses and reportable conditions in internal controls, including the prevention or detection of management override or compromise of the internal control system.
6) The Committee will review with management and the independent public accountants the Company's compliance with laws and regulations having to do with accounting and financial matters.
7) The Committee and the Board of Directors should consider whether the independent public accountants should meet with the full Board to discuss any matters relative to the financial statements and/or any potentially relevant matters, and to answer any questions that other directors may have.

 

B) Financial Statements

1) The Committee will review with management, internal audit and the independent public accountants, the Company's interim and year end financial statements, including:
(a) Management's discussion and analysis, and audit findings (including any significant suggestions for improvements provided to management by the Director of Internal Audit and the independent public accountants). Such review will include a discussion of significant adjustments recorded or adjustments passed and will conform with the requirements of SAS 61. Following such review, the Committee will recommend to the Board whether the audited financial statements should be included in the Company's annual report on Form 10-K. 
(b) The earnings press releases as prepared by management to ensure they are in compliance with SEC requirements.

 

2) The Committee will request from financial management and the independent public accountants, a briefing on any significant accounting and reporting issues, including any changes in accounting standards or rules promulgated by the FASB, SEC or other regulatory bodies, that have an effect on the financial statements.

 

3) The Committee will inquire about the existence and substance of any significant accounting accruals, reserves, or estimates made by management that had a material impact on the financial statements.
4) The Committee will inquire of management and the independent public accountants if there were any significant financial accounting or reporting issues discussed during the accounting period and, if so, how they were resolved or if not resolved, the Committee will inquire and resolve such disagreements. 
5) The Committee will inquire of management and the independent public accountants all alternative treatments within GAAP for policies and practices related to material items that have been discussed among management and the independent auditor, including the ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.
6) The members of the Committee will discuss among themselves, without management or the independent public accountants present, the quality of the accounting principles applied in the preparation of the Company's financial statements and significant judgments affecting the financial statements; and the independent public accountants' view of the quality of those principles and such judgments.
7) The Committee will discuss/review with management, company counsel, and the independent public accountants the substance of any significant issues raised by counsel concerning litigation, contingencies, claims or assessments. The Committee should understand how such matters are reflected in the Company's financial statements.

 

C) Private Discussions 

1) The Committee will meet privately with the independent public accountants at least once a year to request their opinion on various matters including the quality of the Company's accounting principles as applied in its financial reporting, and the quality and performance of its financial and accounting personnel.
The Committee will also discuss privately with the independent public accountants any issues required from time to time by rules of the SEC, FASB and NASD.
2) The Committee will meet privately with the Company's internal auditor at least once a year to discuss the responsibilities, budget and other matters concerning the Company's internal audit function, and any issues that the internal auditor believes warrant audit committee attention.

 

D) Post Audit Review

1) The Committee will review with management and the independent public accountants the annual Integrated Audit Results and Communications and management's responses to each, as necessary.
2) The Committee will ask the independent public accountants what their greatest concerns were (including any serious difficulties encountered) and if they believe anything else should be discussed with the Committee that has not been raised or covered elsewhere.

 

E) Internal Audit

1) Review, based upon the recommendation of the independent auditors and the Director of Internal Audit, the scope and plan of the work to be done by the internal audit group and the responsibilities, budget and staffing needs of the internal audit group.
2) Review and approve the appointment and replacement of the Company's Director of Internal Audit.
3) Review on an annual basis the performance of the internal audit group. 
4) In consultation with the independent auditors and the internal audit group, review the adequacy of the Company's internal control structure and procedures designed to insure compliance with laws and regulations, and any special audit steps adopted in light of material deficiencies and controls.
5) Establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding the questionable accounting or auditing matters.
6) Review (i) the internal control report prepared by management, including management's assessment of the effectiveness of the design and operation of the Company's internal control structure and procedures for financial reporting, as well as the Company's disclosure controls and procedures, with respect to each annual and quarterly report that the Company is required to file under the Securities Exchange Act and (ii) the independent auditors' attestation, and report, on the assessment made by management.

 

V) OTHER

A) The Committee will initiate the investigation of any matter brought to its attention within the scope of its duties, with the power to retain and fund outside counsel for this purpose if, in its judgment, that is appropriate.

B) The Committee will prepare a report for inclusion in the Company's proxy statement for its annual meeting of shareholders describing the activities in which it has engaged during the prior year pursuant to its charter. The report will address all issues then required by the rules of the SEC.

C) The Committee will establish and implement policies and procedures for the review and approval or disapproval of related party transactions as defined by NASDAQ Rule 4350(h).

D) Review and approve (i) any amendment or waiver in the Company's code of ethics for the chief executive officer and senior financial officers and (ii) any public disclosure made regarding such amendment or waiver.

E) Report regularly to the Board. Review with the full Board any issues that have arisen 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 auditors or the performance of the internal audit group.

F) The Committee will include the Audit Committee Charter in the Proxy Statements at least once every three years as required by the SEC.