(as amended December 6, 2018)
The purpose of the Audit Committee of the Board of Directors (the “Board”) of Splunk Inc., a Delaware corporation (the “Company”), shall be to:
Provide oversight of the Company’s accounting and financial reporting processes and the audit of the Company’s financial statements;
Assist the Board in oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the lead independent auditor’s qualifications, independence and performance, and (iv) the Company’s internal accounting and financial controls;
Provide to the Board such information and materials as it may deem necessary to make the Board aware of significant financial matters that require the attention of the Board;
Oversee the management of risks associated with the Company’s financial reporting, accounting and auditing matters; and
Oversee the adequacy and effectiveness of the Company’s risk management framework.
The Audit Committee members shall be appointed by, and shall serve at the discretion of, the Board. The Audit Committee shall consist of at least three members of the Board. The Board may designate one member of the Audit Committee as its chair. The Audit Committee may form and delegate authority to subcommittees when appropriate. Members of the Audit Committee must meet the following criteria (as well as any criteria required by the Securities and Exchange Commission (the “SEC”)):
- Each member will be an independent director in accordance with (i) the Audit Committee requirements of the listing rules of The Nasdaq Stock Market LLC, (the “Nasdaq Rules”) and (ii) the rules of the SEC;
- Each member will be able to read and understand fundamental financial statements, in accordance with the Audit Committee requirements of the Nasdaq Rules;
- At least one member will be an “audit committee financial expert” as defined in the rules of the SEC; and
- No member shall have participated in the preparation of the Company’s or any of its subsidiaries’ financial statements at any time during the past three years.
The responsibilities and duties of the Audit Committee shall include:
- Reviewing the reports of management, internal audit and the independent auditors concerning the design, implementation and maintenance of the Company’s internal controls and procedures for financial reporting, including meeting periodically with the Company’s management, the lead internal auditor and the independent auditors to review their assessment of the adequacy of such controls and to review before release the disclosure regarding such system of internal controls required under SEC rules to be contained in the Company’s periodic filings, reports prepared by the internal audit function and the attestations or reports by the independent auditors relating to such disclosure;
- Reviewing and providing oversight of the external audit by (i) reviewing the independent auditors’ 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, disagreements with management and any other required communications described in applicable accounting standards; (iii) reviewing with the independent auditors the Company’s critical accounting policies and practices, alternative treatments of financial information within generally accepted accounting principles ("GAAP') that have been discussed with management, the ramifications of the use of such alternative treatments and the treatment preferred by the independent auditors, and other material written communications between the independent auditors and management; and (iv) reviewing reports submitted to the audit committee by the independent auditors in accordance with 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;
- Recommending to the Board, if deemed appropriate, that the audited financial statements be included in the Company’s Annual Report on Form 10-K, in accordance with the rules and regulations of the SEC;
- Directing the Company’s independent auditors to review before filing with the SEC the Company’s interim financial statements included in Quarterly Reports on Form 10-Q, using professional standards and procedures for conducting such reviews;
- Conducting a post-audit review of the financial statements and audit findings, including any suggestions for improvements provided to management by internal audit or the independent auditors, and management’s response to such suggestions;
- Reviewing Company quarterly earnings press releases for the purpose of ensuring that such press releases and other disclosures properly disclose financial information presented in accordance with GAAP and, to the extent non-GAAP information is included, reconcile non-GAAP to GAAP information and adequately disclose how such non-GAAP information differs from the comparable GAAP information and ensure that disclosure of such non-GAAP information is not given undue prominence and that such non-GAAP information does not provide a misleading presentation of the Company’s results of operations or financial condition, in all cases consistent with applicable disclosure and accounting rules, including without limitation, those of the SEC;
- Providing oversight of the Company’s financial risk management policies, including its investment policies, and reviewing such policies on an annual basis;
- Reviewing and maintaining the related person transaction policy to ensure compliance with applicable law and that any proposed related person transactions that are required to be disclosed in the Company’s financial statements or SEC filings are properly disclosed, and reporting any material related person transactions to the full Board;
- Reviewing, in conjunction with counsel, any legal matters that could have a significant impact on the Company’s financial statements;
- Reviewing its own charter and related processes and recommending any proposed changes to said charter and processes to the Board on an annual basis;
- Having sole authority over appointing, compensating, terminating, if necessary, and overseeing the work of the independent auditors, and any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, (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;
- Reviewing the independence, qualification and performance of the outside auditors, including (i) obtaining on a periodic basis a 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, and discussing with the independent auditors their independence, (ii) presenting this statement to the Board, and (iii) to the extent there are relationships, monitoring and investigating them;
- Pre-approving audit and permissible non-audit and tax services provided to the Company by the independent auditors, except where pre-approval is not required because such non-audit services are de minimis under the rules of the SEC, in which case subsequent approval may be obtained. 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;
Independent Auditor Function
- Overseeing the internal audit function, including reviewing with the lead internal auditor the internal audit budget, resource plan, activities, organizational structure, qualifications of the internal audit team members and any issues encountered in the course of the internal audit function’s work;
- At least annually, reviewing and approving the internal audit charter;
- Approving decisions regarding the appointment and removal of the lead internal auditor and ensuring there are no unjustified restrictions or limitations on the lead internal auditor;
- Approving the annual audit plan and all major changes to the plan, reviewing internal audit’s performance relative to its plan, and reviewing periodic reports summarizing results of the internal audit projects including any significant findings;
- Reviewing the effectiveness of the internal audit function on a periodic basis;
Regulatory Compliance and Other Matters
- Overseeing compliance with the requirements of the SEC for disclosure of auditor’s services and audit committee members, member qualifications and activities;
- Overseeing matters relating to the Company’s ongoing liquidity, including its internal and external sources of liquidity, and capital resources, including the Company’s financing arrangements;
- Reviewing management’s monitoring of compliance with the Foreign Corrupt Practices Act;
- Providing a report for inclusion 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.
The Audit Committee shall meet at least once each fiscal quarter. The Audit Committee may meet either in person or telephonically, and at such times and places as the Audit Committee determines. The Audit Committee may establish its own meeting schedule, which it shall provide to the Board. The Audit Committee may invite to its meetings other Board members, Company management and such other persons as the Audit Committee deems appropriate in order to carry out its responsibilities.
The Audit Committee shall meet separately with the Chief Executive Officer and separately with the Chief Financial Officer of the Company and any other member of management at such times as it deems appropriate to review the financial affairs of the Company. The Audit Committee will meet separately with the independent auditors of the Company at such times as it deems appropriate, but not less than quarterly. The chair of the Audit Committee may communicate separately with the independent auditors in advance of any meeting of the Audit Committee, and at such other times as he or she deems appropriate.
The Audit Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board.
The Audit Committee shall make regular reports to the full Board on the actions and recommendations of the Audit Committee.
Members of the Audit Committee shall receive such fees, if any, for their service as Audit Committee members or as chair of the Audit Committee, as may be determined by the Board in its sole discretion.
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 a chair or member of any committee thereof.
The independent auditors shall report directly to the Audit Committee. In addition, the Audit Committee may retain, as appropriate and at the Company’s expense, outside legal, accounting or other advisors to advise or assist the Audit Committee in the performance of any of the responsibilities and duties set forth above.
- Financial Expert
- Independent Director