THE CLOROX COMPANY AUDIT COMMITTEE CHARTER. [Effective May 8, 2017]

Transcription

1 THE CLOROX COMPANY AUDIT COMMITTEE CHARTER [Effective May 8, 2017] PURPOSE AND AUTHORITY The Audit Cmmittee ( Cmmittee ) is established by the Bard f Directrs ( Bard ) fr the purpses f: 1. Representing and assisting the Bard in verseeing: The integrity f the Cmpany s financial statements. The independent registered public accunting firm s qualificatins and independence. The perfrmance f the Cmpany s internal audit functin and independent registered public accunting firm. The Cmpany s systems f disclsure cntrls and prcedures and internal cntrl ver financial reprting that management has established. The Cmpany s cmpliance with legal and regulatry requirements relating t accunting and financial reprting matters. The Cmpany s framewrk and guidelines with respect t risk assessment and risk management. The Cmpany s material financial plicies and actins. 2. Preparing the reprt required by the Securities and Exchange Cmmissin ( SEC ) prxy rules t be included in the Cmpany s annual prxy statement. The Cmmittee will reprt regularly t the Bard regarding the executin f its duties and respnsibilities. The Cmmittee has the authrity t engage and terminate, and t apprve the fees and ther retentin terms f, utside legal, accunting r ther advisrs, and t fully investigate any matter brught t its attentin, as deemed apprpriate t perfrm its duties and respnsibilities. The Cmpany shall prvide apprpriate funding, as determined by the Cmmittee, fr the Cmmittee s administrative expenses, and fr cmpensatin t the independent registered public accunting firm, and t any utside advisrs that the Cmmittee chses t engage. This Charter shall be reviewed at least annually and updated as necessary. Additinally, the Cmmittee will perfrm an annual evaluatin f its perfrmance relative t the purpse, duties and respnsibilities utlined herein. The Cmmittee may delegate any f its duties and respnsibilities t subcmmittees cmpsed f its members. 1

2 COMPOSITION AND MEETINGS The Cmmittee shall cnsist f at least three directrs appinted by the Bard in accrdance with the Cmpany s Bylaws. Each member must be financially literate and meet the financial qualificatins set frth by the New Yrk Stck Exchange ( NYSE ), and be independent under the NYSE definitin f independence fr directrs and audit cmmittee members and the Cmpany s independence standards set frth in the Cmpany s Crprate Gvernance Guidelines. In additin, at least ne member f the Cmmittee must qualify as an audit cmmittee financial expert, as determined by the Bard in accrdance with criteria established by the SEC. N member f the Cmmittee shall simultaneusly serve n the audit cmmittees f mre than tw ther public cmpanies, unless the Bard determines that such service will nt impair such member s ability t serve n the Cmmittee. The Bard, by majrity vte f the directrs attending a meeting at which a qurum is present, may remve a member f the Cmmittee withut cause r appint a directr t serve n the Cmmittee at any duly nticed meeting f the Bard. The Cmmittee will meet at least quarterly, and at such additinal times as it deems necessary t carry ut its duties. As part f all in-persn meetings, the Cmmittee will meet with the Chief Financial Officer, the Vice President Internal Audit, the General Cunsel and the independent registered public accunting firm in executive sessins. One third f the Cmmittee members shall cnstitute a qurum, and all matters shall be determined by a majrity vte f the members present. DUTIES AND RESPONSIBILITIES The Cmmittee s primary duties and respnsibilities include: Infrmatin Released t the Public: Meet quarterly with the independent registered public accunting firm and management t review and discuss the annual audited financial statements and quarterly financial statements, including the Cmpany s specific disclsures under Management s Discussin and Analysis f Financial Cnditin and Results f Operatins in its Frm 10-K and Frm 10-Qs, quality f earnings, reserves and accruals, suitability f and issues regarding accunting principles, areas that invlve a high degree f judgment, audit adjustments, whether r nt recrded, and such ther areas f inquiry as may be apprpriate, and annually recmmend t the Bard whether the audited financial statements shuld be included in the Annual Reprt n Frm 10-K. Review earnings press releases and discuss with management and the independent registered public accunting firm the general nature f infrmatin t be disclsed and the type f presentatins t be made in earnings press releases, including any pr frma r ther financial infrmatin that des nt cmply with generally accepted accunting principles in the United States ( GAAP ). Review and discuss with management the general nature f infrmatin t be disclsed and the type f presentatins t be made in financial infrmatin and earnings utlks prvided t analysts and rating agencies. 2

3 Review ther relevant reprts r financial infrmatin submitted by the Cmpany t any gvernmental bdy r the public, including management certificatins as required by the Sarbanes-Oxley Act f Independent Registered Public Accunting Firm: Appint (subject t ratificatin by the Cmpany s stckhlders), retain, cmpensate and versee the wrk perfrmed by the independent registered public accunting firm. The independent registered public accunting firm shall reprt directly t the Cmmittee, and the Cmmittee has the ultimate authrity and respnsibility t evaluate the perfrmance f the independent registered public accunting firm and, where apprpriate, terminate the independent registered public accunting firm. The Cmmittee will cnsider and apprve, in advance, any audit and permissible nn-audit services t be perfrmed by the independent registered public accunting firm and will establish plicies and prcedures fr the pre-apprval f audit and permissible nn-audit services t be perfrmed by the independent registered public accunting firm. At least annually, btain and review a reprt by the independent registered public accunting firm describing: the firm s internal quality cntrl prcedures; any material issues raised by the mst recent internal quality cntrl review, peer review, r any inquiry r investigatin by the Public Cmpany Accunting Oversight Bard ( PCAOB ) r any gvernmental r prfessinal authrities within the last 5 years, and the firm s actins t address such issues; all relatinships between the independent registered public accunting firm and the Cmpany r individuals in financial reprting versight rles at the Cmpany that may reasnably be thught t bear n the independent registered public accunting firm s independence, including the registered public accunting firm s written affirmatin that the registered public accunting firm is in fact independent and an assurance that each member f the engagement team is in cmpliance regarding length f service. Hld timely discussins with the independent registered public accunting firm regarding: The ptential effects f any f the relatinships described in the preceding paragraph n the independent registered public accunting firm s independence. Any prblems r difficulties encuntered during the audit and management s respnse, including any restrictins n the scpe f the independent registered public accunting firm s activities r n access t requested infrmatin and any significant disagreements with management. Critical accunting plicies and practices. Alternative treatments within GAAP related t material items that have been discussed with management, ramificatins f using such alternative treatments, the treatment preferred by the independent registered public accunting firm, and the independent registered public accunting firm s cnclusins abut the treatment selected by the Cmpany. Matters required t be discussed under applicable PCAOB rules. 3

4 Any special audit steps adpted in light f significant deficiencies r material weaknesses in internal cntrl ver financial reprting. Other cmmunicatins between the independent registered public accunting firm and management, including any management letters and schedules f unadjusted audit differences. The respnsibilities, budget and staffing f the internal audit functin. Set hiring plicies fr emplyees r frmer emplyees f the independent registered public accunting firm. Internal Audit: Oversee the internal audit functin, including: Review and apprve the appintment, replacement r dismissal f the Vice President Internal Audit. Review internal audit activities, including budget, staffing, scpe, plans and results f wrk perfrmed, including prgress against thse plans/budgets and, as apprpriate, cnfer with the internal auditrs regarding the scpe and results f their wrk. Review the effectiveness f the internal audit prgram and the independence, bjectivity and perfrmance f the internal audit functin. Financial Reprting Prcesses and Cntrls: Oversee the fllwing: The Cmpany s financial reprting prcesses. The Cmpany s disclsure cntrls and prcedures, and internal cntrl ver financial reprting, and review any disclsure frm the Chief Executive Officer r the Chief Financial Officer f: a) significant deficiencies and material weaknesses in the design r peratin f internal cntrl ver financial reprting and b) fraud that invlves management r ther emplyees invlved in financial reprting. Majr issues regarding accunting principles and financial statement presentatins, including any significant changes in the Cmpany s selectin r applicatin f accunting principles. Majr issues as t the adequacy f the Cmpany s internal cntrls and any special audit steps adpted in light f material cntrl deficiencies. Analyses prepared by management regarding significant financial reprting issues, accunting principles, judgments and estimates, ff-balance sheet structures and taxatin matters. The effect f pending and newly implemented regulatry and accunting initiatives related t the Cmpany s financial statements. 4

5 Management s establishment and maintenance f financial and accunting plicies and prcesses t prvide fr cmpliance with such plicies. Related Persn Transactins: Establish and peridically review plicies and prcedures fr the review, apprval and ratificatin, as applicable, f related persn transactins (as defined in applicable SEC rules), review related persn transactins and versee ther related party transactins gverned by applicable accunting standards. Risk and Cmpliance Oversight: Oversee the Cmpany s cmpliance and risk management prgrams and practices related t accunting and financial reprting matters t identify, manage and mnitr cmpliance with applicable gvernment and regulatry requirements, including: Discussin with management (including the individual respnsible fr day-t-day peratinal respnsibility fr the Cmpany s cmpliance and ethics prgram) regarding cmpliance with legal and regulatry requirements relating t accunting and financial reprting matters as may be apprpriate (with the Nminating and Gvernance Cmmittee assisting the Bard in verseeing cmpliance with legal and regulatry requirements ther than thse related t accunting r financial reprting). Discussin f plicies r guidelines with respect t risk assessment and risk management, accunting, financial reprting and disclsure matters, and anti-fraud cntrls. Establish and maintain prcedures t receive, retain and address cmplaints regarding accunting, internal accunting cntrls and auditing matters, including prcedures fr the cnfidential, annymus submissin by Cmpany emplyees f cncerns regarding questinable accunting r auditing matters. Financial Plicies f the Cmpany: Review the material financial plicies f the Cmpany, including financial delegatin f authrity and brrwing plicies. Review and apprve the Cmpany s plicies regarding cash management, hedging, swaps, security-based swaps, derivatives, freign currency exchange risk and debt interest rate risk. With respect t swaps and security-based swaps that are exempt frm mandatry exchange-executin and clearing pursuant t the Cmmdity Exchange Act and end-user exceptin regulatins established by the Cmmdity Futures Trading Cmmissin (as applicable), review, discuss with management and apprve the Cmpany s plicies and decisins regarding entering int such swap and security-based swap transactins, including decisins t enter int transactins that are neither cleared nr executed n a designated cntract market, exchange, swap executin facility r security-based swap executin facility. Other Respnsibilities: 5

6 The Cmmittee shall perfrm ther activities cnsistent with this Charter, the Cmpany s bylaws and gverning law, as the Cmmittee r the Bard deems necessary r apprpriate. Rle f the Cmmittee: Althugh the Cmmittee has the pwers and respnsibilities set frth in this Charter, the rle f the Cmmittee generally is versight. The members f the Cmmittee are nt emplyees f the Cmpany and generally are nt accuntants r auditrs by prfessin. Cnsequently, the Cmmittee des nt cnduct audits, independently verify management s representatins, r determine that the Cmpany s financial statements and disclsures are cmplete and accurate, prepared in accrdance with GAAP, r fairly present the financial cnditin, results f peratins and cash flws f the Cmpany in accrdance with GAAP, nr des the Cmmittee determine that the Cmpany s internal cntrl ver financial reprting is effective. These are the respnsibilities f management. The independent registered public accunting firm is respnsible fr expressing an pinin n the Cmpany s financial statements and internal cntrl ver financial reprting based upn its audit. The Cmmittee s cnsideratins and discussins with management and the independent registered public accunting firm d nt assure that the Cmpany s financial statements are presented in accrdance with GAAP r that internal cntrl ver financial reprting is effective r that the audit f the Cmpany s financial statements has been carried ut in accrdance with auditing standards generally accepted in the United States. 6