The Audit and Program/Quality Committee of the Hazelden Board of Trustees shall assist the Board in monitoring (1) the integrity of the financial statements of Hazelden; (2) the independent auditor's qualifications and independence; (3) the performance of the internal audit function and the independent auditors; (4) overall risk assessment of the organization and compliance by Hazelden with legal and regulatory requirements (including safety), its code of ethics and related policies; and (5) the quality and effectiveness of the treatment programs and related services provided by the corporation for the benefit of people served by Hazelden.

Membership

The Audit and Program/Quality Committee shall consist of no fewer than three members. All members shall have no relationship with Hazelden whereby they are compensated; and a substantial majority of the Committee must be financially literate or become financially literate, as determined by the Board, within a reasonable period of time after his or her appointment. In addition, at least one member must have accounting or financial management expertise as determined by the Board.

Meetings

The Audit and Program/Quality Committee shall meet at least four times each year. The Audit and Program/Quality Committee shall meet periodically in separate executive sessions with management, the internal auditor and the independent auditor, and have such other direct and independent interaction with such persons from time to time as the members of the Audit and Program/Quality Committee deem appropriate.

Duties

1. Review the adequacy and effectiveness of Hazelden's accounting, financial and other controls, including Hazelden's systems to monitor and manage business operational risks, including patient safety and regulatory matters and legal and ethical compliance programs.

2. Review and monitor the quality and effectiveness of treatment services and related programs in providing patient care and customer service.

3. Review and monitor the performance of the organization in developing and implementing quality improvement initiatives.

4. Review and monitor accreditation status of the organization and recommend credentialing of professionals providing services to Hazelden to the full Board for approval.

5. Review the scope and approach of the audit proposed by the independent auditor.

6. Conduct a post-audit review of the financial statements and the audit findings, including any difficulties encountered in the course of the audit, any restrictions on the scope of activities or access to requested information, any significant disagreements with management, and any significant suggestions for improvement made by the independent auditor.

7. Review performance and fee arrangements of the independent auditor, including all relationships between the independent auditor and Hazelden. Recommend appointment (or reappointment) of the independent auditor.

8. Review and approve the internal auditor's annual audit plan and review the final internal audit reports.

9. Monitor compliance with Hazelden's code of conduct and conflict of interest policy.

10. Review with the Chief Legal Officer any legal matters which may have a significant impact on Hazelden's financial statements or Hazelden's compliance policies or internal controls.

11. Review expense accounts and executive perquisites of Hazelden's senior officers and all Trustees.

12. Review and update this Charter at least annually, and recommend changes, if any, to the Board of Trustees.

13. If necessary, institute special investigations and, if appropriate, hire special counsel or experts to assist.

14. Perform other oversight functions as requested by the Board.

While the Audit and Program/Quality Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit and Program/Quality Committee to plan or conduct audits, to determine that Hazelden's financial statements are complete and accurate or are in accordance with generally accepted accounting principles and applicable laws and regulations. These duties are the responsibility of management and the independent auditor.

Administration

The Chair and Vice Chair of the Committee shall be designated by the Board of Trustees, and at least one Vice Chair will have expertise or background in either accounting or financial management and one Vice Chair will have background, experience or clinical training in addiction treatment programs, or other clinical, medical or healthcare background, experience or clinical training.

The Committee's management staff will be designated by the President and Chief Executive Officer, and will include senior level management employees in the areas of auditing, law and clinical operations.