AMENDED AND RESTATED CHARTER FOR THE AUDIT COMMITTEE

 

OF THE BOARD OF DIRECTORS

 

OF

 

COPART, INC.

 

(as amended and restated November 29, 2004)

 

PURPOSE:

 

The purpose of the Audit Committee of the Board of Directors (the “Board”) of Copart, Inc. and its subsidiaries (the “Company”) shall be to:

 

·    

Oversee the accounting and financial reporting processes of the Company and audits of the financial statements of the Company;

 

·    

Assist the Board in oversight and monitoring of (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; and (iii) the independent auditor’s qualifications, independence and performance;

 

·    

Prepare the report that the Securities and Exchange Commission (the “SEC”) rules require be included in the Company’s annual proxy statement;

 

·    

Provide the Board with the results of the Audit Committee’s monitoring and recommendations derived therefrom; and

 

·    

Provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require the attention of the Board.

 

In addition, the Audit Committee will undertake those specific duties and responsibilities listed below and such other duties as the Board may from time to time prescribe.

 

MEMBERSHIP:

 

The Audit Committee members will be appointed by, and will serve at the discretion of, the Board. The Audit Committee will consist of at least three members of the Board. Members of the Audit Committee must meet the following criteria:

 

·    

Each member will be an independent director, as defined in (i) NASDAQ Rule 4200, (ii) NASDAQ Rule 4350(d), and (iii) the rules of the SEC, as in effect from time to time;

 

·    

Each member will be able to read and understand fundamental financial statements, in accordance with the NASDAQ National Market Audit Committee requirements;

 

·    

No member may have participated in the preparation of the Company’s financial statements or the financial statements of any subsidiary of the Company during the last three (3) years; and

 

·    

At least one member will have past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background, including a current or past position as a principal financial officer or other senior officer with financial oversight responsibilities. 

 

ROLE OF THE AUDIT COMMITTEE:

 

This charter assigns oversight responsibility to the Audit Committee. Management shall be responsible for the preparation, presentation, and integrity of the Company’s financial statements; accounting and financial reporting principles; internal controls; and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditor retained by the Audit Committee shall be responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards.

 

The members of the Committee are not acting as experts in accounting or auditing and may rely on the information provided to them and on the representations made by management and the independent auditor. Accordingly, the Committee’s oversight does not provide an independent basis to determine that the Company’s financial statements have been prepared in accordance with generally accepted accounting principles or that the audit of the Company’s financial statements by the independent auditor has been carried out in accordance with generally accepted auditing standards.

 

RESPONSIBILITIES:

 

The responsibilities of the Audit Committee shall include:

 

·    

Reviewing from time to time, as may be appropriate, with management and with the independent and internal auditors, the adequacy of the Company’s system of internal controls, and to review, before its release, the disclosure regarding such system of internal financial and accounting controls required under SEC rules to be contained in the Company’s periodic filings and the attestations or reports by the independent auditors relating to such disclosure;

 

·    

Exercising sole responsibility for appointing, compensating (including all audit engagement fees and terms), overseeing the work of, and terminating the services of the independent auditors (including resolving disagreements between management and the independent

auditors regarding financial reporting), for the purpose of preparing or issuing an audit report or related work and pre-approving audit and permitted non-audit services provided to the Company by the independent auditors (or subsequently approving audit and permitted non-audit services in those circumstances where a subsequent approval is necessary and permissible) in accordance with the applicable requirements of the SEC and the Public Company Accounting Oversight Board (the “Oversight Board”);

 

·    

Reviewing the independence of the outside auditors, including (i) obtaining on a periodic basis a formal written statement from the independent auditors regarding relationships and services with the Company that may impact independence, as defined by applicable standards and SEC requirements, (ii) presenting this statement to the Board, and (iii) to the extent there are relationships, monitoring and investigating them;

 

·    

Reviewing and discussing with the independent auditors the proposed audit scope and approach; (ii) discussing with the Company’s independent auditors the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and disagreements with management and any other matters described in SAS No. 61, as may be modified or supplemented; and (iii) reviewing reports submitted to the audit committee by the independent auditors in accordance with the applicable SEC requirements;

 

·    

Reviewing and discussing with management and the independent auditors the annual audited financial statements and quarterly unaudited financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” prior to filing the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, respectively, with the SEC (which for purposes of the annual report shall include a recommendation as to whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K);

 

·    

Reviewing separately with management and the independent auditors significant suggestions for improvements provided to management by the independent auditors and any significant difficulties encountered during the conduct of the audit, including any restrictions on the scope of work or access to information;

 

·    

Reviewing before release with management and the independent auditors the unaudited quarterly operating results in the Company’s quarterly earnings release;

 

·    

Reviewing, approving and monitoring the Company’s code of ethics for its senior financial officers and its code of conduct for all employees;

 

·    

Reviewing, in conjunction with counsel, any legal matters that could have a significant impact on the Company’s financial statements;

 

·    

Providing oversight and review at least annually of the Company’s risk management policies, including its investment policies;

 

·    

If necessary, instituting special investigations with full access to all books, records, facilities and personnel of the Company;

 

·    

As appropriate, retaining outside legal, accounting or other advisors to advise or assist the Audit Committee in performing its functions;

 

·    

Reviewing and approving in advance any proposed related party transactions;

 

·    

Reviewing and assessing the adequacy of this charter on and annual basis, as required by marketplace Rule 4350(d)(1);

 

·    

Providing a report in the Company’s proxy statement in accordance with the rules and regulations of the SEC; and

 

·    

Establishing procedures for receiving, retaining and treating complaints received by the Company regarding accounting, internal accounting controls or auditing matters and procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

 

MEETINGS:

 

The Audit Committee will meet at least four times each year. The Audit Committee may establish its own schedule, which it will provide to the Board in advance.

 

The Audit Committee will meet separately with the Chief Executive Officer and separately with the Chief Financial Officer of the Company at such times as are appropriate to review the financial affairs of the Company. The Audit Committee will meet separately, without management present, with the independent auditors of the Company, at such times as it deems appropriate, to fulfill the responsibilities of the Audit Committee under this charter.

 

The audit committee will have regularly scheduled meetings at which only independent directors are present (“executive session”), as required by NASDAQ Rule 4350(c)(2).

 

MINUTES:

 

The Audit Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board.

 

REPORTS:

 

In addition to preparing the report in the Company’s proxy statement in accordance with the rules and regulations of the SEC, the Audit Committee will summarize its examinations and recommendations to the Board as may be appropriate, consistent with the Committee’s charter.

 

COMPENSATION:

 

Members of the Audit Committee shall receive such fees, if any, for their service as Audit Committee members as may be determined by the Board in its sole discretion. Such fees may include retainers or per meeting fees. Fees may be paid in such form of consideration as is determined by the Board.

 

Members of the Audit Committee may not receive any compensation from the Company except the fees that they receive for service as a member of the Board or any committee thereof.

 

DELEGATION OF AUTHORITY:

 

The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full Audit Committee at its scheduled meetings.