Audit Committee
Audit Committee
Charter of the Audit Committee of the Board of Directors, The Bank of New York Mellon Corporation
General Purpose and Function of the Committee
The Committee will assist the Board in fulfilling its oversight responsibilities in respect of:
- the integrity of the Corporation's financial reporting and systems of internal controls regarding finance and accounting;
- the integrity of the Corporation's financial statements;
- the performance of the Corporation's internal audit function (“Internal Audit”);
- the qualifications, independence and performance of the registered independent public accountants; and
- the Corporation’s compliance with legal and regulatory requirements.
The Committee's function is one of oversight, recognizing that the Corporation's management is responsible for preparing the Corporation's financial statements, and the independent public accountants are responsible for auditing those statements. In adopting this Charter, the Board acknowledges that the Committee members are not employees of the Corporation and are not providing any expert or special assurance as to the Corporation's financial statements or any professional certification as to the work of the Corporation's independent public accountants or the auditing standards applied. Each Committee member shall be entitled to rely on the integrity of those persons and organizations within and outside the Corporation that provide information to the Committee and on the accuracy and completeness of the financial and other information provided to the Committee, absent actual knowledge to the contrary.
Annually, the Committee will prepare an Audit Committee Report as required by the Securities and Exchange Commission (the "SEC") to be included in the Corporation's proxy statement.
The Committee is responsible for maintaining open communication between the Committee and the registered independent public accountants, Internal Audit, management, and the Board of Directors.
In addition, the Committee may perform the audit committee functions specified by 12 C.F.R. Part 363 for insured depository institution subsidiaries of the Corporation and may perform the functions of a fiduciary audit committee required by 12 C.F.R. §9.9 for any national bank subsidiary of the Corporation engaged in fiduciary activities. In furtherance of such responsibilities, the Committee has a duty to seek to preserve the safety and soundness of its national bank subsidiaries, and will exercise its oversight of any such subsidiary’s audit committee matters with the understanding that such subsidiary’s interests are not to be subordinated to the interests of the Corporation in a way as to jeopardize the safety and soundness of such subsidiary.
Composition, Membership and Tenure
The Committee shall consist of three or more members who satisfy the independence and experience requirements imposed by the New York Stock Exchange ("NYSE") listing standards and other applicable laws and regulations. All members will be "financially literate," at least one member will have "accounting or related financial management expertise" and, if the Committee performs the audit committee functions for an insured depository institution subsidiary of the Corporation, at least two members will have “banking or related financial management expertise” and no member will be a large customer, as such term is defined for purposes of 12 C.F.R. §363.5(b), of such insured depository institution. All Committee members will have knowledge of audit and risk management practices commensurate with the Corporation’s complexity and risk profile.
The Board of Directors will determine whether any member of the Audit Committee is an “audit committee financial expert” as defined by rules of the SEC.
If the Committee performs the fiduciary audit committee functions for a national bank subsidiary of the Corporation, no Committee member will be an officer of such national bank subsidiary or any of such national bank subsidiary’s affiliates who participate significantly in the administration of such national bank subsidiary’s fiduciary activities. The Committee will consist of a majority of members who are not also members of any committee to which such national bank subsidiary’s board of directors has delegated power to manage and control the fiduciary activities of such national bank subsidiary.
If any member of the Committee simultaneously serves on the audit committees of more than two other public companies, the Board shall determine whether such simultaneous service would impair the member's ability to serve effectively on the Committee and disclose the determination in the proxy statement.
Committee members and the Committee Chairman and their independence shall be reviewed annually by the Corporate Governance, Nominating and Social Responsibility Committee and the Board of Directors and serve at the pleasure of the Board.
Duties and Responsibilities
Registered Independent Public Accountants
The Committee has direct responsibility for the appointment, compensation, retention and oversight of the work of any registered independent public accountants engaged to prepare an audit report or to perform other audit, review or attest services for the Corporation, and such registered independent public accountants will report directly to the Committee. Annually, the Committee shall recommend that the Board request shareholder ratification of the appointment of the registered independent public accountants. The Committee also has the direct responsibility to annually evaluate and, as appropriate, replace the registered independent public accountants.
The Committee shall discuss with the registered independent public accountants the overall scope and plans for its audit, including the adequacy of staffing. The Committee shall review with the registered independent public accountants the results of the audit, and the Committee shall discuss any management or internal control letter issued or proposed to be issued by the registered independent public accountants.
The Committee shall perform an annual evaluation of the registered independent public accountants' qualifications, performance, and independence and the performance of the lead engagement partner. In connection with this evaluation, at least annually, the Committee shall obtain and review a report by the registered independent public accountants describing: the firm's internal quality-control procedures; any material issues raised by the most recent internal quality-control review or peer review 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; the results of the most recent review of the firm by the Public Company Accounting Oversight Board (the “PCAOB”); and (to assess the registered independent accountants' independence) all relationships between the registered independent public accountants and the listed company (including, in the latter regard, the annual communications required under applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence). The Committee shall discuss with the independent accountants their independence and the matters required to be discussed by applicable PCAOB standards, any other applicable auditing standards and applicable laws and regulations.
The Committee shall discuss with management the timing and process for implementing the rotation of the lead audit partner, the concurring partner and any other active audit engagement team partner and shall consider whether there should be a regular rotation of the audit firm itself.
The Committee shall review with the registered independent public accountants any audit problems or difficulties, including any restrictions on the scope of the registered independent public accountants' activities or on access to requested information and any significant disagreements with management and management's response. The Committee shall oversee the process for the resolution of any such disagreement.
The Committee shall annually receive from the independent public accountants a formal written statement of the fees billed in each of the last two fiscal years for each of the following categories of services rendered by the registered independent public accountants: (i) the audit of the Corporation's annual financial statements and the reviews of the financial statements included in the Corporation's Quarterly Reports on Form 10-Q or services that are normally provided by the registered independent public accountants in connection with statutory and regulatory filings or engagements; (ii) assurance and related services not included in clause (i) that are reasonably related to the performance of the audit or review of the Corporation's financial statements, in the aggregate and by each major type of service; (iii) tax compliance, tax advice and tax planning services, in the aggregate and by each major type of service; and (iv) all other products and services provided by the registered independent public accountants, in the aggregate and by each major type of service.
The Committee is responsible for the pre-approval of all audit and permitted non-audit services performed by the independent public accountants. In its discretion, the Committee may delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the registered independent public accountants, provided that all such approvals will be presented to the Audit Committee on a quarterly basis. As an alternative to pre-approving each audit and non-audit service, the Committee may establish and disclose policies and procedures for pre-approval, provided that they meet the requirements of applicable laws and regulations.
If the Committee performs the audit committee functions for an insured depository institution subsidiary of the Corporation, the Committee will be responsible for ensuring that engagement letters and any related agreements with the independent public accountant for services to be performed do not contain any limitation of liability provisions prohibited by applicable laws or regulations.
Chief Audit Executive and Internal Audit
The Committee shall approve the appointment of the Chief Audit Executive, who will report directly to the Committee. The Committee has the direct responsibility to annually review the performance of the Chief Audit Executive and, as appropriate, replace the Chief Audit Executive. Administratively, the Chief Audit Executive reports to the Corporation’s Chief Executive Officer. Annually, or at other appropriate intervals, the Committee shall review and set the compensation of the Chief Audit Executive.
At least annually, the Committee shall review and approve Internal Audit’s charter, budget and staffing levels, and the audit plan and overall risk-assessment methodology. Annually, the Audit Committee shall discuss with the registered independent public accountants and the Chief Audit Executive the responsibilities, budget and staffing of Internal Audit. The Committee shall approve audit plans (and amendments to audit plans), resources, budgets and the outsourcing of functions to external vendors, if applicable.
The Committee shall review significant issues identified by Internal Audit together with management's responses and follow-up, ensuring appropriate management accountabilities are in place.
If the Committee performs the audit committee functions for an insured depository institution subsidiary of the Corporation, the Committee will oversee the internal audit function of such subsidiary.
Audited Financial Statements and Quarterly Financial Statements
The Committee shall meet to review with management, the registered independent public accountants, and the Chief Audit Executive the Corporation's annual consolidated financial statements and the related opinion thereon, and the quarterly financial statements and report thereon, prior to the filing of such documents with the SEC. In this regard, the Committee shall consider (as may apply to such annual or quarterly statements) (i) the Corporation's specific disclosures under Management's Discussion and Analysis of Financial Condition and Results of Operations, (ii) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements, (iii) significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including any significant changes in the Corporation's selection or application of accounting principles and any information presented regarding alternative GAAP methods or treatments and the effect that such alternatives would have on the financial statements, (iv) any accounting adjustments that were noted or proposed by the registered independent public accountants but were passed (as immaterial or otherwise), (v) any other matters communicated to the Committee by the registered independent public accountants under generally accepted auditing standards or applicable laws or regulations, (vi) any management letter or schedule of unadjusted differences, and (vii) matters set forth in General Commentary to NYSE Rule 303A.07(b) and Commentary to NYSE Rule 303A.07(b)(iii)(F). The Committee shall review the registered independent public accountants' judgments about the quality and appropriateness of the accounting principles applied in the Corporation's financial reporting, and shall review and assess the reasonableness of analyses prepared by management and the registered independent public accountants setting forth significant financial reporting issues and judgments made in connection with the preparation of financial statements. Annually, on the basis of its review and discussion of such matters, the Committee shall recommend to the Board of Directors that the audited financial statements be included in the Corporation's annual report on Form 10-K for filing with the SEC.
Internal Control Over Financial Reporting
Quarterly, the Committee shall review a report from the Disclosure Committee and reports concerning the status of the Corporation's annual review of internal control over financial reporting, including (i) information about (a) any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the Corporation's ability to record, process, summarize and report financial information and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation's internal control over financial reporting, and (ii) management's responses to any such circumstance.
Annually, the Committee shall review management's report on internal control over financial reporting to be included in the Corporation's Annual Report on Form 10-K. The Committee shall also review the registered independent public accountants' attestation and report on management's assessment regarding the Corporation's internal controls over financial reporting.
The Committee will review with management and the registered independent public accountants the content and the basis for reports relating to internal controls over financial reporting as required under the Federal Deposit Insurance Corporation Improvement Act of 1991.
Financial Planning & Analysis
The Committee shall review financial forecasts, operating budgets, capital expenditures and expense management programs and progress relative to targets and relative to competitors.
The Committee shall also review plans with regard to Net Interest Revenue, investment portfolio activities and progress relative to such plans and activities.
Press Releases and Information Provided to Analysts and Rating Agencies
The Committee or, in its discretion, the Chairman of the Committee, shall discuss with management, the Chief Audit Executive and/or the registered independent public accountants, as appropriate, the types and presentation of information to be included in the Corporation's earnings press releases and financial information and earnings guidance, if any, provided to analysts and rating agencies.
Oversight of Compliance with Laws and Regulations, Tax Policy and Risk Management
The Committee will review with management, the General Counsel, the Chief Compliance Officer, and the Chief Audit Executive the Corporation's compliance with laws and regulations.
The Committee will periodically review with management the Corporation's policies and positions taken on tax issues.
The Committee will review and discuss policies with respect to risk assessment and risk management. While it is the responsibility of management to assess and manage the Corporation's exposure to risk, the Committee will discuss guidelines and policies to govern the process by which this is handled. In addition, the Committee will review in a general manner the processes used by the Corporation to manage and assess its risk through the Risk Committee of the Board and the management-level risk committees.
The Committee shall coordinate with the Risk Committee of the Board (which may be done through the Chairs of each Committee) to ensure that each Committee has received and, when appropriate, discussed, the information necessary to fulfill their respective responsibilities and duties with respect to areas of common interest. These areas may include, among other matters, the Corporation’s methods for identifying and managing risks, and significant matters including, but not limited to, investment portfolio issues, frauds, regulatory enforcement actions, litigation or whistleblower matters, and technology issues.
The Committee will receive reports from the Chief Compliance Officer on the Corporation's compliance with legal and regulatory requirements, on at least an annual basis. The Committee will receive periodic reports from the General Counsel on all significant litigation and investigations and updates on these matters as warranted by circumstances.
The Committee may receive summary annual reports from audit committees of subsidiaries of the Corporation.
If the Committee performs the audit committee functions for an insured depository institution subsidiary of the Corporation, the Committee will review with management the basis for its reports issued under 12 C.F.R. § 363.2(b).
Audit of Fiduciary Activities of National Bank Subsidiaries
If the Committee performs the fiduciary audit committee functions for a national bank subsidiary of the Corporation (i) the Committee will have responsibility for overseeing the audit of the fiduciary activities of such subsidiary, (ii) the annual audit (by internal or external auditors) of all significant fiduciary activities of such subsidiary, or discrete audits (by internal or external auditors) of each significant fiduciary activity of such subsidiary in connection with a continuous audit system in accordance with 12 C.F.R. § 9.9(b), will be under the direction of the Committee, and (iii) under the direction of the Committee, the results of each audit (including significant actions taken as a result of the audit) will be reported to the board of directors of such subsidiary for inclusion in the minutes of the board of directors of such subsidiary.
Separate Meetings with Chief Audit Executive, Registered Independent Public Accountants, Chief Financial Officer, General Counsel, and Chief Compliance Officer
Meetings of the Committee shall include separate executive sessions with the Chief Audit Executive and the Corporation's registered independent public accountants, quarterly and as needed. The Committee shall also include separate executive sessions with the Corporation's Chief Financial Officer, General Counsel, and Chief Compliance Officer periodically, and as needed.
Hiring Policies for Employees or Former Employees of Registered Independent Public Accountants
The Committee shall set a clear hiring policy for employees or former employees of the registered independent public accountants. Unless subsequently amended, such policy shall be that the Corporation will not hire any employee or former employee of the registered independent public accountants if such hiring would cause the registered independent public accountants to cease to be independent under applicable rules of the SEC.
Annual Review of Senior Officers' Perquisites and Expense Accounts and of Procedures for Preparation of the Compensation Discussion and Analysis
Annually, the Committee shall review the perquisites and travel and entertainment expenses of the Corporation's Named Executive Officers whose compensation is reported in detail in the Corporation's proxy statement for the most recently completed fiscal year, and shall review the Corporation's procedures and controls for the preparation of the Compensation Discussion and Analysis to be included in the proxy statement.
Committee Minutes and Regular Reports to the Board of Directors
The Committee shall maintain minutes of meetings and regularly report to the Board of Directors, including any issues with respect to the quality or integrity of the Corporation's financial statements, the Corporation's compliance with legal and regulatory requirements, the performance and independence of the Corporation's independent auditors, and the performance of Internal Audit.
Whistleblower Complaints
The Committee shall establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by Corporation employees of concerns regarding questionable accounting or auditing matters.
Reports of Lawyers Concerning Evidence of Material Violations
The Committee shall review and discuss any reports received from attorneys with respect to evidence of material securities law violations or material breaches of fiduciary duties that were reported to the General Counsel or the Chief Executive Officer and not resolved to the satisfaction of the reporting attorney.
Meetings
The Committee shall meet as frequently as necessary to fulfill its duties and responsibilities, but not less frequently than quarterly. A meeting of the Committee may be called by its chairman or any two members of the Committee.
Authority, Resources and Access to Personnel, Books and Records
The Committee has the authority to engage such independent counsel and other advisors and to carry out such investigations as it deems necessary to discharge its duties. The Corporation shall provide for appropriate funding, as determined by the Committee, for payment of compensation to any public accountants engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation. The Corporation shall also pay such amounts as the Committee deems appropriate as compensation of any legal or other advisors employed by the Committee, and ordinary administrative expenses of the Committee.
At all times, the Committee shall have access to the books and records of the Corporation and to such management and other personnel as it deems necessary or helpful in discharging its duties.
Committee Charter
The Committee will review and assess the adequacy of this written charter annually and recommend changes to the Board of Directors as necessary.
This charter will be published on the Corporation's website and the Corporation will disclose in its annual proxy statement that this charter is available on its website and provide the website address.
Subcommittees and Delegation
Except as limited by law, regulation or the rules of the NYSE, the Committee may form subcommittees for any purpose that it deems appropriate and may delegate to such committees or to other committees of the Board such power and authority as it deems appropriate.
Annual Performance Evaluation
Annually, there shall be a performance evaluation of the Committee, which may be a self-evaluation or an evaluation employing such other resources or procedures as the Committee and the Corporate Governance, Nominating and Social Responsibility Committee may deem appropriate.
Approved: February 9, 2021