Audit Committee

Audit Committee

Audit Committee

The Audit Committee assists the Board in its oversight of (a) the independence, qualifications and performance of Praxair’s independent auditor, (b) the integrity of Praxair’s financial statements, (c) the performance of Praxair’s internal audit function, and (d) Praxair’s compliance with legal and regulatory requirements.  In furtherance of these responsibilities, the Audit Committee, among other duties,

  1. Appoints the independent auditor to audit Praxair's financial statements, approves the fees and terms of such engagement, approves any non-audit engagements of the independent auditor, and meets regularly with, and receives various reports from, the independent auditor.  The independent auditor reports directly to the Audit Committee;

  2. Reviews Praxair's principal policies for accounting and financial reporting and its disclosure controls and processes, and reviews with management and the independent auditor Praxair's financial statements prior to their publication;
  3. Reviews assessments of Praxair's internal controls, the performance of the Internal Audit function, the performance evaluations of the General Auditor and the Chief Compliance Officer, and the guidelines and policies by which Praxair undertakes risk assessment and risk management; and
  4. Reviews the effectiveness of Praxair's compliance with laws, business conduct, integrity and ethics programs.

Audit Committee Charter

The Board of Directors (the "Board") of Praxair, Inc. (the "Corporation") shall appoint the Audit Committee (the "Audit Committee") which shall be constituted and have the responsibility and authority as described herein.


Composition

The Audit Committee shall meet the size, independence and experience requirements of applicable statutes and the New York Stock Exchange Listing Standards, as may be in effect from time to time.


Responsibility

The Audit Committee's primary responsibility shall be to provide advice and counsel to management regarding, and assist the Board in the oversight of, (a) the integrity of the financial statements of the Corporation, (b) the Corporation's compliance with legal and regulatory requirements, (c) the independence and qualifications of the Corporation's independent auditors, and (d) the performance of the Corporation's internal audit function and independent auditors.

In carrying out its responsibilities, the Audit Committee shall undertake the following activities:


The Independent Auditor

  1. Appoint an independent auditor to audit the financial statements of the Corporation. The independent auditor shall report directly to the Audit Committee.

  2. Evaluate the performance of the independent auditor and, if necessary, replace the independent auditor. Obtain and review written periodic reports at least annually from the independent auditor describing (a) the auditing firm's internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the auditing firm, or by any inquiry or investigation by governmental or professional authorities (including, without limitation, the Public Company Accounting Oversight Board ("PCAOB") with respect to independent audits carried out by the firm), and (c) any steps taken to deal with such issues.

  3. Approve all audit engagement fees and terms for the independent auditor. Pre-approve all non-audit engagements or services with or by the independent auditor. The chair of the Committee shall have the authority to pre-approve such non-audit services between regularly scheduled meetings provided that such approvals are reported to the full Committee at the next Committee meeting.

  4. Obtain and review written periodic reports at least annually from the independent auditor delineating all relationships between the independent auditor and the Corporation. This report shall be consistent with the requirements of Rule 3526 of the PCAOB (Communication with Audit Committees Concerning Independence). Review any disclosed relationships or services that may impact the objectivity and independence of the auditor, and take any other appropriate action deemed necessary or desirable to provide reasonable assurance that the Corporation has an auditor that is independent in fact.

  5. Meet with the independent auditor to review the planning of the audit including scope, staffing, locations, reliance on participation by management and internal audit, and general audit approach.

  6. Review with the independent auditor (a) any problems or difficulties the auditor may have encountered and (b) any material weaknesses or significant deficiencies in the Corporation's controls over financial reporting as communicated to management by the auditor and (c) the Corporation's response to these weaknesses and deficiencies. Resolve any disputes between management and the independent auditor. Obtain and review timely reports from the independent auditor on other material written communications between management and the independent auditor such as any schedule of unadjusted differences.

  7. Discuss with the independent auditor the required communications with Audit Committees as prescribed by the PCAOB Auditing Standards AU Section 380 (Communication with Audit Committees).

  8. Discuss with the independent auditor whether it has identified the existence of any issues of the type described in Section 10A of the Securities Exchange Act of 1934 (concerning detection of illegal acts).

  9. Establish policies for the Corporation regarding the hiring of employees or former employees of the independent auditors.


Financial reporting

  1. Review with management and the independent auditor the Corporation's annual audited financial statements and the independent auditor's report thereon, and the Corporation's quarterly unaudited financial statements (including in each case and without limitation, the accompanying footnotes and the Corporation's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations"). With respect to the annual audited financial statements, such review shall take place prior to their publication and the Committee shall provide a recommendation to the Board regarding their inclusion in the Corporation's Annual Report to Shareholders and its annual report on Form 10-K.

  2. Review with management and the independent auditor the Corporation's earnings results announcements prior to their release to the public. Review with management the Corporation's forward-looking earnings guidance (including changes thereto), if any, prior to its release to the public. The chair of the Committee may represent the entire Audit Committee for purposes of these reviews.

  3. Periodically review and discuss financial information provided to analysts and rating agencies. At the Committee's discretion, the foregoing may be satisfied by the combination of (a) the Audit Committee reviews referenced in the immediately preceding two Charter items, (b) the Board's periodic review of investor relations activities, and (c) the Finance and Pension Committee's periodic review of credit rating results and oversight of the Corporation's dealings with credit rating agencies.

  4. Discuss with management and the independent auditors any significant issues regarding accounting principles, practices and judgments made in connection with the preparation of the Corporation's financial statements. Obtain and review a report from the independent auditors regarding all critical accounting policies to be used in the Corporation's financial statements including major changes thereto and including also; (a) all alternative treatments of financial information within GAAP that have been discussed with management, (b) the ramifications of the use of such alternative disclosures and treatments, and (c) the treatment preferred by the independent auditor.

  5. Review the Corporation's disclosure controls and procedures for financial reporting, and management's assessment thereof.


Internal audit function & internal controls

  1. Review at least annually the global internal audit function, its charter, its performance, its organizational structure, the adequacy of its resources, the competence of its staff, its annual audit plan (including risk considerations and areas of audit emphasis) and any material changes thereto, and the other services it provides. Review the cooperation afforded, and the limitation or pressures, if any, imposed, by management.

  2. Review in advance any appointment of, or change in, the General Auditor. Review the performance evaluation of the General Auditor. Review the effectiveness and appropriateness of the reporting relationships for the General Auditor and the authority given to the General Auditor. Review the cooperation afforded to, and the limitations or pressures, if any, imposed on, the General Auditor by management.

  3. Obtain and review periodic reports on the internal audit department's significant recommendations to management and management's responses, particularly with respect to identified audit risk considerations.

  4. Obtain and review reports at least annually from management and the independent auditors assessing the effectiveness of the Corporation's internal control structure and procedures for financial reporting and including; (a) all significant deficiencies or material weaknesses in the design or operation of internal controls, (b) any fraud, whether or not material, that involves management or other employees having a significant role in the internal controls, (c) all significant changes to internal controls, including corrective actions, since the last report to the Committee.

  5. Review the Corporation's computerized information systems, applications and related controls, including security and contingency plans.


Other oversight

  1. Meet at least annually with the Chief Financial Officer, Controller, General Auditor, the Chief Compliance Officer and the independent auditor in separate private sessions.

  2. Discuss with the independent auditor its annual review of the work of Internal Audit with respect to executive officers' and directors' expense accounts and perquisites.

  3. Review with the Corporation's General Counsel (a) any legal matters that may have a material impact on the financial statements, and (b) the Corporation's compliance with legal and regulatory requirements with respect to financial reporting and disclosure.

  4. Review any appointment of, or change in, the Chief Compliance Officer. Review the performance evaluation of the Chief Compliance Officer. Review the effectiveness and appropriateness of the reporting relationships for the Chief Compliance Officer. Review the cooperation afforded to, and the limitations or pressures, if any, imposed on, the Chief Compliance Officer by management.

  5. Review referrals, investigations, findings and resolutions with regard to alleged violations of the Corporation's Standards of Business Integrity. Review processes and results for certification of employees' understanding of, and compliance with, the Standards of Business Integrity.

  6. To the extent not otherwise reviewed by the Board or its other Committees, (1) review with the General Counsel any significant litigation, investigations, proceedings or actions involving the Corporation or its affiliates, and (2) review with the Chief Compliance Officer and the General Counsel the Corporation's key compliance risks and its compliance program, including that program's design, implementation and effectiveness.

  7. Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal controls and auditing matters.

  8. Establish procedures for the confidential, anonymous submission by the Corporation's employees of concerns regarding questionable accounting or auditing matters.

  9. To the extent not otherwise reviewed by the Board or its other Committees, review and discuss guidelines and policies by which the Corporation undertakes risk assessment and risk management.

  10. Review the Corporation's tax planning efforts, taxing authority developments, pending audits, and the adequacy of tax reserves.

  11. Review periodically the Limits of Authority of the Chief Executive Officer and, in consultation with other relevant Committees as necessary, recommend to the Board any changes thereto.


Committee reports & assessments

  1. Prepare the report required by the rules of the Securities and Exchange Commission to be included in the Corporation's annual proxy statement and review sections of that proxy statement related to the Committee and the independent auditor.

  2. Review and reassess the adequacy of this Charter annually and submit any changes to the Board for approval.

  3. Conduct an evaluation of the Committee's performance at least annually.

The Audit Committee shall meet at least three times a year. The Committee Chairman shall have the authority to call a special meeting of the Committee whenever s/he deems such meeting necessary or desirable.

The Chairman shall regularly make a report to the Board regarding the Committee's activities.

The Committee shall have the authority to designate, and delegate duties to, such standing and ad-hoc sub-committees as it deems necessary or desirable.

A majority of the members of the Committee shall constitute a quorum for the transaction of business, subject to the provisions of Article II, Section 6 of the Corporation's by-laws regarding the appointment of a substitute director to act in the place of any absent or disqualified Committee member.

The vote of a majority of the members and substitute members present at any meeting at which a quorum is present shall be the act of the Committee.

There shall be free and confidential access at any time to the Audit Committee by the independent auditor, the Controller, the General Auditor, the Chief Compliance Officer, the General Counsel and the management of the Corporation, and by the Audit Committee to those individuals.

The Audit Committee shall have the sole authority to retain, and approve the fees and other retention terms of, special legal, accounting or other advisors, as it deems necessary.

While the Audit Committee has the responsibility and authority set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Corporation's financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditor. Nor is it the duty of the Audit Committee to conduct investigations, or to assure compliance with laws and regulations.