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TSR, INC. AUDIT COMMITTEE CHARTER

RESOLVED, that the membership of the Audit Committee of the Board of Directors (the “Audit Committee”) shall consist of at least three members of the Board of Directors, who shall meet the independence and experience requirements contained in the NASDAQ listing standards, including the ability to read and understand fundamental financial statements, and shall serve at the pleasure of the Board of Directors. At least one member of the Audit Committee shall in the judgment of the Board of Directors be an “Audit Committee financial expert” under rules and regulations of the Securities and Exchange Commissions.

RESOLVED, that while the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct the audits or to determine that the Company’s financial statements are complete, accurate and in accordance with generally accepted accounting principles (“GAAP”). This is the responsibility of management and the Company’s independent auditors.

RESOLVED, that the charter and powers of the Audit Committee shall be:

Assisting the Board of Directors in the oversight of the maintenance by management of the reliability and integrity of the accounting policies and financial reporting and disclosure practices of the Company;
Assisting the Board of Directors in the oversight of the establishment and maintenance by management of processes to assure that an adequate system of internal control is functioning within the Company;
Assisting the Board of Directors in the oversight of the establishment and maintenance by management of processes to assure compliance by the Company with all applicable laws, regulations and Company policies;
Providing an independent, direct communication between the Company’s independent auditors and the Board of Directors; and
Overseeing the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company.

RESOLVED, that the Audit Committee shall have the following specific powers and duties:

Holding such regular meetings as may be necessary and such special meetings as may be called by the Chair of the Audit Committee or at the request of the independent auditor;
Having sole authority and direct responsibility for the selection, appointment, retention, compensation, oversight and termination of the independent auditors (including resolution of disagreements between management and the auditors) for the purpose of preparing and issuing an audit report or related work;
Determining the compensation for the independent auditor for the purpose of rendering an audit report, appropriate funding for the payment of which shall be provided by the Company;
Pre-approving all audit services and permissible non-audit services to be performed by the Company’s independent auditor (subject to the de minimus exception for non-audit services described in Section 10A of the Exchange Act that are approved by the Audit Committee prior to completion of the audit); provided that the Audit Committee is authorized to delegate pre-approval of audit and non-audit services to one or more members of the Audit Committee; and such member(s) shall report to the full Audit Committee at each scheduled meeting whether such member(s) pre-approved any audit or non-audit services;
Ensuring independence of the independent auditor by obtaining from the independent auditor a formal written statement delineating all relationships between the independent auditor and the Company and confirming the auditor firm’s independence, as required by Independence Standards Board Standard No. 1;
Actively engaging in a dialogue with the independent auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditor and for recommending that the Board of Directors take appropriate action to oversee the independence of the outside auditor;
Discussing with the Company’s independent auditor the matters described in Statement on Auditing Standards No. 61, as amended;
Reviewing and discussing with management and the independent auditor, any report or attestation from the independent auditors regarding: (i) all critical accounting policies and practices to be used, (ii) all alternative treatments of financial information within GAAP for policies and practices related to material items that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors, and (iii) other material written communications between the independent auditors and management, such as any management representation letter or schedule of unadjusted differences;
Conferring with the independent auditor concerning the scope of its examinations of the books and records of the Company and its subsidiaries; reviewing and approving the independent auditor’s annual engagement letter; and authorizing the independent auditor to perform such supplemental reviews or audits as the Audit Committee may deem desirable;
Reviewing with management and the independent auditor significant financial risk exposures, audit activities and significant audit findings;
Reviewing and discussing with the independent auditor and management (a) the adequacy and effectiveness of the Company’s internal controls (including any significant deficiencies and significant changes in internal controls reported to the Committee by the independent auditor or management); and (b) the adequacy and effectiveness of the Company’s disclosures controls and procedures, and management reports thereon;
Reviewing with management and the independent auditor the Company’s audited annual financial statements, quarterly financial statements and the independent auditor’s opinion and reviews rendered with respect to such financial statements;
Reviewing with management and the independent auditor the Company’s earnings press releases;
Obtaining from the independent auditor its recommendations (if any) regarding the improvement of internal controls and other matters relating to the accounting procedures and the books and records of the Company and its subsidiaries;
At least annually, reviewing with management and the independent auditor major issues regarding accounting principles and financial statement presentations, including any material changes in the selection or application of the principles followed in prior years and any items required to be communicated by the independent auditor in accordance with AICPA Statement of Auditing Standards;
Reviewing the programs and policies of the Company designed to ensure compliance with applicable laws and regulations and monitoring the results of these compliance efforts;
Reviewing and approving all related-party transactions;
Engaging independent counsel and other advisors, as the Audit Committee determines is necessary to carry out its duties and responsibilities, appropriate funding for the payment of which shall be provided by the Company in addition to funding for ordinary administrative expenses that are necessary for the Audit Committee to carry out its duties;
Establishing procedures for the receipt, retention and treatment of complaints about accounting, internal accounting controls or auditing matters, including procedures for the confidential and anonymous submission of employee concerns about questionable accounting or auditing practices;
Adopting a Code of Ethics for all employees, officers and directors of the Company; providing for and reviewing prompt disclosure to the public of any change in, or waiver of such Code of Ethics; and reviewing conduct alleged to be in violation of such Code of Ethics;
Establishing policies for the hiring of employees and former employees of the independent auditor;
Reporting to shareholders in the Company’s annual proxy statement on those matters required by the Securities and Exchange Commission;
Reporting through its Chair to the Board of Directors following the meetings of the Audit Committee;
Reviewing the powers of the Committee annually and reporting and making recommendations to the Board of Directors on these responsibilities;
Conducting or authorizing investigations into any matters within the Audit Committee’s scope of responsibilities;
Considering such other matters in relation to the financial affairs of the Company and its accounts, and in relation to the external audit of the Company as the Audit Committee may, in its discretion, determine to be advisable; and
Reviewing and reassessing the adequacy of this Charter at least annually.

APPROVED BY THE COMMITTEE: OCTOBER 10, 2008