The Audit Committee of our Board currently consists of Robert D. Daleo (Chair), Murray J. Demo and Moira A. Kilcoyne. Under the terms of its Charter, the Audit Committee assists the Board in its general oversight of our financial reporting processes, internal controls and audit functions.
Robert Daleo serves as the Audit Committee's Chair and our Board has determined that each member of the Audit Committee is financially literate and that Mr. Daleo qualifies as an "audit committee financial expert" under the rules of the SEC. Our Board of Directors has determined that each member of the Audit Committee meets the applicable independence requirements promulgated by NASDAQ and the SEC, including Rule 10A-3(b)(1) under the Exchange Act.
As described more fully in its charter, the Audit Committee oversees our accounting and financial reporting processes, internal controls and audit functions. In fulfilling its role, the Committee:
- Reviews the financial reports and related disclosure provided by us to the SEC, our stockholders or the general public;
- Reviews our internal financial and accounting controls;
- Oversees the appointment, compensation, retention and work performed by any independent registered public accounting firms we engage;
- Oversees procedures designed to improve the quality and reliability of the disclosure of our financial condition and results of operations;
- Oversees our internal audit function;
- Serves as the Qualified Legal Compliance Committee of Citrix in accordance with Section 307 of the Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the SEC;
- Recommends, establishes and monitors procedures designed to facilitate (1) the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters, and (2) the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters;
- Engages advisors as necessary; and
- Determines the funding from us that is necessary or appropriate to carry out the Committee’s duties.
In accordance with its charter, the Audit Committee will be comprised of a minimum of three directors, appointed by the Board, who shall meet the applicable independence, audit committee composition and Qualified Legal Compliance Committee composition requirements promulgated by the SEC, NASDAQ, any other exchange upon which securities our securities may be traded, or any governmental or regulatory body exercising authority over Citrix. In addition, each member of the Audit Committee will be free from any relationship that, in the opinion of our Board, would interfere with the exercise of his or her independent judgment as a member of the Committee.
At the time of his or her appointment to the Audit Committee, each member must (i) be able to read and understand fundamental financial statements, including a balance sheet, cash flow statement and income statement and (ii) not have participated in the preparation of our financial statements or any of our current subsidiaries at any time during the past three years. At least one member of the Audit Committee must have had past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. Further, at least one member of the Audit Committee shall qualify as an “audit committee financial expert” (as such term is defined under the SEC’s rules).
The members of the Audit Committee are elected by our Board at the Board meeting following our annual stockholder meeting. Each member is to serve until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. Unless a Chair is elected by the full Board, the members may designate a Chair by majority vote of the full Committee membership.
The Audit Committee will meet as necessary to enable it to fulfill its responsibilities and duties and must meet with management, the internal auditors and the independent accounting firm in executive sessions at least quarterly to discuss matters for which the Committee has responsibility.
The Audit Committee, to the extent its members deem necessary to carry out is duties, has the authority to engage outside counsel, independent accounting consultants, and/or other experts, at our expense.
At least annually, the Audit Committee shall evaluate its own performance and report the results of such evaluation to our Board.
To fulfill its responsibilities and duties the Audit Committee must undertake actions related to document review, our independent accounting firm, our internal and annual audit functions, our financial reporting processes, compliance, reporting and Qualified Legal Compliance Committee responsibilities. We encourage you to refer to the Audit Committee charter for a detailed listing of these actions, which include the following:
- Review and assess the adequacy of its charter periodically as conditions dictate, but at least annually (and update the charter if and when appropriate).
- Review with representatives of management and representatives of the independent accounting firm our audited annual financial statements and the related disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” prior to their filing as part of the Annual Report on Form 10-K. The Committee shall also review our quarterly financial statements prior to their inclusion in our quarterly SEC filings and the related disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
- Instruct the independent accounting firm to review our interim financial statements prior to their inclusion in our quarterly SEC filings.
Independent Accounting Firm
- Appoint, compensate, retain, terminate and oversee the work of any independent accounting firm engaged by Citrix for the purpose of preparing or issuing an audit report, performing other audit, review or attest services or any other related work. The Committee has the ultimate authority to approve all audit engagement fees and terms. The Committee also has the ultimate authority and responsibility to appoint, evaluate and, when warranted, replace such independent accounting firm.
- Resolve any disagreements between management and the independent accounting firm as to financial reporting matters.
- At least annually, obtain and review a report by the independent accounting firm describing (a) the firm’s internal quality control procedures and (b) any material issues raised by the most recent internal quality control review, peer review or review by the Public Company Accounting Oversight Board of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with any such issues.
- Evaluate the performance of the independent accounting firm and consider the discharge of the independent accounting firm when circumstances warrant. The independent accounting firm shall be ultimately accountable to the Committee.
Internal and Annual Audit Functions; Risk Assessment
- Review the internal audit function’s responsibilities, budget and staffing.
- Review the significant reports to management prepared by the internal auditors and management’s responses.
- Review and discuss with management the guidelines and policies that govern the process by which our exposure to risk is assessed and managed by management and discuss our major financial risk exposures and the steps that management has taken to monitor and control such exposure. The Committee provides periodic reports to the Board on such matters.
- Review any analysis prepared by management, the internal auditors and/or the independent accounting firm setting forth significant financial reporting issues and judgments made in connection with the preparation of our financial statements.
Financial Reporting Processes
- In consultation with the independent accounting firm and management, review annually the adequacy of our internal control over financial reporting.
- Review disclosures made to the Audit Committee by our Chief Executive Officer and Chief Financial Officer in connection with their certifications of our reports on Form 10-K and Form 10-Q. The Committee directs the actions to be taken and/or make recommendations to our Board of actions to be taken to the extent such disclosures indicate the finding of any significant deficiencies or material weakneses in internal controls or fraud.
- Review and discuss with management and the independent accounting firm our critical accounting policies and any critical audit matters arising from the current period audit, and accounting estimates resulting from the application of these policies, and inquire at least annually of both our internal auditors and the independent accounting firm as to whether either has any concerns relative to the quality or aggressiveness of management’s accounting policies.
- Request and review periodic reports from management as to our processes for reporting on our internal controls.
- Determine the funding necessary for (a) compensation of any independent accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services, (b) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties, and (c) compensation of any outside advisors to be engaged by the Committee.
- Establish written procedures for (a) the receipt, retention, and treatment of complaints we receive regarding accounting, internal accounting controls, or auditing matters and (b) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.
- Investigate any allegations that any of our officers or directors, or any other person acting under the direction of any such person, took any action to fraudulently influence, coerce, manipulate, or mislead any independent public or certified accountant engaged in the performance of an audit of our financial statements for the purpose of rendering such financial statements materially misleading and, if such allegations prove to be correct, take or recommend to the Board appropriate disciplinary action.
- Prepare in accordance with the rules of the SEC a written report to be included in our annual proxy statement for each annual meeting of stockholders.
- Establish written procedures for the confidential receipt, retention and consideration of evidence of a material violation of an applicable United States federal or state securities law, a material breach of fiduciary duty arising under United States federal or state law, or a similar material violation of any United States federal or state law by Citrix or by any of our officers, directors, employees or agents that is reported to the Committee by our General Counsel, Legal Compliance Officer or other legal advisors and determine whether an investigation is necessary or appropriate.
Investment Policies and Financing Activities
- Recommend action and provide advice to our Board regarding all matters affecting the review and approval of any proposed debt, equity or hybrid financing transaction.
- Review and assess our dividend policy and recommend dividend actions to the Board.
- Review and assess our stock and debenture repurchase plans and approve any actions taken under each such plan.
- Oversee arrangements with banks and/or brokers.
- Review and assess the adequacy of our investment guidelines and approve any amendments or revisions to our investment guidelines.
- Oversee our swap activities; and review and approve our decision to rely on the “end-user exception” to the mandatory clearing requirements included in the Commodity Exchange Act and to enter into swaps that are not submitted for clearing through a clearing organization and/or executed on a designated contract market or swap execution facility; and adopt policies governing our use of swaps subject to the end-user exception.
- Review and assess the adequacy of our foreign currency management guidelines and practices as necessary and approve any amendments or revisions to our foreign currency management guidelines.
- Review and assess the adequacy of our risk assessment and risk management guidelines and practices; assess whether these guidelines and practices are appropriate and approve any amendments or revisions to our risk assessment and risk management guidelines governing investment and financing matters.
The Audit Committee may exercise such additional powers and duties as may be reasonable, necessary or desirable, in the Committee’s discretion, to fulfill its duties under its charter.
While the Audit Committee has the responsibilities and powers set forth more fully and in further detail in its charter, it is not the duty of the Committee to plan or conduct audits or to determine that our financial statements are complete and accurate and are generated in accordance with generally accepted accounting principles.