exv10w3



 






Exhibit 10.3




USG Corporation




Audit Committee Pre-Approval Policy



The Audit Committee has adopted the following guidelines regarding the engagement of an independent
registered public accounting firm to perform audit and non-audit services for USG Corporation (the
“Corporation”).




STATEMENT OF PRINCIPLES



In accordance with Sections 201(a) and 202 of the Sarbanes-Oxley Act of 2002, the Audit Committee
pre-approves all audit and non-audit services performed by the independent auditors. The Audit
Committee will periodically review and authorize policies and procedures, including pre-approval
policies and procedures, for the Corporation to follow in engaging the independent auditors to
provide services to the Corporation.



When the Corporation seeks to engage the independent auditors to provide services not pre-approved
in the annual authorization, specific pre-approval of such services must be made by the Audit
Committee, or its Chair. Any pre-approval by the Chair must be presented to the Audit Committee at
its next regularly scheduled meeting. The independent auditors are not authorized to provide any
services that are prohibited by United States Securities and Exchange Commission (the “SEC”)
regulation, or any other applicable law or regulation. Additionally, the independent auditors are
not allowed to provide any service to the Corporation under a contingent fee arrangement.




AUDIT SERVICES



At its March meeting, the Audit Committee will review and approve the independent auditors’ plan
for the year outlining the scope of audit services (including statutory audit engagements as
required under local country laws) to be performed for the year, the proposed fees and the related
engagement letter. During the remainder of the year, the Audit Committee will approve, if
necessary, any changes in terms, conditions and fees resulting from changes in audit scope, the
Corporation’s structure or other matters.



Audit services include the annual audits of the Corporation’s internal controls and consolidated
financial statements and quarterly reviews of the Corporation’s consolidated financial statements,
all in accordance with generally accepted auditing standards. Audit services also include statutory
audits of the Corporation’s subsidiaries as required by local country laws.



Audit services also may include services related to the issuance of comfort letters, consents, the
review of registration statements filed with the SEC, and the review of, or consultation related
to, non-ordinary transactions that may arise during the year. These other audit services may be
approved from-time-to-time by the Audit Committee in the same manner as the pre-approval of
non-audit services described below.




 









 








NON-AUDIT SERVICES



The Audit Committee supports the Corporation’s efforts to transition to service providers other
than the Corporation’s independent auditors except where that is not reasonably advisable. In
cases where management believes that the Corporation’s independent auditors should be used for
non-audit services, management will submit to the Audit Committee for approval annually at its
November meeting, a detailed list of particular non-audit services that it recommends the Audit
Committee engage the independent auditors to provide during the following calendar year, as well as
detailed backup documentation to the extent necessary to inform the Audit Committee of each of the
specific services proposed to be provided. Management and the independent auditors will each
confirm to the Audit Committee that each non-audit service on the list is permissible under
applicable legal requirements, including the SEC’s rules regarding auditor independence. In
addition to the list of planned non-audit services, a related budget for expenditures for each
non-audit service for the following calendar year will be provided. The budget for non-audit
services will reflect the Corporation’s policy that fees for non-audit work related to tax planning
and other services generally should not exceed the fees for audit, audit-related and tax compliance
services.



The Audit Committee will evaluate the non-audit services recommended by management and assess
whether the provision of such services is consistent with appropriate principles of auditor
independence and such other factors that the Audit Committee considers relevant, including the
principles that (1) the auditor cannot function in the role of management, (2) the auditor cannot
audit his or her own work and (3) the auditor cannot serve in an advocacy role for the Corporation.
Based on such evaluation, the Audit Committee will determine whether to approve each non-audit
service and the budget for each approved service.



Management is responsible for monitoring the non-audit services provided and the level of related
fees against the pre-approval authorization, and will report each actual service provided and a
comparison of actual versus pre-approved fees for such service to the Audit Committee on a periodic
basis and no less frequently than annually. The independent auditor also will monitor its actual
services and fees against the pre-approval authorization and advise management if it is reasonably
likely that the level of pre-approved fees for any particular service may need to be exceeded or if
it believes that a requested service is not consistent with the pre-approval authorization of the
Audit Committee. Any reasonably likely budget overrun, as well as any unresolved question
regarding whether a requested service has been pre-approved, shall be reported to the Audit
Committee, or its Chair, as promptly as is appropriate under the circumstances, and in any event,
no later than the next regularly scheduled Audit Committee meeting.



To ensure prompt handling of unexpected matters, the Audit Committee delegates to the Chair the
authority to amend or modify the list of approved non-audit services and related fees. The Chair
will report to the Audit Committee at its next meeting any approval so given.



Non-audit services include the following:




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Audit-Related Services — These include assurance and related services that are reasonably
related to the performance of the audit or review of the Corporation’s financial statements and
that are traditionally performed by the independent auditors. Audit-related services may include,
among other things, assistance related to the internal control reporting requirements prescribed
under Section 404 of the Sarbanes-Oxley Act of 2002, due diligence related to acquisitions, joint
ventures and dispositions, attest services that are not required by statute, and
consultations concerning financial accounting and reporting matters not related to the current-year
audit.



Tax Services — Tax services may include, but are not limited to, services such as
international tax compliance services, property tax services, expatriate tax services, domestic and
international tax planning and tax advice related to acquisitions, joint ventures and dispositions.
The Audit Committee will normally not permit the retention of the independent auditors in
connection with a transaction initially recommended by the independent auditors, the sole business
purpose of which may be tax avoidance and the tax treatment of which may not be supported in the
Internal Revenue Code and related regulations.



Other Services — The Audit Committee also may grant pre-approval to other permissible
non-audit services in situations that it considers appropriate.




PROHIBITED NON-AUDIT SERVICES



Non-audit service categories that are prohibited, including those listed under Section 201 of the
Sarbanes-Oxley Act of 2002 and Rule 2-01(c)(4) of Regulation S-X and further defined in the
regulations, are identified below:





	1.	 	Bookkeeping or Other Services Related to the Corporation’s Accounting Records or Financial
Statements
	 
	2.	 	Financial Information Systems Design and Implementation
	 
	3.	 	Appraisal or Valuation Services, Fairness Opinion or Contribution-in-Kind Reports
	 
	4.	 	Actuarial Services
	 
	5.	 	Internal Audit Outsourcing Services
	 
	6.	 	Managerial Functions
	 
	7.	 	Human Resources
	 
	8.	 	Broker-Dealer, Investment Advisor or Investment Banking Services
	 
	9.	 	Legal Services
	 
	10.	 	Expert Services
	 
	11.	 	Services related to marketing, planning or opining in favor of the tax treatment of a
confidential or “aggressive” transaction, including listed transactions




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	12.	 	Tax services to certain members of management who serve in financial reporting oversight
roles at the audit client or to the immediate family members of such individuals




The foregoing list is subject to the SEC’s rules and relevant interpretive guidance concerning the
precise definitions of these services and the potential applicability of exceptions to certain of
the prohibitions.





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