Amended and Restated Charter
The Audit Committee is the principal agent of the Board of Directors in overseeing the Company's accounting and financial reporting processes and audits of the Company's financial statements and internal controls, including:
- Assisting in the Board's oversight of the (i) the integrity of the Company's financial statements, (ii) the Company's compliance with ethical, legal and regulatory requirements (iii) the Company's independent accountants' qualifications and independence, and (iv) the performance of the Company's independent accountants and internal audit function; and
- Preparing the report required to be prepared by the Committee pursuant to the rules of the Securities and Exchange Commission for inclusion in the Company's proxy statement.
The Committee's responsibility is oversight, and it recognizes that the Company's management is responsible for preparing the Company's financial statements. Additionally, the Committee recognizes that financial management (including the Internal Audit staff), as well as the independent accountants, have more knowledge and more detailed information about the Company than do the members of the Committee; consequently, in carrying out its oversight responsibilities the Committee is not providing any expert or special assurance as to the Company's financial statements or any professional certification as to the independent accountants' work.
The membership of the Committee shall consist of at least three members of the Board of Directors, one of whom shall serve as Chair of the Committee. The Committee shall be comprised solely of members who are independent Directors as determined by the Board under the standards set forth in the Board's Corporate Governance Guidelines. No member of the Committee may receive any compensation, consulting, advisory or other fee from the Company, other than Board compensation, as determined in accordance with applicable Securities and Exchange Commission (SEC) and New York Stock Exchange (NYSE) rules. Members serving on the Audit Committee are limited to serving on two other audit committees of public companies, unless the Board of Directors evaluates and determines that these other commitments would not impair his or her effective service to the Company. In accordance with NYSE and SEC rules, all members shall be "financially literate" and at least one member shall be an "audit committee financial expert" with "accounting or related financial management expertise."
Primary Committee Responsibilities
- Review and discuss with management and the Company's independent accountants the annual audited financial statements and quarterly unaudited financial statements, including disclosures under Management's Discussion and Analysis of Financial Condition and Results of Operations, prior to the filing of the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q with the SEC.
- Direct the independent accountants to review before filing with the SEC the Company's interim financial statements included in the Quarterly Reports on Form 10-Q, using applicable professional standards and procedures for conducting such review.
- Discuss with management and the independent accountants (1) all critical accounting policies and practices used, (2) any significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including analyses of the effects of alternative accounting methods under GAAP that have been discussed with management and the treatment preferred by the independent accountants, (3) the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company's financial statements, and (4) any other reports required by law to be delivered by the independent accountants, including any management letter or schedule of unadjusted differences.
- Review on a regular basis with the Company's independent accountants any problems or difficulties encountered by the independent accountants in the course of any audit work, including management's response with respect thereto, any restrictions on the scope of the independent accountants' activities or on access to requested information, and any significant disagreements between management. The Committee will resolve any disagreements between management and the independent accountants regarding financial reporting.
Review earnings press releases, as well as financial information and earnings guidance provided by the Company to analysts and rating agencies prior to public disclosure. Such discussions may be general (consisting of discussing the types of information to be disclosed and the types of presentations to be made), and each earnings release or each instance in which the Company provides earnings guidance need not be discussed in advance.
- Be directly responsible for the appointment, compensation and oversight of the Company's independent accountants and has the sole authority to retain or terminate. The independent accountants shall report directly to the Committee.
- Review and, in its sole discretion, approve in advance the engagement of the independent accountants on an annual basis, including the proposed fees, as well as all audit and non-audit engagements and relationships between the Company and the independent accountants.
- Pre-approve all auditing and non-auditing services provided to the Company by its independent accountants, to the extent required by applicable law. The Committee may delegate the authority to grant pre-approval of auditing or permitted non-audit services to one or more members of the Committee. Any pre-approvals granted by such Committee member(s) will be presented to the full Committee at its next regularly scheduled meeting for ratification.
At least annually, obtain and review a report by the Company's independent accountants describing (1) the firm's internal quality-control procedures, (2) any material issues raised by the most recent internal quality-control review (or peer review) of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, regarding one or more independent audits carried out by the firm, and any steps taken to deal with any such issues, and (3) all relationships between the independent accountants and the Company. Establish and maintain a policy regarding the Company's hiring of individuals employed or formerly employed by the Company's independent accountants.
- Review the annual audit plan of the independent accountants, including the scope of audit activities, and monitor the audits' progress and results.
- Review with the independent accountants the results of the annual audits and obtain assurance from the independent accountants that the audits were conducted in a manner consistent with Section 10A of the Securities Exchange Act of 1934.
Discuss with the Company's independent accountants the matters required to be discussed by PCAOB AU 380.
Internal Controls and Risk Assessment
- Review annually the charter, structure, resources, budget, audit scope and plan of the internal auditors and compliance with the Institute of Internal Auditor's Standards for Professional Practice of Internal Auditing.
- Review with the independent accountants, the internal auditors, and management as appropriate the adequacy of internal controls and the company's financial accounting and reporting processes, which shall include a review of major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection and application of accounting principles and major issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of identified deficiencies.
- Review management's report assessing the adequacy and effectiveness of the Company's internal controls prior to the inclusion of such report in the Company's Annual Report on Form 10-K.
- Review with management and independent counsel, accountants or advisors, as appropriate, the status of any legal and regulatory matters that may have a material impact on the Company's financial statements, including compliance issues, threatened, pending, or ongoing litigation and outstanding matters with regulatory agencies.
- Discuss with management the Company's guidelines and policies regarding financial and enterprise risk management and risk appetite including major risk exposures and the steps management has taken to monitor and control such exposures.
Establish procedures for processing and addressing complaints regarding accounting, internal controls, or auditing matters, and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.
Ethics and Compliance Program Oversight
- Review, approve and monitor the Company's Code of Conduct, which includes the code of ethics for its senior financial officers.
Oversee the Company's program for monitoring compliance with laws and regulations and the Company's ethical standards and receive reports on significant ethics and compliance investigations or matters.
- Report at the next meeting of the Board of Directors, summarizing all significant items discussed at any Audit Committee meeting and describing all actions taken.
- Review and approve the Committee report and any other audit committee disclosure required by the SEC to be included in the Company's proxy statement.
- Receive periodic reports from management and the Company's independent accountants to assess the impact on the Company's significant accounting or financial reporting developments that may have a bearing on the Company.
Receive periodic reports from the internal auditors on findings of fraud as well as significant findings regarding the design and/or operation of internal controls as well as management responses. Internal Audit shall also report any difficulties encountered in the course of its audits, such as any restrictions on the scope of its work or access to required information.
- Meet separately in private session periodically with (1) Vice President, Enterprise Risk and Assurance Services, (2) the independent accountants, (3) the E&C Officer for the Company, and (4) management.
- Perform such other oversight functions that from time to time may be assigned to it by the Board of Directors.
- Conduct or authorize investigations into or studies of any matters within its scope of responsibilities and retain independent counsel, accountants or other professionals as necessary to assist in the conduct of any investigations.
- Engage, set the compensation of and, where appropriate, replace independent counsel and other advisors as it deems necessary to carry out its duties. The Company shall provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to its independent accountants for the purpose of rendering or issuing an audit report and to any advisors employed by the Audit Committee.
- Review and reassess the adequacy of the Audit Committee charter periodically.
- Annually evaluate the performance of the Committee.
The Audit Committee shall hold meetings at least four times each year and at any additional time as the Committee Chair or Teradata's Chief Financial Officer deems necessary. The meetings will generally be held in January, April, July and October. The Committee may request that members of management and/or representatives of the independent accountants be present as needed in order to execute the Committee's primary responsibilities. At least quarterly, the Committee will meet in separate executive sessions with management, independent accountants and the Vice President, Enterprise Risk and Assurance Services regarding the internal audit function. The Committee may also meet periodically as needed in executive sessions with other members of management such as the General Counsel or other persons as determined by the Committee.
Amended and Restated: January 31, 2012