The Board of Directors of The Pep Boys – Manny, Moe & Jack (“Company”) has adopted this updated Charter for its Audit Committee (“Committee”) effective for its fiscal year commencing January 30, 2005.
The Committee shall be comprised of at least three (3) non-management directors designated by the Board of Directors, each of whom shall be generally knowledgeable in financial and auditing matters, as determined by the Board of Directors, and shall otherwise comply with the independence requirements of the New York Stock Exchange, Inc. In addition, at least one member of the Committee must have accounting or related financial management expertise, as determined by the Board of Directors. One member shall be appointed Committee Chairman by the Board of Directors. The Committee and its Chairman immediately prior to the adoption of this Charter shall continue to serve in those capacities until the Board of Directors determines otherwise.
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 auditor) 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 or Chief Executive Officer. 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 accounting policies and reporting practices of the Company, and the sufficiency of auditing relating thereto. The Committee is to serve as a focal point for communication among the Board of Directors, the Company’s independent auditors and management, as the respective duties of such groups, or their constituent members, relate to the Company’s financial accounting and reporting and to its 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 auditors, is responsible for producing the Company’s financial statements and reports and for instituting and maintaining internal controls. The independent auditors 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 Number. The Committee is to meet at least four times per year, and as many other times as the Board of Directors, the Committee or the Committee Chairman deems necessary. The Committee may meet or otherwise take action in the same manner or manners as may the Board of Directors.
4.2 Attendance. The Committee or the Chairman of the Committee may request that member(s) of management and representatives of the independent auditors be present at meetings of the Committee as well as outside experts or counsel, if appropriate.
4.3 Minutes. Minutes of each Committee Meeting are to be prepared and sent to Committee members.
5 Specific Duties
The Audit Committee is to perform the following duties:
5.1 Communication. Inform the independent auditors and management that they may communicate with the Committee, directly or through its Chairman, at any time with respect to any matters which he or she reasonably believes are related to the Committee’s responsibilities.
5.2 Internal Controls. Review with management and the independent auditors the Company’s policies and procedures to seek assurance as to the adequacy of internal controls.
5.3 Annual Audit Process.
(a) Selection of Independent Auditors. Inquire as to the independence of the independent auditors and obtain from the independent auditors, on a periodic basis, a formal written statement delineating all relationships between the independent auditors and the Company. In addition, the Committee shall review the extent of non-audit services, including without limitation any management consultant and other fee arrangements, provided by the independent auditors in relation to the objectivity needed in the independent audit and recommend that the Board of Directors take appropriate action in response to the independent auditors’ written statement to satisfy the Board of Directors as the independent auditors’ independence. Determine Committee’s recommendation to the Board of Directors on whether to retain or replace the independent auditors. Conduct, with management, the selection process in the event the independent auditors are to be replaced. The independent auditors shall be accountable to the Committee and the Board of Directors.
(b) Scope of Audit. Discuss with management and the independent auditors and approve, prior to the commencement of the audit, the scope and general extent of the independent auditors’ audit examination, including review of their engagement letter and the costs and fees for the audit. The Committee should be provided by the independent auditors with an explanation of the factors considered by the auditors in determining the audit scope, including, among other things, the attestation of the assessment of internal controls.
(c) Post-Audit Review. Subsequent to the completion of the audit for the last fiscal year, the Committee should conduct a post-audit review which shall include a review of the independent auditors’ report to the Committee, and management’s response thereto (including private meetings with the independent auditors as appropriate); and a review with management and the independent auditors of any matters relating to the audit, the financial statements for the fiscal year and the assessment of internal controls that may be of interest to the Committee in fulfilling its obligation to oversee the financial reporting process for which management is responsible.
5.4 Financial Reporting.
(a) Annual Report.
(i) Upon or near completion of the annual audit, review with management and the independent auditors, the proposed audited financial results for the fiscal year and the assessment of internal controls, prior to their release to the public. This review should encompass, among other things, the matters required to be discussed under Statement of Auditing Standards No. 61 and consideration of the Company’s accounting principles as applied in its financial reporting, including a review of particularly sensitive accounting estimates, reserves and accruals, judgmental areas, audit adjustments (whether or not recorded), and other such inquiries as the Committee or the independent auditors shall deem appropriate. 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.
(ii) The completed financial statements of the Company, including notes to the financial statements and management’s discussion and analysis and its assement of internal controls, will be circulated to the members of the Audit Committee as part of the Company’s annual report on Form 10-K, in advance of filing the Form 10-K with the SEC, to enable members of the Audit Committee to discuss with management and the independent auditors any questions arising in connection with their review of those financial statements and the assessment of internal controls.
(b) Quarterly Reports. Review with management and the independent auditors, the proposed unaudited financial results and assessment of internal controls for the applicable fiscal quarter, prior to their release to the public. The results of such reviews shall be reported and reviewed at each quarterly meeting of the Board of Directors. Management is expected to inform the Committee in advance of any proposed significant changes in accounting or financial reporting practices or of any other unusual events that could have a significant impact on the Company’s quarterly financial statements.
(c) Proxy Statement. In accordance with the regulations promulgated by the SEC, prepare and submit to management any reports required to be included in the Company’s Proxy Statement for the applicable fiscal year.
5.5 Whistleblower Line. Oversee the Company’s maintenance of an anonymous telephone hotline for the reporting by all of the Company’s employees of employee dishonesty, theft, embezzlement, fraudulent refunding or merchandise handouts and questionable accounting or auditing activities.
5.6 Audit Committee Review. Review and update the Committee’s charter annually
The Board of Directors of The Pep Boys – Manny, Moe & Jack (“Company”) has adopted this updated Charter for its Audit Committee (“Committee”) effective for its fiscal year commencing February 1, 2004