The document is a charter that outlines the purpose, composition, responsibilities, and meeting procedures of the Audit Committee of Cisco Systems' Board of Directors. The Audit Committee is responsible for overseeing Cisco's accounting and financial reporting processes, internal controls, and independent audits. Its key duties include reviewing Cisco's financial statements and disclosures, internal controls, independent auditor selection and compensation, and compliance with legal and regulatory requirements. The Committee must have at least three independent directors with financial expertise and will meet at least quarterly with management and auditors.
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cisco systems Audit Committee Charter
1. CISCO SYSTEMS, INC.
CHARTER FOR THE
AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
As Revised September 11, 2008
1. PURPOSE
The purpose of the Audit Committee (the “Committee”) is to assist the Board of
Directors (the “Board”) in fulfilling its oversight responsibilities by reviewing the financial
information which will be provided to the shareholders and others; reviewing the systems of
internal controls which management and the Board have established; appointing, retaining and
overseeing the performance of independent accountants; and overseeing the Company’s
accounting and financial reporting processes and the audits of the Company’s financial
statements.
The Committee will fulfill these responsibilities by carrying out the activities
enumerated in Section 3 of the Charter. The Committee shall be given full and direct access to
the Company’s Internal Control Services group, the Board Chairman, Company executives and
independent accountants as necessary to carry out these responsibilities. However, the
Committee’s function is one of oversight only and shall not relieve the Company’s management
of its responsibilities for preparing financial statements which accurately and fairly present the
Company’s financial results and condition, or the responsibilities of the independent accountants
relating to the audit or review of financial statements.
2. COMPOSITION OF THE COMMITTEE
The Committee shall be comprised of not less than three directors, each of whom
will be independent as required by Section 10A(m) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), any rules and regulations promulgated thereunder by the
Securities and Exchange Commission (the “SEC”), and the rules of The Nasdaq Stock Market
(“Nasdaq”). No member of the Committee shall have participated in the preparation of the
financial statements of the Company or any current subsidiary of the Company at any time
during the preceding three years. Each appointed Committee member shall be subject to annual
reconfirmation and may be removed by the Board at any time.
All members of the Committee shall be able to read and understand fundamental
financial statements, including a balance sheet, income statement and cash flow statement. At
least one member of the Committee shall have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other comparable
experience or background which results in the individual’s financial sophistication, including
being or having been a chief executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.
2. 3. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall:
1. Review annually the Committee Charter for adequacy and recommend any
changes to the Board.
2. Review the significant accounting principles, policies and practices followed by
the Company in accounting for and reporting its financial results of operations in
accordance with generally accepted accounting principles (“GAAP”).
3. Review the financial and risk management policies followed by the Company in
operating its business activities.
4. Review the Company’s annual audited financial statements, related disclosures,
including the MD&A portion of the Company’s filings, and discuss with the
independent accountants the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended, including (a) the quality as well as
acceptability of the accounting principles applied in the financial statements, and
(b) new or changed accounting policies; significant estimates, judgments,
uncertainties or unusual transactions; and accounting policies relating to
significant financial statement items.
5. Review any management letters or internal control reports prepared by the
independent accountants or the Company’s internal auditors and responses to
prior management letters, and review with the independent accountants the
Company’s internal financial controls, including the budget, staffing and
responsibilities of the Company’s Internal Control Services department.
6. Review the effectiveness of the independent audit effort, including approval of the
scope of, and fees charged in connection with, the annual audit, quarterly reviews
and any non-audit services being provided.
7. Be directly responsible for the appointment, determination of the compensation
for, retention and oversight of the work of the independent accountant employed
to conduct the audit (including resolution of disagreements between the
independent accountants and management regarding financial reporting) or other
audit, review or attest services. The independent accountants shall report directly
to the Committee.
8. Pre-approve all audit services and permissible non-audit services by the
independent accountants, as set forth in Section 10A of the Exchange Act and the
rules and regulations promulgated thereunder by the SEC. The Committee may
establish pre-approval policies and procedures, as permitted by Section 10A of the
Exchange Act and the rules and regulations promulgated thereunder by the SEC,
for the engagement of independent accountants to render services to the
Company, including but not limited to policies that would allow the delegation of
3. pre-approval authority to one or more members of the Committee, provided that
any pre-approvals delegated to one or more members of the Committee are
reported to the Committee at its next scheduled meeting.
9. Review the hiring policies for any employees or former employees of the
independent accountants.
10. Obtain on an annual basis a formal written statement from the independent
accountants delineating all relationships between the accountants and the
Company consistent with Independence Standards Board Standard No. 1, and
review and discuss with the accountants any disclosed relationships or services
the accountants have with the Company which may affect the accountants’
independence and objectivity. The Committee is responsible for taking, or
recommending that the full Board take, appropriate action to oversee the
independence of the independent accountants.
11. For each of the first three fiscal quarters and at year end, at a Committee meeting
review with management the financial results, the proposed earnings press release
and formal guidance which the Company may plan to offer, and review with the
independent accountants the results of their review of the interim financial
information and audit of the annual financial statements.
12. Review management’s analysis of any significant accounting issues, changes,
estimates, judgments or unusual items relating to the financial statements and the
selection, application and effects of critical accounting policies applied by the
Company (including an analysis of the effect of alternative GAAP methods) and
review with the independent accountants the reports on such subjects delivered
pursuant to Section 10A(k) of the Exchange Act and the rules and regulations
promulgated thereunder by the SEC.
13. Following completion of the annual audit, review separately with the independent
accountants, the Internal Control Services department, and management any
significant difficulties encountered during the course of the audit.
14. Engage and determine funding for such independent professional advisers and
counsel as the Committee determines are appropriate to carry out its functions
hereunder. The Company shall provide appropriate funding to the Committee, as
determined by the Committee, for payment of (1) compensation to the
independent accountants for services approved by the Committee, (2)
compensation to any outside advisers retained by the Committee, and (3) ordinary
administrative expenses of the Committee that are necessary or appropriate in
carrying out its duties.
15. Report to the Board on a regular basis on the major events covered by the
Committee and make recommendations to the Board and management concerning
these matters.
4. 16. Perform any other activities consistent with this charter, the Company’s Bylaws
and governing law as the Committee or the Board deems necessary or
appropriate, including but not limited to the Company’s legal and regulatory
compliance.
17. Conduct appropriate review and oversight of related party transactions, as defined
by applicable rules of Nasdaq, to which the Company is a party.
18. Establish procedures for:
(a) the receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or auditing
matters, and (b) the confidential, anonymous submission by employees of
concerns regarding questionable accounting or auditing matters.
4. COMMITTEE MEETINGS
The Committee will meet on a regular basis at least 4 times each year, and will
hold special meetings as circumstances require. The timing of the meetings to be scheduled for
an upcoming fiscal year shall be determined by the Committee prior to the beginning of such
fiscal year. A calendar of proposed meetings will be reviewed by the Committee at the same
time as the annual Committee Charter review. The calendar shall include appropriate meetings
to be held separately with representatives of the independent accountants, management and the
Internal Control Services department, including a meeting to conduct the reviews required under
Section 3.13 above. In addition, the Committee will meet at any time that the independent
accountants believe communication to the Committee is required.
At all Committee meetings a majority of the total number of members shall
constitute a quorum. All meetings shall be held subject to and in accordance with Section 307
(including without limitation notice, quorum and votes/actions of the committee) and other
applicable sections of the General Corporation Law of California. Minutes shall be kept of each
meeting of the Committee.