The Audit Committee of BMC Software, Inc.is appointed
by the Board of Directors to assist it in fulfilling its responsibility to
oversee (i) the quality and integrity of the
Company’s financial statements and the process that produces them, (ii) the
Company’s compliance with legal and regulatory requirements, (iii) the quality
and integrity of the Company’s risk management processes, and (iv) the
qualifications and independence of the independent auditors. The Audit
Committee also oversees the performance of the Company’s internal audit
function and the independent auditors.
Audit Committee will consist of three to five members of the Board. Every
member of the Audit Committee must meet the independence and experience
requirements of the New York Stock Exchange, any other regulatory requirements
applicable to the Company and any additional independence requirements set
forth in the Company’s Corporate Governance Guidelines. All members of the
Audit Committee must be financially literate, and at least one member of the
Audit Committee must be an “audit committee financial expert,” as defined by
the regulations of the Securities and Exchange Commission. The members of the
Audit Committee may be replaced by the Board at any time.
- The Audit Committee has sole responsibility for
the retention and termination of the independent auditors. In this regard,
the Audit Committee ensures that the Company’s management and its
independent auditors are aware that the independent auditors are
ultimately accountable to the Audit Committee. The Audit Committee
pre-approves the payment of all audit and non-audit fees to the Company’s
independent auditors or, in lieu thereof, adopts a pre-approval policy for
the payment of fees for non-audit services. The Audit Committee approves,
in advance, the hiring of any employees of any independent auditors who
were engaged on the Company’s account within the previous three (3) years.
The Audit Committee serves as the focal point for communications between
the Board, the independent auditors, the internal auditors and management
of the Company.
- The Audit Committee reviews and approves the
annual audit scope of the independent auditors and the internal auditors.
The independent auditors are required to conduct a formal review of the
quarterly financial statements prior to filing each Form 10Q and to review
their findings and conclusions with the Audit Committee.
- The Audit Committee reviews the independence of
the independent auditors by reviewing and evaluating written statements
from the independent auditors describing all relationships with the
Company and comparable statements from management. The Audit Committee
reviews the experience and qualifications of the senior members of the
independent auditors’ team and the quality control procedures of the
- The Audit Committee discusses with the independent
auditors the results of its audit from the preceding year, including:
a. A review of the audited financial statements and the memorandum
containing recommendations for improving accounting procedures and
internal controls and any disagreements with management.
b. The adequacy of the organization’s internal control structure.
c. Management’s cooperation with the independent auditors.
d. The adequacy and quality of the organization’s accounting principles
and policies when compared to its industry in general.
e. A determination that the organization’s financial statements will
constitute full disclosure and an easily comprehendible and meaningful
report to the Company’s shareholders and creditors.
f. A review of the effect of regulatory and accounting initiatives, as
well as off balance sheet structures, on the Company’s financial
- The Audit Committee discusses items 4.b. and
4.d. above, as well as all significant findings, with the Company’s
- The Audit Committee discusses quarterly with the
Company’s Director of Internal Audit the issues and observations of the
Company’s internal quality control procedures, the Internal Audit
projects, and audit plan and periodically reviews the same to ensure they
have been addressed and resolved.
- The Audit Committee reviews with management the
“Management’s Discussion and Analysis” section of the Company’s annual
report to shareholders and discusses earnings press releases, as well as
financial information and earnings guidance provided to the financial
- The Audit Committee discusses with management
and the independent and internal auditors, as appropriate, the Company’s
risk assessment and risk management policies, including the Company’s
major risk exposures and steps to be taken by management to monitor and
mitigate such exposures.
- The Audit Committee reviews quarterly with
management, the internal auditors and the independent auditors all
significant issues concerning litigation, contingencies, claims, or
assessments and all material transactions and accounting issues and
transactions that require disclosure in the Company’s financial
statements. The review includes a discussion of recent FASB or other
regulatory agency pronouncements that may have a material impact on the
- The Audit Committee monitors instances where
management seeks second opinions on significant accounting matters.
- The Audit Committee reviews management’s
evaluation of the adequacy of the Company’s internal control structure and
the extent to which major recommendations made by the independent and
internal auditors have been implemented.
- The Audit Committee reviews the audit results of
governmental and regulatory agencies and independent accountants engaged
for specific purposes. The Audit Committee reviews with management and the
internal auditors any correspondence with regulators or governmental
agencies and any employee complaints or published reports which raise
material issues regarding the Company’s financial statements or accounting
- The Audit Committee establishes procedures to
receive and address complaints, both direct and anonymous, regarding
accounting, internal control, or auditing issues and to protect from
retaliation those individuals providing such information in good faith.
- The Audit Committee directs and supervises an
investigation into any matter as deemed necessary to discharge its duties
and responsibilities. In connection with any such investigation, the Audit
Committee has access to all books, records, facilities and personnel of
the Company and the authority to employ outside counsel, auditors or other
experts at Company expense for such purpose.
- The Audit Committee is responsible for preparing
a report for inclusion in the Company’s annual proxy statement.
- The Audit Committee has the authority to retain
and terminate advisors to assist in discharging its duties including the
authority to approve such advisors’ fees and retention terms.
- The Audit Committee provides a report of its
meetings and activities to the full Board on a regular basis.
- The Audit Committee meets on a regularly
scheduled basis, at least quarterly and more frequently as necessary, to
fulfill its responsibilities. The Audit Committee meets during the
external audit planning phase to review the scope and details of the audit
and approve the audit fee. A second meeting is held at the
conclusion of the external audit to review the audit opinion, the
recommendations of the independent auditors, and any situation involving
irregularities or weaknesses in internal control structure.
Management, internal audit, and other corporate compliance persons meet
with the Committee as needed, but at least annually.
- A quorum of the Audit Committee consists of a
majority of its members. All actions of the Audit Committee must be
approved by a majority vote of the members present, unless there are only
two members present, in which case such actions require a unanimous vote.
- Voting may be conducted verbally and the
results, together with all other business conducted at each meeting, will
be recorded in the minutes of the meeting.
- In conjunction with the Corporate Governance
Committee and its evaluation process, the Audit Committee annually reviews
its own performance and the adequacy of this charter.
of Audit Committee
George F. Raymond,
Jon E. Barfield
John W. Barter
Louis J. Lavigne, Jr.