Audit Committee Charter

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

(As amended and restated on June 27, 2013.)

The responsibilities of the Board of Directors of The Walt Disney Company include oversight of the Company’s systems of internal control, preparation and presentation of financial reports and compliance with applicable laws, regulations and Company policies. Through this Charter, the Board delegates certain responsibilities to the Audit Committee to assist the Board in the fulfillment of its duties to the Company and its shareholders. As more fully set forth below, the purpose of the Committee is to assist the Board in its oversight of:

  • the integrity of the Company’s financial statements;
  • the Company’s compliance with legal and regulatory requirements;
  • the qualifications and independence of the Company’s independent auditors; and
  • the performance of the Company’s independent auditors and of the Company’s internal audit function.

Authority
The Committee shall be given the resources and assistance necessary to discharge its responsibilities, including appropriate funding, as determined by the Committee, unrestricted access to Company personnel and documents and the Company’s independent auditors. The Committee shall also have authority, with notice to the Chairman of the Board, to engage outside legal, accounting and other advisors as it deems necessary or appropriate.

Membership
The Committee shall consist of three or more directors, who shall be appointed annually and subject to removal at any time, by the Board of Directors. Each Committee member shall meet the independence requirements established by rules of the Securities and Exchange Commission and listing standards of the New York Stock Exchange, as well as the independence standards set forth in the Company’s Corporate Governance Guidelines.

All Committee members shall be financially literate, having a basic understanding of financial controls and reporting. At least one Committee member shall also have accounting or related financial management expertise, including at a minimum the expertise required by rules of the Securities and Exchange Commission and listing standards of the New York Stock Exchange.

 No member of the Audit Committee shall receive directly or indirectly any compensation from the Company other than his or her Directors’ fees and benefits.

Procedures
The Committee shall meet at least four times a year and may call special meetings as required. Meetings may be called by the Chair of the Committee or the Chairman of the Board. The presence in person or by telephone of a majority of the members shall constitute a quorum. Meetings may be held at any time, any place and in any manner permitted by applicable law and the Company’s Bylaws. Minutes of the Committee’s meetings shall be kept. To the extent practicable, the meeting agenda, draft minutes from the prior meeting and supporting materials shall be provided to Committee members prior to each meeting to allow time for review. The Committee shall have authority to create and delegate specific tasks to such standing or ad hoc subcommittees as it may determine to be necessary or appropriate for the discharge of its responsibilities. The results of the meetings shall be reported regularly to the full Board.

Responsibilities
The Company’s executive management bears primary responsibility for the Company’s financial and other reporting, for establishing the system of internal controls and for ensuring compliance with laws, regulations and Company policies. The Committee’s responsibilities and related key processes are described below. From time to time, the Committee may take on additional responsibilities, at the request of the Board.

(a)    Financial Reporting.    The Committee shall monitor the preparation by management of the Company’s quarterly and annual external financial reports. In carrying out this responsibility, the Committee shall:

  • review with management the significant financial reporting issues, judgments and estimates used in developing the financial reports, including analyses of the effects of alternative GAAP methods on the financial statements;
  • review the accounting and reporting treatment of significant transactions outside the Company’s ordinary operations;
  • review with management and the Company’s independent auditors significant changes to the Company’s accounting principles or their application as reflected in the financial reports;
  • review with management and the Company’s independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company;
  • meet periodically with the Company’s independent auditors (in private, as appropriate) (a) to review their reasoning in accepting or questioning significant decisions made by management in preparing the financial reports; (b) to review any audit problems or difficulties and management’s response; (c) to review any outstanding disagreements with management that would cause them to issue a non-standard report on the Company’s financial statements; (d) to examine the appropriateness of the Company’s accounting principles (including the quality, not just the acceptability, of accounting principles) and the clarity of disclosure practices used or proposed; (e) to determine if any restrictions have been placed by management on the scope of their audit; and (f) to discuss any other matters the Committee deems appropriate;
  • meet periodically in private with the Company’s management;
  • review earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies and discuss their appropriateness with management and the Company’s independent auditors, paying particular attention to any use of “pro forma” or “adjusted” non-GAAP information; and
  • review draft quarterly and annual financial statements and discuss their appropriateness with management and the Company’s independent auditors, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(b)    Relationship with Independent Auditors.    The Committee shall bear primary responsibility for overseeing the Company’s relationship with its independent auditors. In carrying out this responsibility, the Committee shall:

  • be directly responsible for the appointment, compensation, retention and oversight of the work of the Company’s independent auditors, in consultation with the full Board;
  • review the scope and extent of audit services to be provided;
  • review the overall audit plan, including the risk factors considered in determining the audit scope;
  • review the independent auditors’ annual letter pursuant to Public Company Accounting Oversight Board Rule 3526, Communication with Audit Committees Concerning Independence, outlining all relationships that may impact their independence;
  • review with the independent auditors the extent of non-audit services provided and related fees, and pre-approve any non-audit relationships;
  • determine whether the Committee believes the outside auditors are independent;
  • review the responsiveness of the outside auditors to the Company’s needs;
  • at least annually, obtain and review a report by the Company’s independent auditors describing:  the independent auditor 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; and (to assess the auditors’ independence) all relationships between the independent auditors and the Company;
  • at least annually, evaluate the auditors’ qualifications, performance and independence and present its conclusion with respect to the auditors to the Board of Directors;
  • resolve any disagreements between management and the auditors regarding financial reporting; and
  • set clear hiring policies for employees or former employees of the Company’s independent auditors.

(c)    Internal Control.    The Committee shall have responsibility for overseeing that management has implemented an effective system of internal control that helps promote the reliability of financial and operating information and compliance with applicable laws, regulations and Company policies, including those related to risk management, ethics and conflicts of interest. In carrying out this responsibility, the Committee shall:

  • inquire of management, management auditors and the Company’s independent auditors concerning any deficiencies in the Company’s policies and procedures that could adversely affect the adequacy of internal controls and the financial reporting process and review any special audit steps adopted in light of any material control deficiencies and the timeliness and reasonableness of proposed corrective actions;
  • review significant management audit findings and recommendations, and management’s responses thereto;
  • meet periodically with management auditors in private session (without the participation of management or the independent auditors);
  • review the Company’s policies and practices with respect to risk assessment and risk management;
  • review the Company’s policies and practices related to compliance with laws, ethical conduct and conflicts of interest;
  • review significant cases of conflicts of interest, misconduct or fraud;
  • review significant issues between the Company and regulatory agencies; and
  • review as appropriate material litigation involving the Company.

(d)    Relationship with Management Auditors.    The Committee shall have responsibility for determining that the Management Audit department is effectively discharging its responsibilities. In carrying out this responsibility, the Committee shall:

  • review and approve the Management Audit department’s charter;
  • review the appropriateness of the funding, staffing and operational independence of Management Audit; and
  • review and approve the appointment or dismissal of, and determine and approve the compensation of, the Vice President of (or corresponding officer responsible for) Management Audit.

(e)    Receipt of Complaints.    The Committee shall establish procedures for:

  • the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls and auditing matters; and
  • the confidential, anonymous submission by employees of the Company regarding questionable accounting or auditing matters.

(f)    Preparation of Reports.    The Committee shall prepare and approve the Committee’s report included in the proxy statement for the Company’s annual meeting of shareholders, and such other reports as may from time to time be necessary or appropriate.

Annual Performance Review
The Committee shall conduct an annual evaluation of its performance in carrying out its responsibilities hereunder.

 

<<<previous page