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The Audit Committee (the "Committee") of the Board of Directors (the "Board") of QUALCOMM Incorporated (the "Company") was established to oversee the accounting and financial reporting processes of the Company and audits of the Company's financial statements. This charter specifies the scope of authority and responsibility of the Committee.
1. The Committee shall be comprised of at least three directors who meet the independence and experience requirements contained in the NASDAQ listing standards and any other applicable independence requirements established by law or Securities and Exchange Commission ("SEC") rule. The Board will decide whether the directors meet such independence and experience requirements, based in part upon the recommendation of the Governance Committee of the Board (the "Governance Committee").
2. At least one member of the Committee shall have past employment experience in finance or accounting, hold professional certification in accounting or other comparable experience or background resulting in the individual being "financially sophisticated," (as defined by the NASDAQ listing standards), which may include being or having been a chief executive, chief financial or other senior officer with financial oversight responsibilities.
3. Members of the Committee, including the chairperson of the Committee, shall be appointed annually by the Board, based in part on the recommendation of the Governance Committee. Members may be replaced by the Board at any time, but shall otherwise serve until a successor has been named or the Board decides to reduce the number of Committee members.
4. The Committee shall meet at least four times a year, with the authority to convene additional meetings as circumstances require. The Committee may invite members of management, internal auditors, independent auditors, legal counsel or others to attend meetings and to provide relevant information. The Committee may include non-Committee members at its meetings, but generally shall also hold an executive session at each meeting at which only independent directors are present.
5. The Committee may form and delegate authority to subcommittees when appropriate, or to one or more members of the Committee.
6. The Committee shall maintain written minutes of its meetings, which minutes will be filed in the corporate minute book.
To fulfill its responsibilities and duties hereunder, the Committee shall:
Independent Auditor Oversight
1. Be directly and solely responsible for the oversight, engagement and termination of any independent auditor employed by the Company for the purpose of preparing or issuing an audit report or related work on or with respect to the consolidated financial statements of the Company. The independent auditor shall report directly to the Committee.
2. Meet with the independent auditor to discuss the scope of the annual audit, key risk areas and significant modifications to the annual audit plan.
3. Approve in advance the engagement of the independent auditor for all audit services and non audit services, subject to preapproval policies adopted by the Committee and the de minimus exception for non-audit services contained in the Securities Exchange Act and related rules; and approve the fees of any such engagements
4. Obtain periodically from the independent auditor (i) a formal written statement of the matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard 16 and (ii) any formal written statements consistent with and in satisfaction of PCAOB Rule No. 3526, including without limitation, descriptions of (a) all relationships between the independent auditor and the Company, (b) any disclosed relationships or services that may impact auditor objectivity and independence and (c) whether any of the Company’s senior finance personnel were recently employed by the independent auditor; and discuss with the independent auditor any disclosed relationships or services that may affect the objectivity or independence of the auditor.
5. Evaluate the qualifications, performance and independence of the independent auditor.
6. Consult with the independent auditor to assure the rotation every five years of the lead audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit and consider issues related to the timing of such rotation and the transition to new lead and reviewing partners.
7. Review procedures for the hiring of employees or former employees of the independent auditor, taking into account the impact of such procedures on auditor independence.
8. Review with the independent auditor matters required to be discussed by PCAOB Auditing Standard 16, including the following:
Financial Information Oversight
1. Review and discuss with management and the independent auditor:
2. Recommend to the Board whether the audited financial statements should be included in the Company's Annual Report on Form 10-K.
3. Periodically (but not less than annually) meet separately with the independent auditor.
1. Review and discuss annually with management its assessment of the effectiveness of the Company's internal control over financial reporting and disclosure controls and procedures.
2. Review and approve, at least annually, the internal audit plans, budget and staffing of the internal audit function. The Committee shall also receive regular reports from the Company's internal auditor regarding the significant results of internal audits; and whether recommendations made in the audits have been implemented by Company management. The Committee shall meet separately with the internal auditor to discuss any matter that members of the Committee or the internal auditor believe should be discussed privately.
3. Review with the principal executive and financial officers of the Company any report on significant deficiencies in the design or operation of internal controls that could adversely affect the Company's ability to record, process, summarize or report financial data, any material weakness in internal controls identified to the independent auditors, and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls.
4. Review the appointment of the senior executive in charge of the Company’s compliance function. Review and approve the compliance plan and obtain regular reports on the Company’s compliance plan and the state of compliance matters. The Committee shall meet separately with the senior executive in charge of the Company’s compliance function to discuss any matter that the members of the Committee or the senior executive believe should be discussed privately.
Legal Compliance and Ethics Oversight
1. Review and approve related person transactions that would require disclosure under applicable SEC rules (including, to the extent required by the applicable Nasdaq rules, transactions with family members of directors or executive officers), after considering potential conflicts of interest and improprieties. The Committee may delegate review and approval of any employment-related related person transactions to the Compensation Committee.
2. Establish procedures for receipt, retention and treatment of complaints or concerns received by the Company regarding accounting, internal controls or auditing matters, and the confidentiality and anonymity of such submissions. The Committee will assure, as necessary, that appropriate remedial measures or actions are taken with respect to such complaints or concerns.
3. Review and approve the Company’s Code of Ethics and provide for and review prompt disclosure to the public of any change in, or waiver of such Code of Ethics. The Committee will review conduct alleged to be in violation of such Code of Ethics and adopt as necessary or appropriate remedial, disciplinary or other measures with respect to such conduct.
4. Review the Company's procedures for monitoring compliance with the Foreign Corrupt Practices Act and other applicable anti-corruption laws.
Other Matters Oversight
1. Review the Company’s policies and practices with respect to the financial reporting and control aspects of risk management. In addition, the Committee will review the status of risk oversight activities performed by the Board and its other committees.
2. Submit the Audit Committee Report required by the rules of the SEC to be included in the Company's annual proxy statement.
3. Regularly report to the Board on the Committee's activities, recommendations and conclusions.
4. Review and reassess this Charter's adequacy at least annually.
5. Review the Committee's own performance, at least annually, for purposes of self evaluation and to encourage the continuing improvement of the Committee in the execution of its responsibilities.
6. On an annual basis, review who among the Committee's members is to be designated for disclosure purposes as an "audit committee financial expert" as defined by SEC regulations; and provide a recommendation for such determination to the Board through the Governance Committee.
General and Resources
1. Have the authority to engage advisors and experts deemed necessary, as determined by the Committee, to permit the Committee to perform its duties under this Charter. The fees and expenses of these advisors and experts shall be paid by the Company.
2. At its discretion, have the authority to initiate special investigations and, if appropriate, hire special legal, accounting or other outside advisors and experts to assist the Committee to fulfill its duties under this Charter.
3. Perform any other activities consistent with this Charter, the Company's Bylaws and governing law, as the Committee or the Board deems necessary or appropriate.
As amended May 5, 2014
Raymond V. Dittamore has served as a director of the Company since December 2002. Mr. Dittamore retired in June 2001 as a partner of Ernst & Young LLP, an international public accounting firm, after 35 years of service. Mr. Dittamore has been a director of Life Technologies Corporation since July 2001. He previously served as a director of Gen-Probe Incorporated from August 2002 to September 2009 and Digirad Corporation from March 2004 to March 2008. Mr. Dittamore holds a B.S. degree in accounting from San Diego State University.
Sir Donald G. Cruickshank has served as a director of the Company since June 2005. Sir Donald has been Chairman of Audioboo Ltd. since April 2010. He was Chairman of Clinovia Group Ltd. from January 2004 to February 2007 and Formscape Group Ltd. from April 2003 to December 2006 and was a member of the Financial Reporting Council, the body in the U.K. responsible for oversight of the Accountancy and Actuarial professions and for corporate governance standards, from June 2001 to June 2007. Sir Donald has extensive experience in a number of areas, including European regulation and telecommunications. His career has included assignments at McKinsey & Co. Inc., Times Newspapers, Virgin Group plc., Wandsworth Health Authority and the National Health Service in Scotland. Sir Donald served as Chairman of the London Stock Exchange plc. from 2000 to 2003 and as Director General of the U.K.'s Office of Telecommunications (Oftel) from 1993 to 1998. From 1997 to 2000, he served as Chairman of Action 2000, the U.K.'s Millennium Bug campaign. In 1998, Chancellor Gordon Brown appointed him as Chairman of the Government's Review of the U.K. banking sector, and from 1999 to 2004, he served as Chairman of SMG plc., one of Scotland's leading broadcasters. Sir Donald holds an M.A. degree in law and an honorary L.L.D. degree from the University of Aberdeen and an M.B.A. degree from Manchester Business School, the University of Manchester.
Thomas W. Horton has served as a director of the Company since December 2008. Mr. Horton has been Chairman of American Airlines Group Inc. (formed upon the merger of AMR Corporation (AMR) and US Airways Group, Inc.) since December 2013 and Chairman of American Airlines, Inc. (American) since November 2011. He was Chairman and Chief Executive Officer of AMR and Chief Executive Officer of American from November 2011 to December 2013, and President of AMR and American from July 2010 to December 2013. He served as Executive Vice President and Chief Financial Officer of AMR and American from March 2006 to July 2010. He served as Vice Chairman and Chief Financial Officer of AT&T Corporation (AT&T) from January 2002 to February 2006. Prior to joining AT&T, Mr. Horton was Senior Vice President and Chief Financial Officer of AMR from January 2000 to 2002 and served in numerous management positions with AMR since 1985. In November 2011, AMR and American filed voluntary petitions for reorganization under Federal bankruptcy laws, and emerged from bankruptcy in December 2013. Mr. Horton holds a B.B.A. degree in accounting from Baylor University and an M.B.A. degree from Southern Methodist University.