REPORT OF THE AUDIT REVIEW COMMITTEE
The Audit Review Committee (the Committee) operates under a written charter adopted and approved by the Board (the Charter). The Charter, which defines the functions and responsibilities of the Committee, is reviewed annually. A link to the Committees Charter can be found on
www.lydall.com
. The Committee has determined that its Charter and practices are consistent with the listing standards of the NYSE and the provisions of the Sarbanes-Oxley Act of 2002.
During 2018, all Directors who served on the Committee were independent for purposes of the NYSE rules and Section 10A(m)(3) of the Exchange Act. The Board has determined that none of the Committee members has a relationship with the Company that may interfere with his/her independence from the Company and its management, and that each member is an audit committee financial expert as defined by the SEC.
Periodically, the Committee meets with management to consider the adequacy of the Companys internal controls and the objectivity and appropriateness of its financial reporting. The Committee also discusses these matters with PwC, the Companys independent auditors, appropriate Company financial personnel, and internal auditors, both separately and jointly. Independent and internal auditors of the Company have unrestricted access to the Committee.
Management has primary responsibility for the Companys financial statements and the overall reporting process, including the Companys system of internal controls. The independent auditors audit the annual financial statements prepared by management, express an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of the Company in conformity with generally accepted accounting principles in the United States (U.S. GAAP), and discuss with the Committee the Companys significant accounting policies, accounting estimates and
management judgments reflected in the financial statements, audit adjustments arising from the audit, and other matters in accordance with Auditing Standard No. 1301 (Communications with Audit Committees) as adopted by the Public Company Accounting Oversight Board (PCAOB).
The Committee reviewed the Companys audited financial statements for the fiscal year ended December 31, 2018, and met with both management and PwC to discuss those financial statements. Management has represented to the Committee that the financial statements were prepared in accordance with U.S. GAAP. PwC has reported to the Committee that such financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the Company in accordance with U.S. GAAP.
At each regularly scheduled Committee meeting during 2018, the Committee monitored and discussed with management and PwC the status of the Companys compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The Committee also reviewed and discussed with PwC and management their reports and attestations on internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
The Committee annually reviews PwCs independence and performance in connection with the determination to retain PwC. PwC has provided to the Committee the written disclosures and the letter required by PCAOBs Ethics and Independence Rule 3526 (Communication with Audit Committees Concerning Independence), and the Committee discussed and confirmed with PwC their independence. As a result of their evaluation, the Committee has concluded that PwC has the ability to provide the necessary expertise to audit the Companys businesses on a global basis, and the Committee approved the appointment of PwC as Lydalls
independent registered public accounting firm for 2019.
Based on the foregoing, the Committee has recommended to the Board, and the Board approved, that the Companys audited financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018.
David G. Bills
Kathleen Burdett, Chair
Matthew T. Farrell
Suzanne Hammett
S. Carl Soderstrom, Jr.