2003 Audit Charter: KMBKIMBERLY-CLARK CORPORATION
AUDIT COMMITTEE CHARTER
This charter governs the operations of the Audit Committee. The Audit
Committee shall review and reassess the adequacy of this charter annually and
recommend any proposed changes of the charter to the Board for approval. The
Corporation's Nominating and Corporate Governance Committee, in consultation
with the Chairman of the Board, shall recommend members for appointment to, and
the Chairman of, the Audit Committee to the Board for its approval. The Audit
Committee shall be comprised of at least three directors, each of whom is
independent of management and the Corporation. The members of the Audit
Committee shall meet the independence and experience requirements of the New
York Stock Exchange ("NYSE"), the Securities Exchange Act of 1934, and the rules
and regulations of the Securities and Exchange Commission ("SEC"). All Audit
Committee members shall be financially literate, and at least one member shall
be an "audit committee financial expert," as defined by rules and regulations of
the SEC and the NYSE. The Audit Committee shall maintain minutes of its meetings
and report to the Board.
The Audit Committee shall assist the Board in fulfilling its oversight
responsibilities to stockholders, the investment community and others for
monitoring (1) the quality and integrity of the financial statements of the
Corporation; (2) the Corporation's compliance with ethical policies contained in
the Corporation's Code of Conduct and legal and regulatory requirements; (3) the
independence, qualification and performance of the Corporation's independent
auditors; and (4) the performance of the Corporation's internal auditors. The
Audit Committee shall have the authority to retain special legal, accounting or
other consultants to advise the Audit Committee. The Audit Committee may request
any officer or employee of the Corporation or the Corporation's outside counsel
or independent auditors to attend a meeting of the Audit Committee or to meet
with any members of, or consultants to, the Audit Committee.
RESPONSIBILITIES AND PROCESSES
The Audit Committee, in carrying out its responsibilities, believes its
policies and procedures should be reviewed periodically, in order to best react
to changing conditions and circumstances. The Audit Committee should take
appropriate actions to ensure a management environment for quality financial
reporting, sound business risk practices, and ethical behavior. The following
shall be the principal duties and responsibilities of the Audit Committee. These
are set forth as a guide with the understanding that the Audit Committee may
supplement them as appropriate.
In carrying out its responsibilities, the Audit Committee shall:
1. Engage, subject to stockholder approval, the independent auditors of
the Corporation to conduct the examination of the books and records
of the Corporation and its affiliates, and to terminate any such
engagement if circumstances warrant. The independent auditors are
ultimately accountable to, and shall report directly to, the Audit
Committee. The Audit Committee shall have the sole authority to
approve all audit and non-audit engagement fees and terms. The Audit
Committee shall provide oversight of the work of the independent
auditors, including resolution of disagreements between management
and the independent auditors regarding financial reporting.
2. Pre-approve all audit services and, to the extent permitted by law,
all non-audit services provided by the independent auditors. The
Audit Committee may delegate pre-approval authority to a member of
the Audit Committee. The decisions of any Audit Committee
member to whom pre-approval authority is delegated must be presented
to the full Audit Committee at its next scheduled meeting.
3. Meet with the Corporation's independent auditors and management to
review the scope of the proposed annual audit (and related quarterly
reviews), the audit procedures to be followed and, at the conclusion
of the audit, review the principal audit findings including any
comments or recommendations of the Corporation's independent
4. Discuss with the Corporation's independent auditors and management
information relating to the auditors' judgments about the quality,
not just the acceptability, of the Corporation's accounting
principles and matters identified by the auditors during its interim
reviews. Also, the Committee shall discuss the results of the annual
audit and any other matters that may be required to be communicated
to the Audit Committee by the Corporation's independent auditors
under generally accepted auditing standards.
5. At least annually, receive from and discuss with the independent
auditors and management, separately or together as determined by the
Committee, a report on (1) all critical accounting policies and
practices to be used; (2) all alternative treatments of financial
information within generally accepted accounting principles that have
been discussed with management of the Corporation, the ramifications
of the use of such alternative disclosures and treatments, and the
treatment preferred by the independent auditors; and (3) other
material written communications between the independent auditors and
management of the Corporation, such as any management letter or
schedule of unadjusted audit differences.
6. Obtain assurance from the Corporation's independent auditors that
they have complied with their obligation to identify and report fraud
in connection with their audit of the financial statements of the
7. Discuss the Corporation's annual audited financial statements and
unaudited quarterly financial statements with management and the
independent auditors, including management's discussion and analysis
of financial condition and results of operations. Discuss other
matters with the Corporation's independent auditors as required by
the Securities and Exchange Commission and, if appropriate, recommend
that the audited financial statements be included in the
Corporation's Form 10-K.
8. Approve the content of the report of the Audit Committee required by
the Securities and Exchange Commission to be included in the
Corporation's annual proxy statement.
9. Provide sufficient opportunity at its meetings to meet separately in
executive session with the Corporation's independent auditors,
members of management and representatives of internal audit. Among
the items to be discussed with the Corporation's independent auditors
are (1) the independent auditors' evaluation of the Corporation's
financial and accounting personnel, (2) the cooperation that the
independent auditors received during the course of its audit, (3) any
management letter provided by the independent auditors and
management's response, and (4) any other matters the Audit Committee
may determine from time to time.
10. At least annually, obtain and review a report by the independent
auditors describing: (1) the firm's internal quality-control
procedures; and (2) 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 any
independent audits carried out by the firm and any steps taken to
deal with any such items.
11. At least annually, receive reports from the Corporation's
independent auditors regarding the auditors' independence from
management and the Corporation (including the identification of all
relationships between the independent auditors and the Corporation),
discuss such reports with the independent auditors, consider whether
the provision of non-audit services by the independent auditors is
compatible with the auditors' independence, and, if determined by
the Audit Committee, recommend that the Board take action to satisfy
itself of the independence of the auditors.
12. Evaluate the performance of the Corporation's independent auditors
and lead audit partner, and report its conclusions to the full
13. Set hiring policies that conform to applicable Securities and
Exchange Commission or other external guidelines for employment by
the Corporation of employees and former employees of the independent
14. Review major changes to the Corporation's auditing and accounting
principles and practices as suggested by the independent auditors,
internal auditors or management.
15. Discuss with the Corporation's independent auditors, the internal
audit executive and management the adequacy and effectiveness of the
Corporation's internal auditing, accounting and financial controls,
and elicit any recommendations for improvement.
16. Review the internal audit function, budgeting and staffing,
including appointment or replacement of the senior internal auditing
executive and the proposed audit scope for the year. The senior
internal auditing executive is accountable to, and shall report
directly to, the Audit Committee.
17. Receive from the internal audit executive a summary of findings from
completed audits (and management's response) and a progress report
on the proposed internal audit plan with explanations for any
deviations from the original plan.
18. Review periodic reports from the internal audit executive with
respect to, and advise the Board regarding compliance with, the
Corporation's Code of Conduct.
19. Discuss with management an outline of press releases regarding
results of operations, as well as general policies on earnings
guidance to be provided to analysts, rating agencies, and the
general public. Review any relevant items with management and the
Corporation's independent auditors prior to release of any such
press releases or earnings guidance. The review shall be with the
Chairman of the Audit Committee or the full Audit Committee, as may
20. Meet, at least annually, with management to discuss, as appropriate,
significant accounting accruals, estimates and reserves; litigation
matters; management's representations to the independent auditors;
new or proposed regulatory accounting and reporting rules; any
significant off-balance sheet transactions and special purpose
entities; and any significant financial reporting issues or
judgments disputed with the Corporation's independent auditors.
21. Discuss with management policies with respect to risk assessment and
22. Review with the Corporation's general counsel legal matters that may
have a material impact on the financial statements.
23. Establish procedures for (1) the receipt, retention, and treatment
of complaints received by the Corporation regarding accounting,
internal accounting controls, or auditing matters, and (2) the
confidential, anonymous submission by employees of the Corporation
of concerns regarding questionable accounting or auditing matters.
24. Report regularly to the Board any issues that arise with respect to
the quality or integrity of the Corporation's financial statements.
25. In consultation with the Nominating and Corporate Governance
Committee, conduct an annual evaluation of the performance and
effectiveness of the Audit Committee and report the results of that
evaluation to the Board.
While the Audit Committee has the responsibilities and powers set forth in
this charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. Management is responsible for preparing the Corporation's financial
statements and the Corporation's independent auditors are responsible for
auditing the annual financial statements and for reviewing the unaudited interim
financial statements. Nor is it the duty of the Audit Committee to conduct
investigations to assure compliance with laws and regulations and the
Corporation's Code of Conduct.