Roger W. Ferguson Jr., Chair
R. Martin “Marty” Chávez
Robin L. Washington
Audit and Compliance Committee Charter
Purpose
The purpose of the Audit and Compliance Committee of the Board of Directors of Alphabet Inc. (“Alphabet”) is to:
- Oversee Alphabet’s accounting and financial reporting processes, including Alphabet’s disclosure controls and procedures and system of internal controls and audits of Alphabet’s consolidated financial statements.
- Oversee Alphabet’s relationship with its independent auditors, including appointing or changing Alphabet’s auditors and ensuring their independence.
- Provide oversight regarding significant financial matters, including but not limited to Alphabet’s tax planning, treasury policies, currency exposures, dividends and share issuance and repurchases.
- Review and discuss with management Alphabet’s major risk exposures, including financial, operational, data privacy and security, competition, legal, regulatory, compliance, civil and human rights, sustainability, and reputational risks, and the steps Alphabet takes to prevent, detect, monitor, and actively manage such exposures.
In carrying out Audit and Compliance Committee functions, the Audit and Compliance Committee must maintain free and open communication with Alphabet’s independent auditors and Alphabet’s management.
Appointment and Membership Requirements
The Audit and Compliance Committee shall be made up of at least the minimum number of independent members of the Board of Directors as required under the rules of the NASDAQ Stock Market (NASDAQ). Audit and Compliance Committee members are appointed by the Board of Directors. The Board of Directors decides the Audit and Compliance Committee’s exact number and can at any time remove or replace a Committee member. The Board of Directors will also make all determinations regarding satisfaction of the membership requirements described below.
The Audit and Compliance Committee will comply with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Securities and Exchange Commission (SEC) and the NASDAQ and any other requirements of applicable law, including those related to independence and committee composition.
At least one member of the Audit and Compliance Committee must have past employment experience in finance or accounting, or comparable experience or background, which results in an understanding of GAAP and financial statements, an ability to apply GAAP principles in assessing accounting policies and accounting for estimates, accruals and reserves, experience in preparing, auditing and evaluating financial statements with a level of complexity comparable to Alphabet’s financial statements, an understanding of audit committee functions and an understanding of internal control over financial reporting. Having been a CEO, CFO or other senior officer with financial oversight responsibilities for a public company, for instance, would qualify.
Each member of the Audit and Compliance Committee must be able to read and understand fundamental financial statements, including Alphabet’s balance sheet, income statement and cash flow statement.
Responsibilities
The Audit and Compliance Committee’s main responsibility is to oversee Alphabet’s financial reporting process (including Alphabet’s disclosure controls and procedures and system of internal controls). The Audit and Compliance Committee believes that Alphabet’s policies and procedures should remain flexible in order to best react to changing conditions and circumstances. The following list includes the Audit and Compliance Committee’s main recurring processes in carrying out its responsibilities. This list is intended as a guide, with the understanding that the Audit and Compliance Committee can supplement it as appropriate, consistent with the requirements of the SEC and the NASDAQ.
1. Hiring and Selection of Auditors. The Audit and Compliance Committee will directly appoint, retain and compensate Alphabet’s independent auditors. These independent auditors will report directly to, and be responsible to, the Audit and Compliance Committee.
2. Approval of Audit and Non-Audit Services. The Audit and Compliance Committee is responsible for overseeing services provided by the independent auditors, including establishing a policy to decide what services will be performed and the approval requirements for these services.
3. Auditor Independence. The Audit and Compliance Committee is responsible for making sure it reviews at least annually the qualifications, performance and independence of the auditors. In addition, the Audit and Compliance Committee shall review a formal written statement explaining all relationships between the outside auditors and Alphabet consistent with the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit and Compliance Committee concerning independence. The Audit and Compliance Committee will maintain an active dialogue with the independent auditors, covering any disclosed relationships or services that may impact their objectivity and independence. The Audit and Compliance Committee will review all proposed hires by Alphabet or any of its subsidiaries or controlled affiliates of management level or higher individuals formerly employed by the independent auditors who provided services to Alphabet or any of its subsidiaries or controlled affiliates. The Audit and Compliance Committee will take, or recommend to the Board of Directors that it take, appropriate actions to oversee the independence of Alphabet’s outside auditors.
4. Oversight of Auditors; Audit Plan. The Audit and Compliance Committee will be responsible for Alphabet’s relationship with its independent auditors. The Audit and Compliance Committee will discuss with the independent auditors the overall scope and plans for their audits and other financial reviews, as well as any other matters that are required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. The Audit and Compliance Committee will oversee the rotation of the audit partners of Alphabet’s independent auditors as required by the Sarbanes-Oxley Act and the rules of the SEC. The Audit and Compliance Committee will be responsible for reviewing and resolving any disagreements between Alphabet’s management and the independent auditors regarding financial controls or financial reporting.
5. Risk Assessment. The Audit and Compliance Committee has responsibility for oversight of risks and exposures associated with (1) financial matters, particularly strategy, financial reporting, tax, accounting, disclosure, internal control over financial reporting, treasury policies and activities, investment guidelines and credit and liquidity matters; (2) data privacy and security, competition, legal, regulatory, compliance, civil and human rights, sustainability, and reputational risks; and (3) our operations and infrastructure, particularly reliability, business continuity, and capacity. In order to facilitate this review, the Audit and Compliance Committee will meet in executive session with key management personnel and representatives of outside advisors as required.
6. Internal Controls. The Audit and Compliance Committee will discuss with management and the independent auditors the design, implementation, adequacy and effectiveness of Alphabet’s internal controls. The Audit and Compliance Committee will also meet separately with the independent auditors, with and without management present, to discuss the results of their examinations. The Audit and Compliance Committee will provide oversight over the system of internal controls, relying upon management’s and the independent auditors’ representations and assessments of, and recommendations regarding, these controls. The Audit and Compliance Committee will review any required disclosures regarding Alphabet’s internal controls.
7. Internal Audit Processes. The Audit and Compliance Committee will review the appointment of an internal auditing executive and the Chair of the Audit and Compliance Committee will meet separately with such executive at least once every quarter. The Audit and Compliance Committee will review any significant issues raised in reports to management by the internal audit team. The Audit and Compliance Committee will also provide oversight of the internal audit department objectives, its mission, responsibilities, independence, performance and annual plan.
8. Quarterly and Annual Financial Statements. The Audit and Compliance Committee will review and discuss the annual audited financial statements and quarterly financial statements with management (including the “Management’s Discussion and Analysis” section and officer certifications). The Audit and Compliance Committee will be responsible for making a recommendation to the Board of Directors as to whether Alphabet’s annual audited financial statements should be included in Alphabet’s Annual Report on Form 10-K.
9. Proxy Report. The Audit and Compliance Committee will prepare any report required to be prepared by it for inclusion in any proxy statement of Alphabet under SEC rules and regulations.
10. Earnings Announcements. The Audit and Compliance Committee will review and discuss with management Alphabet’s quarterly earnings announcements and other public announcements regarding Alphabet’s results of operations.
11. Critical Accounting Policies. The Audit and Compliance Committee will obtain, review and discuss reports from the independent auditors about:
- all critical accounting policies and practices which Alphabet will use, and the qualities of those policies and practices;
- all alternative treatments of financial information within generally accepted accounting principles that the auditors have discussed with management officials of Alphabet, ramifications of the use of these alternative disclosures and treatments, the treatment preferred by the independent auditors and the reasons for favoring that treatment; and
- other material written communications between the independent auditors and Alphabet management, such as any management letter or schedule of unadjusted differences.
The Audit and Compliance Committee will also discuss with the independent auditors and then disclose those matters whose disclosure is required by applicable auditing standards, including any critical audit matters, difficulties the independent auditors encountered in the course of the audit work, any restrictions on the scope of the independent auditors’ activities or on their access to requested information, and any significant disagreements with management.
12. CEO and CFO Certifications. The Audit and Compliance Committee will review the CEO and CFO disclosure and certifications under Sections 302 and 906 of the Sarbanes-Oxley Act.
13. Related Party Transactions. The Audit and Compliance Committee will review and approve all related party transactions.
14. Anonymous Complaint Handling Process. The Audit and Compliance Committee will have responsibility for establishment and oversight of processes and procedures for (a) the receipt, retention and treatment of complaints about accounting, internal accounting controls or audit matters, and (b) confidential and anonymous submissions by employees concerning questionable accounting, auditing and internal control matters. All such relevant complaints and submissions must be reported to the Audit and Compliance Committee.
15. Ability to Investigate; Retention of Advisors. The Audit and Compliance Committee has the power to investigate any matter brought to its attention, with full access to all Alphabet books, records, facilities and employees. The Audit and Compliance Committee has the sole authority to select, retain and terminate consultants, legal counsel or other advisors to advise the Audit and Compliance Committee, at the expense of Alphabet, and to approve the terms of any such engagement and the fees of any such consultants, legal counsel or advisors. In selecting a consultant or other advisor, the Audit and Compliance Committee will take into account factors it considers appropriate or as may be required by applicable law or listing standards.
16. Review of Alphabet Policies. The Audit and Compliance Committee will be responsible for reviewing and approving all changes to Alphabet’s Policy Against Insider Trading, Related Party Transaction Policy, Investment in Marketable Securities and Accounting for Marketable Securities Policy, Foreign Exchange and Accounting for Foreign Currency Hedges Policy, Code of Conduct, and Global Commitment and Signature Authority Policy. The Audit and Compliance Committee will review the implementation and effectiveness of these policies and Alphabet’s overall compliance program at least annually with management and Alphabet’s compliance and securities counsel. The Chief Legal Officer has express authority to communicate personally at any time with the Chair of the Audit and Compliance Committee about compliance matters.
The Audit and Compliance Committee will also periodically review and discuss with management, Alphabet’s overall hedging strategy and the use of swaps and other derivative instruments by Alphabet or any of its subsidiaries for hedging risks pursuant to Alphabet’s Investment Policy, other hedging policies, or otherwise. The Audit and Compliance Committee will have the authority to review and approve, at least annually, decisions by Alphabet or any of its subsidiaries to enter into swaps, including those that may not be subject to clearing and exchange trading and execution requirements in reliance on the “end-user exception” under the Commodity Exchange Act, or other rules and regulations promulgated from time to time.
17. Review of Charter. The Audit and Compliance Committee will review and reassess the adequacy of this charter at least once a year and make recommendations to the Board regarding any proposed changes.
It is not the Audit and Compliance Committee’s responsibility to prepare and certify Alphabet’s financial statements, to guarantee the independent auditors’ report, or to guarantee other disclosures by Alphabet. These are the fundamental responsibilities of management and the independent auditors. The Audit and Compliance Committee members are not full-time Alphabet employees and do not perform the functions of auditors and accountants.
Restrictions on Independent Auditors Services
Alphabet’s independent auditors cannot perform any of the following services:
- bookkeeping or other services related to Alphabet’s accounting records or financial statements;
- financial information systems design and implementation;
- appraisal or valuation services, fairness opinions or contribution-in-kind reports;
- actuarial services;
- internal audit outsourcing services;
- management or human resources functions;
- broker or dealer, investment adviser or investment banking services;
- legal services and expert services unrelated to the audit; and
- any other service that the Public Company Accounting Oversight Board of Directors determines, by regulation, would impair the independence of Alphabet’s auditors.
Meetings and Minutes
The Audit and Compliance Committee will meet at least four times each year, and will keep minutes of each meeting. The Audit and Compliance Committee decides when and where it will meet, and must deliver a copy of this schedule in advance to the Board of Directors.
Unless the Board of Directors or this Charter provides otherwise, the Audit and Compliance Committee can make, alter or repeal rules for the conduct of its business. In the absence of these rules, the Audit and Compliance Committee will conduct its business in the same way the Board of Directors conducts its business.
Delegation of Authority; Chair of Audit and Compliance Committee
The Audit and Compliance Committee can delegate to one or more members of the Audit and Compliance Committee the authority to pre-approve audit and permissible non-audit services, as long as any pre-approval of services is presented to the full Audit and Compliance Committee at its next scheduled meeting.
The Audit and Compliance Committee can delegate to one or more members of the Audit and Compliance Committee the authority to pre-approve related party transactions, as long as any pre-approval of a transaction is presented to the full Audit and Compliance Committee at its next scheduled meeting.
The Audit and Compliance Committee cannot delegate its responsibilities to non-committee members.
Unless the chair of the Audit and Compliance Committee is elected by the full Board of Directors, the members of the Audit and Compliance Committee shall designate a chair by the majority vote of the full Committee membership. The Audit and Compliance Committee may change the chair at any time.
Last revised April 17, 2024