Prudential Financial, Inc.
Audit Committee of the Board of Directors
Audit Committee Charter
Purpose
The Audit Committee’s primary purposes are to assist the Board of Directors (“Board”)
in its oversight of:

the integrity and audit of the Company’s financial statements;

the Company’s accounting, financial reporting and disclosure processes and the
adequacy of the systems of disclosure and internal control established by
management;

processes established by management to provide compliance with legal and
regulatory requirements;

the independent auditor’s qualifications, performance and independence; and

the performance of the Company’s internal audit function.
In addition, the Audit Committee approves the report required by the rules of the
Securities and Exchange Commission (SEC) to be included in the Company’s annual
proxy statement.
The purpose of the Audit Committee is oversight of the integrity and audit of the
Company’s financial statements. The Company’s management is responsible for the
preparation, presentation and integrity of the Company’s financial statements, and the
independent auditor is responsible for auditing the Company’s financial statements.
In discharging its oversight role, the Audit Committee may investigate any matter
brought to its attention with full access to all books, records, facilities and personnel of
the Company and the authority to engage outside counsel and other advisers as it
determines necessary to carry out its duties (including the approval of the fees and
other retention terms of such outside counsel and advisers). The Company shall
provide, as determined by the Committee, for payment of compensation to any advisors
employed by the Committee and ordinary administrative expenses of the Committee.
The independent auditor shall report directly to the Audit Committee, which has the sole
authority and responsibility to appoint (which appointment may be presented to
shareholders for ratification), compensate, retain, oversee, evaluate, and when
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appropriate, replace the independent auditor engaged for the purpose of preparing or
issuing an audit report or performing other audit, review and attest services.
Organization
The Audit Committee shall be appointed by the Board of Directors on the
recommendation of the Corporate Governance and Business Ethics Committee.
The Audit Committee shall be comprised of at least three directors, each of whom shall
satisfy the independence and financial literacy requirements applicable to directors and
audit committee members under the New York Stock Exchange (NYSE) listing
standards and other applicable laws and regulations (including the Sarbanes-Oxley Act
of 2002) as such requirements are interpreted by the Board of Directors in its business
judgment. The Board shall designate one Committee member as the Committee’s chair.
The Audit Committee shall have at least one member who the Board has determined in
its business judgment is an audit committee financial expert, as that term is defined by
the SEC, and such determination shall be disclosed by the Audit Committee in its report
in the Company’s annual proxy statement.
No Audit Committee member shall simultaneously serve on the audit committee of more
than two other public companies, unless the Board determines, and discloses in the
Company’s annual proxy statement, that such simultaneous service would not impair
the ability of the director to serve effectively on the Audit Committee.
The Audit Committee shall meet at least eight times per year, or more frequently as
circumstances require.
The Committee chair shall, in consultation with other Committee members and the Chief
Auditor, set the agenda for and preside at the meetings of the Committee.
The Audit Committee may form and delegate to one or more subcommittees all or any
portion of the Committee’s authority, duties and responsibilities, and may establish such
rules as it determines necessary to conduct its business.
Activities of the Audit Committee
The Audit Committee shall:
1.
Perform the following with respect to the independent auditor:
(i)
appoint the independent auditor and pre-approve all audit and
engagement services and fees;
(ii)
discuss with management of the Company and of the independent auditor
the timing and process for implementing the rotation of the lead audit
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partner, the concurring review partner and any other active audit
engagement team partner, as required by law;
2.
(iii)
review and evaluate at least annually the qualifications, independence and
performance of the independent auditor and the lead audit partner, taking
into account the opinions of management. If independence or
performance issues are identified as a result of this evaluation, the
Committee will consider whether there should be rotation of the
independent auditor. The Committee will present its conclusions with
respect to the independent auditor to the Board at least annually;
(iv)
pre-approve all audit services and non-audit services performed by the
independent auditor and the related fees and consider whether the
provision of any such non-audit services is compatible with the
independence of the independent auditor;
(v)
direct the independent auditor to prepare and deliver annually a statement
as to independence consistent with PCAOB Ethics and Independence
Rule 3526, Communicating with Audit Committees Concerning
Independence, (it being understood that the independent auditor is
responsible for the accuracy and completeness of this statement) and
discuss with the independent auditor any relationships or services
disclosed in this statement that may affect its objectivity and
independence;
(vi)
receive and discuss reports timely from the independent auditor as
required by the NYSE, including a report of the firm’s internal quality
control procedures, any material issues raised by the most recent internal
quality control review, or Public Company Accounting Oversight Board or
peer review, of the firm, or by any inquiry or investigation by governmental
or professional authorities within the preceding five years, and any steps
taken in response to any such issues;
(vii)
review and discuss with the independent auditor the matters required to
be discussed by the independent auditor under Auditing Standard No. 16,
as adopted by the Public Company Accounting Oversight Board and
amended from time to time; and
(viii)
annually review and approve Company hiring policies for employees or
former employees of the independent auditor.
Perform the following with respect to the Internal Audit Department:
(i)
approve the appointment, and annually review the performance,
compensation and independence of the Chief Auditor;
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3.
(ii)
annually review and approve the Internal Audit Department’s charter, riskbased audit methodology, annual audit plan, financial budget and staffing;
(iii)
receive and discuss with the Chief Auditor reports on the results of audits
conducted and other control matters determined by the Chief Auditor to
warrant the Audit Committee’s attention; and
(iv)
review and discuss the report of the Chief Auditor regarding the expenses,
including their use of corporate assets, or other personal benefits paid to,
and the conflicts of interest, if any, of members of the Company’s senior
management.
Perform the following with respect to accounting and financial control matters:
(i)
receive periodic reports from the Chief Financial Officer and/or the
Principal Accounting Officer relating to significant accounting
developments including emerging issues, the impact of accounting
changes where material, including the effect of regulatory and accounting
initiatives, the treatment of carryover or reversals of any prior year
misstatements in accordance with SEC Staff Accounting Bulletin No. 108,
as well as off-balance sheet structures;
(ii)
receive periodic reports from the Chief Financial Officer and/or Principal
Accounting Officer relating to the possible impact of any impending
significant changes in generally accepted accounting principles, as well as
statutory accounting practices;
(iii)
discuss any significant matters arising from any audit, including any audit
problems or difficulties encountered in the course of the performance of
the audit and management’s response, whether raised by management,
the Internal Audit Department or the independent auditor, relating to the
Company’s financial statements; and
(iv)
receive reports from management as required by the Committee’s
established procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls [or] auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable accounting
[or] auditing matters.
4.
Review and discuss with management the Company’s earnings releases,
including the use of “pro forma” or “adjusted” non-GAAP information, as well as
financial information and earnings guidance provided to analysts and rating
agencies. The Committee need not discuss the earnings guidance prior to
provision to analysts and rating agencies.
5.
Meet to review and discuss with management and the independent auditor the
Company’s interim financial results, disclosures made in “Management’s
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Discussion and Analysis of Financial Condition and the Results of Operations,”
and all required management certifications prior to the filing with the SEC of the
related Form 10-Q. After review and discussion, the Committee will consider
approval of the Form 10-Q for filing with the SEC.
6.
Meet to review and discuss with management and the independent auditor the
Company’s annual financial statements, disclosures made in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and
all required management certifications prior to the filing with the SEC of the
related Form 10-K and the independent auditor’s report thereon. The Committee
will recommend to the Board whether the audited financial statements should be
included in the Company’s Form 10-K, and whether the Form 10-K should be
filed with the SEC.
7.
Review and discuss with management and the independent auditor their reports
regarding, the adequacy and effectiveness of, the Company’s internal control
over financial reporting, including any significant deficiencies or material
weaknesses identified by management in connection with its required quarterly
certifications under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.
8.
Review and discuss reports from the Company’s Treasurer on the Company’s
controls related to liquidity management.
9.
Receive reports from management, and review and discuss the adequacy and
effectiveness of the Company’s disclosure controls and procedures.
10.
Annually review and discuss with management and the independent auditor the
statutory financial information and required auditor communications associated
with The Prudential Insurance Company of America (PICA) and key statutory
financial metrics of other U.S. domestic life insurance subsidiaries subject to the
NAIC Model Audit Rule. Review and discuss with management and the
independent auditor remediated and unremediated significant deficiencies or
material weaknesses in internal control over statutory financial reporting of PICA
and unremediated significant deficiencies or material weaknesses in internal
control over statutory financial reporting of U.S. domestic life insurance
subsidiaries subject to the NAIC Model Audit Rule.
11.
Pre-approve all audit services to be performed for Prudential Financial, Inc. and
its consolidated subsidiaries by accounting firms other than the independent
auditor (e.g., statutory or regulatory audits outside the U.S. that are not
performed by the independent auditor).
12.
Review and discuss reports from the Company’s General Counsel on legal
matters determined by the General Counsel to warrant the Audit Committee’s
attention, including legal, compliance or regulatory matters that may have a
material impact on the Company’s business, financial statements or compliance
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policies and any material reports or inquiries received from regulators and
government agencies.
13.
Review and discuss reports, at least twice per year, from the Company’s Chief
Ethics and Compliance Officer on the implementation and effectiveness of the
Company’s program for compliance with applicable laws and regulations, the
results of examinations conducted by regulatory agencies, and other material
compliance matters that are determined by the Chief Ethics and Compliance
Officer to warrant the Audit Committee’s attention. The Chief Ethics and
Compliance Officer shall have the authority to promptly communicate to the Audit
Committee about actual and alleged violations of law or the Company’s Code of
Business Conduct, including any matters involving criminal or potential criminal
conduct.
14.
Discuss with the Chief Risk Officer, at least annually, the Company’s controls
related to major financial risks, including credit, equity, interest rate, foreign
exchange, actuarial, product and catastrophic risks, and the steps management
has taken to monitor and control such risks, including the Company’s risk
assessment and risk management policies.
15.
Review and discuss reports from management on the major risks and related
controls associated with the Company’s businesses that are determined by the
Chief Auditor to warrant the Audit Committee’s attention.
16.
Report to the Board of Directors on significant matters, as often as deemed
appropriate, and make such recommendations as the Audit Committee may
deem necessary or appropriate.
17.
Maintain minutes and other relevant documentation of all meetings held.
18.
Meet periodically in separate executive sessions with the Chief Auditor, the Chief
Financial Officer, the Chief Ethics and Compliance Officer, the Chief Risk Officer,
the General Counsel and the lead audit partner of the independent auditor and,
when necessary, with management and as a Committee to discuss any matters
that the Audit Committee or any of these persons believe should be discussed.
19.
Prepare any report or other disclosures required of the Audit Committee by the
rules of the SEC to be included in the Company’s annual proxy statement.
20.
Review this Charter at least annually and recommend any changes to the Board
of Directors.
21.
Conduct, and report to the Board the results of, an annual self-evaluation of its
performance in accordance with the requirements of this charter.
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