Minutes of the Meetings of the Audit Committee of the Internet Society

A meeting of the Audit Committee of the Internet Society (ISOC) was held on December 19, 2007. The meeting was held by teleconference. In attendance were Glenn Ricart, ISOC’s Treasurer and Chairman of the Audit Committee, Patrik Fältström and Ted Hardie as members of the Audit Committee, and as invited guests Lynn St. Amour, ISOC’s President and CEO, and Greg Kapfer, ISOC’s Chief Financial Officer.

Dr. Ricart called the meeting to order and introduced all parties. As all members of the Audit Committee were present, a quorum was present for the meeting.

Audit Committee Charter Review

Dr. Ricart noted that the Audit Committee Charter calls upon the Committee to review the Charter at least annually. Dr. Ricart asked for any comments or changes appropriate for Committee consideration. Mr. Kapfer noted that the current Charter assigns certain responsibilities and duties to ISOC’s Director of Finance. Mr. Kapfer suggested that the Charter be amended and restated to delegate those responsibilities to the Chief Financial Officer, as a newly created position. Such an amendment requires the action of the Board of Trustees. Whereupon, Mr. Hardie presented the following resolution:

Resolution: Amendment of the Audit Committee Charter.

RESOLVED: The Audit Committee recommends that the Audit Committee Charter (the “Charter”) be amended and restated to delegate the responsibilities currently granted to the Director of Finance to ISOC’s Chief Financial Officer, and to submit this resolution to ISOC’s Board of Trustees for ratification at the Board’s next regularly scheduled meeting.

Mr. Fältström seconded and carried the motion, and the resolution passed unanimously.

Approval of Independent Auditors

Dr. Ricart then called for discussion regarding Management’s recommendation that the firm of Grant Thornton be appointed as ISOC’s independent auditors beginning with the audit of ISOC’s 2007 financial statements. Upon discussion, Mr. Fältström presented the following resolution:

Resolution: Appointment of Grant Thornton as ISOC’s Independent Auditors for 2007.

RESOLVED: The Audit Committee approves the appointment of Grant Thornton as ISOC’s Independent Auditors for 2007, including preparation and review of ISOC’s annual tax returns.

Mr. Hardie seconded and carried the motion, and the resolution passed unanimously.

Approval of Non-Audit Reviews by Grant Thornton

Dr. Ricart then noted that ISOC’s Management had requested that it be empowered to solicit proposals from the firm of Grant Thornton to perform certain non-audit reviews. Audit Committee approval is required for employment of Grant Thornton for non-audit functions, according to the Charter. Mr. Kapfer presented the scope of the intended reviews. Mr. Fältström asked Mr. Kapfer to confirm that he would obtain Audit Committee approval via email responses prior to proceeding with a specific engagement, to which Mr. Kapfer assented. Mr. Fältström presented the following resolution:

Resolution: Approve engagement of Grant Thornton for non-audit services.

RESOLVED: Subject to its review and approval of engagement proposals, the Audit Committee approves engagement of Grant Thornton to:

  1. review the internal controls surrounding the operation of its Geneva office; and
  2. review ISOC’s worldwide employment practices for local compliance and global tax implications

Mr. Hardie seconded and carried the motion, and the resolution passed unanimously.

Out-of-Policy Leave Accruals

Dr. Ricart called for any New Business. Mr. Kapfer informed the Committee that he had performed a review of leave time accrued by company personnel to determine if year-end leave would be within company policy. Mr. Kapfer noted that this topic was addressed by its former auditors, Gelman Rosenberg & Freedman, who recommended that the company monitor vacation balances. The policy states that, without approval, no more than one year’s leave be carried over from one calendar year to the next.

Three employees with out-of-policy balances at the beginning of 2007 will still exceed the policy threshold at the end of 2007. Mr. Kapfer presented to the Committee the out-of-policy balances.

Since this matter was the subject of a management letter comment, Mr. Kapfer asked that the Audit Committee make a recommendation to the Executive Committee with regard to the resolution of the 2007 balances. The next Executive Committee call is scheduled for January 21, 2008.

Ms. St.Amour recused herself from the discussion of this matter and left the meeting. Upon further discussion, Mr. Hardie presented the following resolution:

Resolution: Recommendation for resolution of out-of-policy leave balances.

RESOLVED: The Audit Committee recommends that the out-of-policy leave balances at the end of 2007 be extended until the Executive Committee reviews the balances and the ISOC leave policy; and

FURTHER RESOLVED: The Audit Committee recommends to the Executive Committee of the Board of Trustees that an extraordinary exception to the leave carry forward policy be approved to pay the out-of-policy accrued leave in full in lieu of actual leave time taken; and

FURTHER RESOLVED: The Audit Committee encourages Management to submit to the Executive Committee of the Board of Trustees a revised ISOC policy that will encourage that leave be taken within policy in the future and specify what should happen if such leave is not taken.

Mr. Fältström seconded and carried the motion, and the resolution passed unanimously.

Adjournment

Dr. Ricart then asked if there was any further business to be brought forward. There being no further business, Mr. Hardie moved that the meeting of the Audit Committee be adjourned. Mr. Fältström seconded. The motion was carried, and the meeting was adjourned.