Audit Committee Charter
The Audit Committee ("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, and (iii) the qualifications and performance of the Company’s 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, who are not employees of the Company; 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 be appointed by the Board to 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 and the New York Stock Exchange Listing Standards. The members shall be appointed or removed by a majority of the Board of Directors. 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 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, and recommend to the Board that the audited financial statements be included in the Company’s Form 10-K filing.
- 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, retention and oversight of an independent registered public accounting firm to act as the Company’s independent accountants with the sole authority to retain or terminate such firm. 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.
- Appoint, retain, compensate, oversee and terminate, if necessary, any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for Teradata Corporation.
- Pre-approve all auditing and non-auditing services provided to the Company by its independent accountants and, if necessary, any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for Teradata Corporation or its subsidiaries, 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 or any of its subsidiaries.
- At least annually, evaluate the qualifications, performance and independence of the Company’s independent accountants, including an evaluation of the lead audit partner; and assure that a process is in place regarding the regular rotation of the lead audit partner at the Company’s independent accountants and consider rotation of the accounting firm serving as the Company’s independent accountants.
- 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 under applicable accounting and auditing professional standards or applicable regulations, including auditing standards adopted by the Public Company Accounting Oversight Board which shall include PCAOB Auditing Standards Nos. 1301 (Communications with Audit Committees) and 2410 (Related Parties).
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. Oversee the selection and replacement of the lead internal auditor with responsibility for the internal audit function of the Company who shall report administratively to the Company’s Chief Finance Officer and functionally to the Committee.
- Review with the independent accountants, the internal auditors, and management as appropriate, the internal audit scope and plan, the results of internal audit activities, and 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.
- Review and discuss with management the Company’s guidelines and policies regarding financial and enterprise risk management and risk appetite including major risk exposures such as, for example, financial, cash investments, cyber security, IT, data privacy, business continuity, and legal and regulatory risks, and regularly discuss management’s plans related to these areas and the steps management has taken to monitor and control such exposures, except as to those risks for which oversight has been assigned to other committees of the Board or retained by the Board.
- Establish procedures for processing and addressing the receipt and handling of 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 managements’ monitoring and enforcement of 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, or sooner if appropriate, summarizing any issues that arise relating to the Committee’s oversight responsibilities and all significant items discussed at any Committee meeting and describing all actions taken, and make recommendations to the Board as appropriate.
- 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. Review reports on the results of significant findings from audits and special projects conducted by the internal auditors as appropriate. 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.
Other Responsibilities and Authority
- 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 Committee, for payment of compensation to its independent accountants for the purpose of rendering or issuing an audit report, to any advisors employed by the Committee and ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
- Review and reassess the adequacy of the Committee charter periodically and submit any recommend changes to the Board for approval.
- Annually evaluate the performance of the Committee. The Committee shall conduct this evaluation in such manner as it deems appropriate.
- The Committee may request that members of management and/or representatives of the independent accountants be present at its meetings as it may deem desirable and appropriate. The Committee shall have all of the resources and authority to discharge its duties and responsibilities.
Structure and Operations
- The Committee may form and delegate authority to one or more subcommittees (including a subcommittee consisting of a single member), as it deems appropriate in its sole discretion from time to time under the circumstances. Any decision of a subcommittee to pre-approve audit and permitted non-audit and tax services and take any other actions shall be presented to the full Committee at its next regularly scheduled meeting.
- The 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 November/December.
- At least quarterly, the Committee will have the opportunity to meet in separate private sessions with management, the E&C Officer of the Company, the independent accountants and the lead internal auditor with responsibility for the internal audit function. The Committee may also meet periodically as needed in private sessions with other members of management such as the General Counsel or other persons as determined by the Committee.
- A majority of the Committee members shall constitute a quorum, present in person or by telephone or through other telecommunications.
Amended and Restated: July 19, 2018