Audit Committee Charter
The Board of Directors of The Pep Boys - Manny, Moe & Jack (the "Company") has adopted this updated Charter for its Audit Committee ("Committee") effective for its fiscal year commencing February 3, 2014.
The Committee shall be comprised of at least three (3) non-management directors appointed by the full Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, who shall serve at the pleasure of the full Board. Each Committee member shall comply with the independence requirements of the New York Stock Exchange, Inc ("NYSE") and the Securities and Exchange Commission ("SEC") and shall have sufficient financial experience and ability to enable them to discharge their responsibilities. In addition, at least one Committee member shall be an "audit committee financial expert" as defined by the SEC.
The Committee is authorized to carry out the responsibilities set forth in this Charter and any other assignments requested by the Board of Directors. The Committee shall have full access to the Company's books, records, facilities and personnel (including, without limitation, direct access to the Company's internal audit function) to carry out its responsibilities and is authorized to retain persons or entities having special competence to assist the Committee in fulfilling its responsibilities, after notice to the Chairman of the Board. The Committee shall have access to the Company's outside counsel for advice and information. .
The Committee shall assist the Board of Directors in fulfilling its fiduciary responsibilities as to its oversight of (a) the integrity of the Company's financial statements, (b) the compliance of the Company's public disclosures with legal and regulatory requirements, (c) the independence and qualifications of the Company's independent registered public accounting firm and (d) the performance of the Company's internal audit function and independent registered public accounting firm. The Committee is to serve as a focal point for communication among the Board of Directors and its committees, the Company's independent registered public accounting firm, internal audit function and management, as the respective duties of such groups, or their constituent members, relate to the Company's financial accounting and reporting and internal controls.
The Committee is not intended to be part of the Company's operational or managerial decision-making process. The Company's management, and not the Committee or the independent registered public accounting firm, is responsible for producing the Company's financial statements and reports and for instituting and maintaining internal controls. The independent registered public accounting firm are responsible for attesting to the fair presentation of the financial statements in accordance with generally accepted accounting principles and upon the adequacy of the Company's internal controls.
4.1 Financial Reporting. To discuss with management and the independent registered public accounting firm the annual audited financial statements and quarterly financial statements, including matters required to be reviewed under applicable SEC, NYSE and any other applicable legal or regulatory requirements.
The Committee will review the Company's Form 10-K with management, the Director of Internal Audit and the independent registered public accounting firm. Based on such review, the Committee shall make its recommendation to the Board as to the inclusion of the Company's audited financial statements and assessment of internal controls in the Company's Annual Report on Form 10-K.
After consulting with each member of the Committee, the Committee Chair will review the Company's Form 10-Qs and any Form 8-K which includes financial statements with management and, if appropriate, the Director of Internal Audit and/or the independent registered public accounting firm.
In connection with all such reviews, the Committee will also review the corresponding (i) proceedings of the Corporate Accountability Committee in support of the SEC's required CEO and CFO certifications and (ii) management representation letters to the independent registered public accounting firm.
4.2 Proxy Statement.To prepare and publish an annual Committee report in the Company's proxy statement.
4.3 Internal Controls Over Financial Reporting.To review with management, the internal audit function and the independent registered public accounting firm the Company's policies and procedures to seek assurance as to the adequacy of the Company's internal controls over financial reporting. Annually, the Committee shall review the Company's plan for documenting and testing the Company's internal controls and, at least quarterly, shall review the Company's progress against such plan and the results of such testing.
4.4 Press Releases.To discuss with management and the independent registered public accounting firm, as appropriate, earnings press releases and any other press releases which contain previously non-public material financial information. The Committee shall review all such releases with management prior to their release to the public.
4.5 Independent Registered Public Accounting Firm. To select the independent registered public accounting firm to examine the Company's accounts, controls and financial statements and to ask the full Board to seek the shareholders' ratification of such selection at each Annual Meeting of Shareholders. The Committee shall have the sole authority and responsibility to select, evaluate, compensate and oversee the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company (including resolution of disagreements between management and the registered public accounting firm regarding financial reporting). The independent registered public accounting firm and each such registered public accounting firm will report directly to the Committee. The Committee shall have the sole authority to approve all audit engagement fees and terms and the Committee must pre-approve any audit and non-audit service provided to the Company by the Company's independent registered public accounting firm.
To obtain and review at least annually a formal written report from the independent registered public accounting firm delineating (i) the auditing firm's internal quality-control procedures and (ii) any material issues raised within the preceding five years by the auditing firm's internal quality-control reviews, by peer reviews of the firm or by any governmental or other inquiry or investigation relating to any audit conducted by the firm. The Committee will also review steps taken by the auditing firm to address any findings in any of the foregoing reviews. Also, in order to assess the independence of the independent registered public accounting firm, the committee will review at least annually all relationships between the independent registered public accounting firm and the Company.
To set policies for the hiring of employees or former employees of the Company's independent registered public accounting firm.
To ensure that the lead audit partners assigned by the Company's independent registered public accounting firm to the Company, as well as the audit partner responsible for reviewing the Company's audit shall be changed at least every five years.
To consider whether there should be regular rotation of the independent audit firm to assure continuing independence of the independent registered public accounting firm.
The Committee shall have the authority to dismiss the independent registered public accounting firm if it deems necessary at any time.
4.6 Accounting Standards and Principles. To review the Company's financial reporting and accounting standards and principles, significant changes in such standards or principles or in their application and the key accounting decisions affecting the Company's financial statements, including alternatives to, and the rationale for, the decisions made.
4.7 Internal Audit Function. To review and approve the internal audit staff functions, including (i) purpose, authority and organizational reporting lines and (ii) annual audit plan, budget and staffing. At least quarterly, the Committee shall review internal audit's progress against such plan and the results of such audit. The senior internal audit executive shall not be terminated or reassigned without the consent of the committee. .
4.8 Risk Assessment. To discuss with management and the independent registered public accounting firm, as appropriate, any audit problems or difficulties and management's response, and the Company's financial risk assessment and financial risk management policies, including the Company's major financial risk exposure and steps taken by management to monitor and mitigate such exposure. Annually, the Committee shall review with management, the Company's Cost of Risk and Litigation portfolios and, shall be provided with quarterly updates of any material changes thereto. .
4.9 Whistleblower Lines. To oversee the Company's maintenance of an anonymous telephone hotline for the reporting by all of the Company's employees questionable accounting or auditing activities. The Committee shall also review with management periodic reports from the Company's anonymous hotline for the reporting by all of the Company's employees of employee dishonesty, theft, embezzlement and human resource matters. .
4.10 Conflicts of Interest. To review with the General Counsel, and to investigate as appropriate, any matters pertaining to the integrity of management, members of the Board and the independent registered public accounting firm, including conflicts of interest and adherence to standards of business conduct as required by the policies of the Company.
4.11 Expense Reimbursement. To review with management, the results of its an annual review of the expenses reimbursed to the Chief Executive Officer to ensure compliance with all applicable company policies..
4.12 Self-Evaluation. To perform an annual evaluation of the performance of the Committee using criteria and procedures established by the Committee, and to review the results of that evaluation with the full Board. .
4.13 Charter. To review and update the Committee's charter annually. .
In furtherance of its stated purpose, the Committee shall have the following responsibilities:
The Committee expects to meet nine times per year and may meet as many other times as the full Board or the Committee deems necessary. The Committee may meet or otherwise take action in the same manner or manners as may the full Board of Directors. The Committee may request that members of management, the internal audit function and/or representatives of the independent registered public accounting firm be present at meetings of the Committee, as well as outside experts or counsel, if appropriate. At each meeting, the Committee will generally hold an executive session. Minutes of each Committee meeting are to be prepared and sent to Committee members for approval.