The Audit Committee reviews the company´s financial reporting process and the integrity of its financial statements, Baxter´s system of internal controls, the internal and external audit process and the process for monitoring compliance with laws and regulations. Common recurring activities of the Audit Committee in carrying out its oversight function include:

• reviewing the adequacy and effectiveness of Baxter´s internal control over financial reporting with management and the independent registered public accounting firm and internal auditors and reviewing with management Baxter´s disclosure controls and procedures;
• retaining and evaluating the qualifications, independence and performance of the independent registered public accounting firm;
• approving audit and permissible non-audit engagements to be undertaken by the independent registered public accounting firm through the pre-approval policies and procedures adopted by the committee;
• reviewing the scope of the annual internal and external audit;
• reviewing the company´s consolidated financial statements including Management´s Discussion and Analysis of Financial Condition and Results of Operations and discussing with the independent registered public accounting firm the quality and acceptability of accounting principles used to prepare the consolidated financial statements;
• reviewing and discussing earnings and press releases prior to issuance of the releases (conducted by the Audit Committee Chairman);
• holding separate executive sessions with the internal auditor, the independent registered public accounting firm and management; and
• discussing guidelines and policies governing the process by which Baxter assesses and manages risk.

The Audit Committee also establishes Baxter´s policy with respect to the hiring of employees and former employees of its independent auditor. The current policy is that Baxter will not hire any current or previous employees of its independent registered public accounting firm who are or have, within the last two years, worked on the company´s audit.

The Audit Committee met 10 times in 2007. The current members of the Audit Committee are Blake E. Devitt (Chair), Gail D. Fosler, Thomas T. Stallkamp, K. J. Storm and Albert P. L. Stroucken.