EX-99 5 auditpolicy.txt AUDIT POLICY John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Policy Statement December 2003 Table of Contents ----------------- Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section I - Policy Purpose and Applicability Section II - Policy Summary Section III - Policy Detail John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section I - Policy Purpose and Applicability John Hancock Funds recognize the importance of maintaining the independence of our outside auditors. We believe that maintaining independence is a shared responsibility involving management, the audit committee and the independent auditors. The Funds recognize that the independent audit firm: 1) possesses knowledge of the Funds, 2) is able to incorporate certain services into the scope of its audit, thereby avoiding redundant work, cost and disruption of Fund personnel and processes, and 3) has expertise that has value to the Funds. As a result, there are situations where it is desirable to utilize the audit firm for services in addition to the annual audit. Consequently, this policy, which is intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and procedures to be followed by the Funds when retaining the independent audit firm to perform audit, audit-related tax and other services under those circumstances, while also maintaining independence. Approval of a service in accordance with these policies for a Fund shall also constitute approval for any other Fund whose pre-approval is required pursuant to Rule 210.2-01(c)(7)(ii). In addition to the procedures set forth in this policy, any non-audit services that may be provided consistently with Rule 210.2-01 may be approved by the Audit Committee itself and any pre-approval that may be waived in accordance with Rule 210.2-01(c)(7)(i)(C) is hereby waived. John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section II - Policy Summary Four categories of services have been defined by the Funds within the policy to provide a consistent, efficient and practical framework for assessment, decision-making, approval and reporting. Following is a summary of the key provisions of the policy (see Section III for the Policy Detail): I. Audit Services - specified services directly related to performing the independent audit of the Funds. o Consistent with current practice, management will submit to the Audit Committee for pre-approval the scope and estimated fees associated with the current year audit at the appropriate Audit Committee meeting. II. Audit-Related Services - specified services that are related extensions of audit services and are logically performed by the auditors. o Individual project/services included on the pre-approved list (see Section III) are pre-approved in an amount per year/per Fund up to $50,000. o Additional services exceeding the specified pre-approved limits, or adding service types to the pre-approved list, require specific Audit Committee approval. III. Tax Services - specified services related to tax matters. Using PwC & D&T for these matters creates efficiencies, minimizes disruption, or preserves confidentiality. o Individual project/service included on the pre-approved list are pre-approved in an amount per year/per Fund up to $50,000 for individual projects. o Additional services exceeding the specified pre-approved limits, or adding service types to the pre-approved list, requires specific Audit Committee approval. IV. Other Services - (a) "Synergistic": specified services for which utilizing PwC and D&T creates efficiencies, minimizes disruption, or preserves confidentiality, or (b) "Unique Qualifications": specified services for which management has determined that PwC and D&T possesses unique or superior qualifications to provide these services. o Individual project/service included on the pre-approved list) are pre-approved in an amount per year/per Fund up to $10,000 for individual projects. o Additional services exceeding the specified pre-approved limits, or adding service types to the pre-approved list, requires specific Audit Committee approval. "Restricted" Non-Audit Services - includes nine specific restricted services identified in Rule 210.2-01(c)(4). o These services may not be performed by PwC and D&T, with the exception of the certain services (see prohibited services on page 7) that may be permitted if they would not be subject to audit at the Fund's level by the firm providing the service. John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section III - Policy Detail
------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Pre-Approved Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy ------------------------------------------------------------------------------------------------------------------------------------ I. Audit Services Services that are directly o Accounting research o "One-time" pre-approval o A summary of all such related to performing the assistance (e.g. new for the audit period for services and related independent audit of the products, securities, all pre-approved fees reported at each Funds and investment specific service regularly scheduled strategies) subcategories Audit Committee meeting. o SEC consultation, registration statements, and reporting o Tax accrual related matters (e.g. review of tax qualifications and distributions) o Implementation of new accounting standards o Compliance letters (e.g. rating agency letters) o Regulatory reviews and assistance regarding financial matters o Semi-annual reviews (if requested) o Comfort letters for closed end offerings ------------------------------------------------------------------------------------------------------------------------------------ II. Audit-Related Services which are not o AICPA attest and o "One-time" pre-approval o A summary of all such Services prohibited under Rule agreed-upon procedures for the fund fiscal year services and related 210.2-01(C)(4) (the (e.g. fund mergers, within a specified fees (including "Rule")and are related liquidation procedures dollar limit of $50,000 comparison to specified extensions of the audit and related comfort for all pre-approved dollar limits) reported services support the letters and review of specific service at each regularly audit, or use the preferred Shares' Basic subcategories scheduled Audit knowledge/expertise gained Maintenance Report) Committee meeting. from the audit procedures o Specific approval is as a foundation to o Technology control needed to exceed the complete the project. In assessments pre-approved dollar most cases, if the limit for these services Audit-Related Services are o Financial reporting (see general Audit not performed by the Audit control assessments Committee approval firm, the scope of the policy below for details Audit Services would o Enterprise security on obtaining specific likely increase. The architecture assessment approvals) Services are typically well-defined and governed o Attestation related to o Specific approval is by accounting professional compliance under needed to utilize PwC & standards (AICPA, SEC, (AIMR-PPS) standards. D&T for Audit-Related etc.) Services not denoted as "pre-approved" to the left, or to add a specific service subcategory as "pre-approved" ------------------------------------------------------------------------------------------------------------------------------------
Section III - Policy Detail, continued
------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Pre-Approved Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy ------------------------------------------------------------------------------------------------------------------------------------ III. Tax Services Services which are not o Tax planning and support o "One-time" pre-approval o A summary of all such prohibited by the Rule, if for the fund fiscal year services and related fund management determines o Tax controversy within a specified fees (including that utilizing PwC and D&T assistance dollar limit of $50,000 comparison to specified to provide these services for individual projects dollar limits) reported creates significant o Tax compliance, tax at each regularly synergy in the form of returns, excise tax o Specific approval is scheduled Audit efficiency, minimized returns and support needed to exceed the Committee meeting disruption, or the ability pre-approved dollar to maintain a desired o Tax opinions limits for these level of confidentiality. services (see general o Tax research assistance Audit Committee approval (e.g. new products, policy below for details securities and on obtaining specific investment strategies) approvals) o Withholding tax filing o Specific approval is needed to utilize PwC & D&T for tax services not denoted as pre-approved to the left, or to add a specific service subcategory as "pre-approved" ------------------------------------------------------------------------------------------------------------------------------------
Section III - Policy Detail, continued
------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Pre-Approved Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy ------------------------------------------------------------------------------------------------------------------------------------ IV. Other Services Services which are not o Business Risk Management o "One-time" pre-approval o A summary of all such prohibited by the Rule, if support for the fund fiscal year services and related a. Synergistic, Fund management determines within a specified fees (including unique that utilizing PwC or D&T o Other control and dollar limit ($10,000 comparison to specified qualifications to provide these services regulatory compliance for individual projects dollar limits) reported creates significant projects for all pre-approved at each regularly synergy in the form of specific service scheduled Audit efficiency, minimized subcategories Committee meeting disruption, the ability to maintain a desired level o Specific approval is of confidentiality, or needed to exceed the where PwC or D&T posses pre-approved dollar unique or superior limits for these qualifications to provide services (see general these services, resulting Audit Committee approval in superior value and policy below for details results for the Fund. on obtaining specific approvals) o Specific approval is needed to utilize PwC or D&T for "Synergistic" or "Unique Qualifications" Other Services not denoted as pre-approved to the left, or to add a specific service subcategory as "pre-approved" ------------------------------------------------------------------------------------------------------------------------------------
Section III - Policy Detail, continued
------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Prohibited Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy ------------------------------------------------------------------------------------------------------------------------------------ Prohibited Services which result in 1. Bookkeeping or other o These services are not o A summary of all Services the auditors losing services related to the to be performed with the services and related independence status under accounting records or exception of the (*) fees reported at each the Rule. financial statements of services (see regularly scheduled the audit client* subcategories 1 through Audit Committee meeting 5 on the left), that may will serve as continual 2. Financial information be permitted if they confirmation that has systems design and would not be subject to not provided any implementation* audit procedures at the restricted services. audit client (as defined 3. Appraisal or valuation in Rule 2-01(f)(4)) services, fairness* level by the firm opinions, or providing the service. contribution-in-kind reports 4. Actuarial services (i.e., setting actuarial reserves versus actuarial audit work)* 5. Internal audit outsourcing services* 6. Management functions or human resources 7. Broker or dealer, investment advisor, or investment banking services 8. Legal services and expert services unrelated to the audit 9. Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible ------------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- General Audit Committee Approval Policy: o Management will continue to evaluate all individual projects on a monthly basis, and all individual projects greater than $50,000 are evaluated and approved by the Fund's CFO prior to the engagement letter being signed and the project starting o For all projects, management and PwC and D&T will each make an assessment to determine that any proposed projects will not impair independence. o Potential services will be classified into the four non-restricted service categories and the "Approval of Audit, Audit-Related, Tax and Other Services" Policy above will be applied. Any services outside the specific pre-approved service subcategories set forth above must be specifically approved by the Audit Committee. o At each regularly scheduled Audit Committee meeting, the Audit Committee shall review a report summarizing the services by service category, including fees, provided by the Audit firm as set forth in the above policy. --------------------------------------------------------------------------------