Purpose
The Audit Committee is appointed by the board of directors (the “Board”) of
Walmart Inc. (the “Company”) to: (1) assist the Board in the oversight and
monitoring of (a) the integrity of the financial reporting process, system
of internal control over financial reporting (“internal controls”) and
financial statements and reports of the Company, (b) the performance of the
Company’s global internal audit function, (c) the compliance by the Company
with legal and regulatory requirements, (d) the qualifications,
independence and performance of the Company’s independent registered public
accounting firm employed by the Company for the purpose of preparing or
issuing an audit report or related work (the “Outside Auditor”), and (e)
assist the Board with the Company’s risk assessment and risk management
process and policies; and (2) be directly responsible for the appointment,
compensation and oversight of the Outside Auditor.
Committee Membership
The Audit Committee should consist of no fewer than three members, as
determined annually by the Board on the recommendation of the Nominating
and Governance Committee; provided, however, that the Audit Committee may
operate with fewer than three members as long as such composition complies
with applicable laws, rules, regulations, and securities exchange listing
standards. The members of the Audit Committee shall meet the independence,
experience and expertise requirements of the New York Stock Exchange, any
other exchange on which the Company’s securities are traded, Section
10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and regulations of the Securities and Exchange
Commission (the “Commission”). Audit Committee members shall not serve
simultaneously on the audit committees of more than two other public
companies without the approval of the full Board.
The members of the Audit Committee shall be appointed annually by the Board
on the recommendation of the Nominating and Governance Committee. Audit
Committee members may be replaced by the Board at any time. The Board shall
designate the Chairman or Chairwoman (the “Chairperson”) of the Audit
Committee. Committee members may resign by giving written notice to the
Board. A Committee member may resign Committee membership without resigning
from the Board, but a member shall cease automatically to be a member of
the Committee upon either ceasing to be a member of the Board or ceasing to
be “independent” as required above.
Committee Authority and Responsibilities
The basic responsibility of the members of the Audit Committee is to
exercise their business judgment to act in what they reasonably believe to
be in the best interests of the Company and its shareholders. In
discharging that obligation, members should be entitled to rely on the
honesty and integrity of the Company’s senior executives and its outside
advisors and auditors, to the fullest extent permitted by law.
The Audit Committee shall prepare the report required by the rules of the
Commission to be included in the Company’s annual proxy statement.
The Audit Committee shall be responsible directly for the appointment
(subject, if applicable, to shareholder ratification), retention,
termination, compensation and terms of engagement, evaluation, and
oversight of the work of the Outside Auditor (including resolution of
disagreements between management and the Outside Auditor regarding
financial reporting). The Outside Auditor shall report directly to the
Audit Committee.
The Audit Committee shall oversee the integrity of the audit process,
financial reporting and internal controls of the Company, oversee the work
of the Company’s management, global internal auditors (the “Internal
Auditors”) and the Outside Auditor in these areas, oversee management’s
development of, and adherence to, a sound system of internal controls,
review whether the Internal Auditors and the Outside Auditor objectively
assess the Company’s financial reporting, accounting practices and internal
controls, and provide an open avenue of communication among the Outside
Auditor, the Internal Auditors and the Board. It is the responsibility of:
(i) management of the Company and the Outside Auditor, under the oversight
of the Audit Committee and the Board, to plan and conduct financial audits
and to determine that the Company’s financial statements and related
disclosures are complete and accurate in all material respects and in
accordance with accounting principles generally accepted in the United
States (“US GAAP”) and applicable rules and regulations and fairly present,
in all material respects, the financial condition and results of operations
of the Company; (ii) management of the Company, under the oversight of the
Audit Committee and the Board, to assure compliance by the Company with
applicable legal and regulatory requirements; and (iii) the Internal
Auditors, under the oversight of the Audit Committee and the Board, to
review the Company’s internal transactions and accounting which do not
require involvement in the detailed presentation of the Company’s financial
statements.
The Audit Committee shall pre-approve, or establish and maintain an
appropriate policy governing the pre-approval of, all audit services and
non-audit services (including the fees and terms thereof) to be performed
for the Company by the Outside Auditor to the extent required by and in a
manner consistent with applicable law and as permissible and compatible
with the Outside Auditor’s independence.
The Audit Committee shall meet as often as it determines necessary or
appropriate, but not less frequently than quarterly. The Chairperson shall
preside at each meeting and, in the absence of the Chairperson, one of the
other members of the Audit Committee shall be designated as the acting
chair of the meeting. The Chairperson (or acting chair) may direct
appropriate members of management and staff to prepare draft agendas and
related background information for each Audit Committee meeting. The draft
agenda shall be reviewed and approved by the Audit Committee Chairperson
(or acting chair) in advance of distribution to the other Audit Committee
members. Any background materials, together with the agenda, should be
distributed to the Audit Committee members in advance of the meeting. All
meetings of the Audit Committee shall be held pursuant to the Amended and
Restated Bylaws of the Company with regard to notice and waiver thereof,
and written minutes of each meeting, in the form approved by the Audit
Committee, shall be duly filed in the Company records. Reports of meetings
of the Audit Committee shall be made to the Board at its next regularly
scheduled meeting following the Audit Committee meeting accompanied by any
recommendations to the Board approved by the Audit Committee.
The Audit Committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate.
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisers. The Company shall provide for appropriate funding, as determined
by the Audit Committee, for payment of (i) compensation to the Outside
Auditor for the purpose of rendering or issuing an audit report or
performing other audit, review or attest services, (ii) compensation to any
independent legal, accounting or other advisers employed by the Audit
Committee and (iii) ordinary administrative expenses of the Audit Committee
necessary to carry out its duties, subject only to any limitations imposed
by applicable rules and regulations. The Audit Committee may request any
officer or associate of the Company or the Company’s outside counsel or
Outside Auditor to attend a meeting of the Audit Committee or to meet with
any members of, or consultants to, the Audit Committee. The Audit Committee
shall meet periodically with management, the Internal Auditors and the
Outside Auditor in separate executive sessions to discuss matters for which
the Audit Committee has responsibility.
The Audit Committee shall make regular reports to the Board. The Audit
Committee and the Nominating and Governance Committee shall review and
reassess the adequacy of this Charter annually and recommend any proposed
changes to the Board for approval. The Audit Committee shall annually
review its own performance.
In performing its functions, the Audit Committee shall undertake those
tasks and responsibilities that, in its judgment, would contribute most
effectively to and implement the purposes of the Audit Committee. In
addition to the general tasks and responsibilities noted above, the
following are the specific functions of the Audit Committee:
Financial Statement and Disclosure Matters
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Review and discuss with management, and to the extent the Audit
Committee deems necessary or appropriate, the Internal Auditors and the
Outside Auditor, the Company’s disclosure controls and procedures that are
designed to ensure that the reports the Company files or submits with the
Commission comply with the Commission’s rules and forms.
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Review and discuss with management, the Internal Auditors and the
Outside Auditor the Company’s annual audited financial statements,
including any critical audit matters and disclosures made in management’s
discussion and analysis, prior to the filing of its Annual Report on Form
10-K, and recommend to the Board whether the audited financial statements
should be included in the Company’s Annual Report on Form 10-K.
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Review and discuss with management, the Internal Auditors and the
Outside Auditor the Company’s quarterly financial statements, including
disclosures made in management’s discussion and analysis, prior to the
filing of its Quarterly Report on Form 10-Q, including the results of the
Outside Auditor’s reviews of the quarterly financial statements.
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Review and discuss quarterly reports from the Outside Auditor on:
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All critical accounting policies and practices to be used;
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All alternative treatments within US GAAP for policies and practices
related to material items that have been discussed with management,
including ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the Outside Auditor;
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The internal controls adhered to by the Company, management, and the
Company’s financial, accounting and internal auditing personnel, and the
impact of each on the quality and reliability of the Company’s financial
reporting; and
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Other material written communications between the Outside Auditor and
management, such as any management letter or schedule of unadjusted
differences.
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Discuss in advance with management the Company’s practice with respect
to the types of information to be disclosed and the types of presentations
to be made in earnings press releases, including the use, if any, of non-US
GAAP information, as well as financial information and earnings guidance
provided to investors, analysts and rating agencies.
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Review and discuss with management, the Internal Auditors and the
Outside Auditor:
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Significant financial reporting issues and judgments made in connection
with the preparation of the Company’s financial statements, including the
effect of alternative US GAAP methods on the financial statements;
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The clarity of the financial disclosures made by the Company;
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The development, selection and disclosure of critical accounting
estimates and the analyses of alternative assumptions or estimates, and the
effect of such estimates on the Company’s financial statements;
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Potential changes in US GAAP and the effect such changes would have on
the Company’s financial statements;
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Significant changes in accounting principles, financial reporting
policies and internal controls implemented by the Company;
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Significant litigation, contingencies and claims against the Company
and material accounting issues that require disclosure in the Company’s
financial statements;
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Information regarding any “second” opinions sought by management from
an independent auditor with respect to the accounting treatment of a
particular event or transaction;
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Management’s compliance with the Company’s processes, procedures and
internal controls;
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The adequacy and effectiveness of the Company’s internal controls and
the recommendations of management, the Internal Auditors and the Outside
Auditor for the improvement of accounting practices and internal controls;
and
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Any problems or difficulties encountered by the Outside Auditor or the
Internal Auditors in the course of their audit work, including any
restrictions on the scope of activities or access to requested information,
and any significant disagreements with management.
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Discuss with management and the Outside Auditor the effect of regulatory
and accounting initiatives as well as off-balance sheet structures and
aggregate contractual obligations on the Company’s financial statements.
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Review and discuss with management: (i) the Company’s risk assessment
and risk management process and policies; (ii) risks related to
information systems, information security, and cybersecurity; and (iii)
the Company’s major financial and other risk exposures and the steps
management has taken to monitor and control such exposures.
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Discuss with the Outside Auditor the matters required to be discussed by
the Public Company Accounting Oversight Board’s Auditing Standard No. 1301
relating to the conduct of the audit. In particular, discuss:
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The adoption of, or changes to, the Company’s significant internal
auditing and accounting principles and practices as suggested by the
Outside Auditor, Internal Auditors or management; and
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The management letter provided by the Outside Auditor and the Company’s
response to that letter.
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Receive and review disclosures made to the Audit Committee by the
Company’s Chief Executive Officer and Chief Financial Officer during their
certification process for the Company’s Annual Report on Form 10-K and
Quarterly Report on Form 10-Q about (a) any significant deficiencies in the
design or operation of internal controls or material weakness therein, (b)
any fraud involving management or other associates who have a significant
role in the Company’s internal controls, and (c) any significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation.
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Review and discuss with management (including the senior internal
auditing executive) and the Outside Auditor the Company’s internal controls
report and the Outside Auditor’s attestation of the report prior to the
filing of the Company’s Annual Report on Form 10-K.
Oversight of the Company’s Relationship with the Outside Auditor
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Review the experience and qualifications of the senior members of the
Outside Auditor team.
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Obtain and review a report from the Outside Auditor at least annually
regarding (a) the Outside Auditor’s internal quality-control procedures,
(b) 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
respecting one or more independent audits carried out by the firm, and any
steps taken to deal with any such issues, and (c) all relationships between
the Outside Auditor and the Company, including the written disclosures and
the letter required by applicable independence standards, rules and
regulations.
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Evaluate the qualifications, performance independence, and fees of the
Outside Auditor, including considering whether the Outside Auditor’s
quality controls are adequate and the provision of non-audit services is
compatible with maintaining the Outside Auditor’s independence, and taking
into account the opinions of management and the Internal Auditor. The Audit
Committee shall present its conclusions to the Board.
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Oversee the rotation of the lead (or coordinating) audit partner having
primary responsibility for the audit and the audit partner responsible for
reviewing the audit at least once every five years, and oversee the
rotation of other audit partners, in accordance with the rules of the
Commission.
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Develop and periodically review policies for the Company’s hiring of
present and former employees of the Outside Auditor.
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To the extent the Audit Committee deems necessary or appropriate,
discuss with the national office of the Outside Auditor issues on which
they were consulted by the Company’s audit team and matters of audit
quality and consistency.
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Discuss with management, the Internal Auditors and the Outside Auditor
any accounting adjustments that were noted or proposed by the Outside
Auditor, but were not adopted or reflected.
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Meet with management, the Internal Auditors and the Outside Auditor
prior to the audit to discuss and review the scope, planning and staffing
of the audit.
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Obtain from the Outside Auditor the information required to be
disclosed to the Company by generally accepted auditing standards in
connection with the conduct of an audit, including topics covered by
applicable Statements on Auditing Standards.
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Require the Outside Auditor to review the financial information
included in the Company’s Quarterly Report on Form 10-Q in accordance with
Rule 10-01(d) of Regulation S-X of the Commission prior to the Company
filing such reports with the Commission and to provide to the Company for
inclusion in the Company’s Quarterly Report Form 10-Q any reports of the
Outside Auditor required by Rule 10-01(d).
Oversight of the Company’s Internal Audit Function
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Ensure that the Company has an internal audit function.
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Review and concur in the appointment, replacement, reassignment or
dismissal of the senior internal auditing executive, and the compensation
package for such person.
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Review the significant reports to management prepared by the internal
auditing department and management’s responses.
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Communicate with management and the Internal Auditors to obtain
information concerning internal audits, accounting principles adopted by
the Company, internal controls of the Company, management, and the
Company’s financial and accounting personnel, and review the impact of each
on the quality and reliability of the Company’s financial statements.
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Evaluate the internal auditing department and its impact on the
accounting practices, internal controls and financial reporting of the
Company.
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Discuss with the Outside Auditor and the senior internal auditing
executive the internal audit department’s responsibilities, budget and
staffing and any recommended changes in the planned scope of the internal
audit.
Ethics and Compliance Oversight Responsibilities
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Obtain from the Outside Auditor the reports required to be furnished to
the Audit Committee under Section 10A of the Exchange Act and obtain from
the Outside Auditor any information with respect to illegal acts in
accordance with Section 10A.
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Discuss with management and the Outside Auditor, and advise the Board
with respect to, the Company’s policies, processes and procedures regarding
compliance with applicable laws and regulations and the Statement of
Ethics, and instances of non-compliance therewith. Obtain and review
reports and disclosures of insider and affiliated party transactions.
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Review and approve any requested waivers by executive officers and
directors of the Company’s Statement of Ethics and recommend to the Board,
when appropriate, whether a particular waiver should be granted.
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Establish procedures for (a) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal controls
or auditing matters, and (b) the confidential, anonymous submission by
associates of the Company of concerns regarding questionable accounting,
internal controls or auditing matters.
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Discuss with management and the Outside Auditor any correspondence
between the Company and regulators or governmental agencies and any
associate complaints or published reports that raise material issues
regarding the Company’s financial statements or accounting policies.
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Discuss with the Company’s Chief Legal Officer legal matters that may
have a material impact on the financial statements or the Company’s ethics
and compliance policies.
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Meet no less than annually with the senior executive(s) of the Company
with primary responsibility for ethics and compliance regarding the
implementation and effectiveness of the Company’s ethics and compliance
programs and at such other times as such officer(s) may request.
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Review and concur in the appointment, replacement, reassignment or
dismissal of the senior executive(s) of the Company with primary
responsibility for the Company’s ethics and compliance function, and the
compensation package for such executive(s).
Additional Responsibilities
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Conduct or authorize investigations into any matters within the Audit
Committee’s scope of responsibilities.
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Review the Company’s Transaction Review Policy and recommend any
changes to the Nominating and Governance Committee and then to the Board
for approval. Review and determine whether to approve or ratify
transactions covered by such policy, as appropriate.
History of Amendments
This charter was last amended on April 5, 2021.