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Roland A. and internal controls of Wal-Mart
Hernandez • Recommends appointment of outside auditors
J. Paul Reason • Reviews related party transactions
• The Board has determined that the members
are “independent” as defined by the current
listing standards of the New York Stock
Exchange
and
• The Board has adopted a written charter for the
Audit Committee12

In addition, the activities of the audit committee are further disclosed in the annual
stockholders™ report, which states in part:

Wal-Mart™s Audit Committee consists of three directors, each of whom is “indepen-
dent” as defined by the current listing standards of the New York Stock Exchange.
The members of the Committee are Stanley C. Gault, Roland A. Hernandez, who is
the Committee™s chairperson, and J. Paul Reason. The Audit Committee is governed
by a written charter adopted by the Board. Given the current trends in corporate gov-
ernance, recent legislation by Congress, and the proposed New York Stock Exchange
corporate governance listing standards, the Audit Committee and the Board recently
adopted a revised Audit Committee charter in March 2003. A copy of the revised
charter is available on our website at www.walmartstores.com.
Wal-Mart™s management is responsible for Wal-Mart™s internal controls and financial
reporting, including the preparation of Wal-Mart™s consolidated financial statements.
Wal-Mart™s independent auditors are responsible for auditing Wal-Mart™s annual
consolidated financial statements in accordance with generally accepted auditing
standards and ensuring that the financial statements fairly present Wal-Mart™s results
of operations and financial position. The independent auditors also are responsible
for issuing a report on those financial statements. The Audit Committee monitors and
oversees these processes. The Audit Committee annually recommends to the Board
for its approval an independent accounting firm to be Wal-Mart™s independent audi-
tors. Beginning with the June 6, 2003 shareholders™ meeting, ratification of the
Board™s approval of the independent auditors is being sought. Ernst & Young LLP is
Wal-Mart™s current independent auditor.
As part of the oversight process, the Audit Committee regularly meets with man-
agement, the outside auditors, and Wal-Mart™s internal auditors. The Audit Com-
mittee often meets with these groups in closed sessions. Throughout the year, the


12
Wal-Mart Stores, Inc., Notice of Annual Meeting of Shareholders and Proxy Statement, (June 6,
2003), pp. 4“6.
Organization of the Audit Committee 47


Audit Committee had full access to management, and the outside and internal au-
ditors for the Company. To fulfill its responsibilities, the Audit Committee did the
following:

• reviewed and discussed with Wal-Mart™s management and the independent audi-
tors Wal-Mart™s consolidated financial statements for the fiscal year ended Janu-
ary 31, 2003;
• reviewed management™s representations that those consolidated financial state-
ments were prepared in accordance with generally accepted accounting princi-
ples and fairly present the results of operations and financial positions of the
Company;
• discussed with the independent auditors the matters required by Statement on Au-
diting Standards 61, including matters related to the conduct of the audit of Wal-
Mart™s consolidated financial statements;
• received written disclosures and the letter from the independent auditors required
by Independence Standards Board Standard No. 1 relating to their independence
from Wal-Mart, and discussed with Ernst & Young LLP their independence from
Wal-Mart;
• based on the discussions with management and the independent auditors, the in-
dependent auditors™ disclosures and letter to the Audit Committee, the represen-
tations of management to the Audit Committee and the report of the independent
auditors, the Audit Committee recommended to the board that Wal-Mart™s au-
dited annual consolidated financial statements for fiscal year 2003 be included in
Wal-Mart™s Annual Report on Form 10-K for the fiscal year ended January 31,
2003, for filing with the Securities and Exchange Commission;
• reviewed all non-audit services performed for Wal-Mart by Ernst & Young LLP
and considered whether Ernst & Young LLP™s provision of non-audit services
was compatible with maintaining its independence from Wal-Mart;
• recommended that the Board select Ernst & Young LLP as Wal-Mart™s indepen-
dent auditors to audit and report on the annual consolidated financial statements
of Wal-Mart filed with the Securities and Exchange Commission prior to Wal-
Mart™s annual shareholders meeting to be held in calendar year 2004; and
• consulted with advisors regarding the Sarbanes-Oxley Act of 2002, the New York
Stock Exchange™s proposed corporate governance listing standards and the cor-
porate governance environment in general and considered any additional re-
quirements placed on the Audit Committee as well as additional procedures or
matters that the Audit Committee should consider.
The Audit Committee submits this report:

Stanley C. Gault
Roland A. Hernandez, Chairperson
J. Paul Reason
The Board of Directors, through the activities of its Audit Committee consisting
solely of outside directors, provides oversight of the process of reporting financial in-
formation. The Committee stays informed of the financial condition of the Company
and regularly reviews its financial policies and procedures, the independence of the
Company™s independent auditors, its internal accounting controls and the objectivity
of its financial reporting. Both the Company™s independent auditors and the internal
48 Audit Committees: Basic Roles and Responsibilities


auditors have free access to the Audit Committee and meet with the Committee pe-
riodically, both with and without management present.


H. Lee Scott Thomas M. Schoewe
President and Chief Executive Vice President and Chief
Financial Officer13
Executive Officer


Audit Committee Charter
As noted in Chapter 1, both the SEC and SROs require that the audit committee
adopt and annually reassess its written charter, which describes the scope of the
committee™s responsibilities and how it fulfills these responsibilities. Moreover,
the rules require that the audit committee charter be included in the proxy state-
ment at least every three years.
Exhibit 2.1 presents the audit committee charter of Wal-Mart Stores, Inc.

The effectiveness of the
Membership and Size of the Audit Committee
audit committee depends on the backgrounds of the members and of the chairman.

Audit Committee Independence
Under Section 301 of the Sarbanes-Oxley Act of 2002, Section 10A of the Secu-
rities Exchange Act of 1934 is amended by adding (m) Standards Relating to
Audit Committees, which states in part:

(2) RESPONSIBILITIES RELATING TO REGISTERED PUBLIC ACCOUNT-
ING FIRMS”The audit committee of each issuer, in its capacity as a committee of
the board of directors, shall be directly responsible for the appointment, compensa-
tion, and oversight of the work of any registered public accounting firm employed by
that issuer (including resolution of disagreements between management and the au-
ditor regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work, and each such registered public accounting firm shall report
directly to the audit committee.
(3) INDEPENDENCE”
(A) IN GENERAL”Each member of the audit committee of the issuer shall
be a member of the board of directors of the issuer, and shall otherwise be
independent.
(B) CRITERIA”In order to be considered to be independent for purposes of
this paragraph, a member of an audit committee of an issuer may not, other than
in his or her capacity as a member of the audit committee, the board of directors,
or any other board committee”
(i) accept any consulting, advisory, or other compensatory fee from the
issuer; or
(ii) be an affiliated person of the issuer or any subsidiary thereof.

13
Wal-Mart Stores, Inc., 2003 Annual Report, p. 52.
Organization of the Audit Committee 49



Exhibit 2.1 Wal-Mart Stores, Inc., Audit Committee Charter

WAL-MART STORES, INC.
AUDIT COMMITTEE CHARTER

Purpose
The Audit Committee is appointed by the Board to: (1) assist the Board in monitoring (a)
the integrity of the financial reporting process, systems of internal controls and financial
statements and reports of the Company, (b) the performance of the Company™s internal
audit function, and (c) the compliance by the Company with legal and regulatory require-
ments; and (2) be directly responsible for the appointment, compensation and oversight of
the Company™s independent auditor employed by the Company for the purpose of prepar-
ing or issuing an audit report or related work (the “Outside Auditor”).

Committee Membership
The Audit Committee shall consist of no fewer than three members, as determined annu-
ally by the Board on the recommendation of the Compensation, Nominating and Gover-
nance Committee. The members of the Audit Committee shall meet the independence and
expertise requirements of the New York Stock Exchange, any other exchange on which the
Company™s securities are traded, Section 10A(m)(3) of the Securities Exchange Act of
1934 (the “Exchange Act”) and the rules and regulations of the Securities and Exchange
Commission (the “Commission”). Audit Committee members shall not serve simultane-
ously on the audit committees of more than two other public companies without the ap-
proval of the full Board.
The members of the Audit Committee shall be appointed annually by the Board on the rec-
ommendation of the Compensation, Nominating and Governance Committee. Audit Com-
mittee members may be replaced by the Board at any time. The Board shall designate the
Chairman or Chairwoman (“Chairperson”) of the Audit Committee.

Committee Authority and Responsibilities
The basic responsibility of the members of the Audit Committee is to exercise their busi-
ness judgment to act in what they reasonably believe to be in the best interests of the Com-
pany and its shareholders. In discharging that obligation, members should be entitled to
rely on the honesty and integrity of the Company™s senior executives and its outside advi-
sors and auditors, to the fullest extent permitted by law.
The Audit Committee shall prepare the report required by the rules of the Commission to
be included in the Company™s annual proxy statement.
The Audit Committee shall be responsible directly for the appointment (subject, if applic-
able, to shareholder ratification), retention, termination, compensation and terms of en-
gagement, evaluation, and oversight of the work of the Outside Auditor (including
resolution of disagreements between management and the Outside Auditor regarding fi-
nancial reporting). The Outside Auditor shall report directly to the Audit Committee.
The Audit Committee shall oversee the integrity of the audit process, financial reporting and
internal accounting controls of the Company, oversee the work of the Company™s manage-
ment, internal auditors (the “Internal Auditors”) and the Outside Auditor in these areas,
oversee management™s development of, and adherence to, a sound system of internal ac-
counting and financial controls, review whether the Internal Auditors and the Outside Au-
ditor objectively assess the Company™s financial reporting, accounting practices and internal


(continued)
50 Audit Committees: Basic Roles and Responsibilities



Exhibit 2.1 (Continued)

controls, and provide an open avenue of communication among the Outside Auditor, the
Internal Auditors and the Board. It is the responsibility of: (i) management of the Company
and the Outside Auditor, under the oversight of the Audit Committee and the Board, to plan
and conduct financial audits and to determine that the Company™s financial statements and
disclosures are complete and accurate in accordance with generally accepted accounting
principles (“GAAP”) and applicable rules and regulations and fairly present, in all material
respects, the financial condition of the Company; (ii) management of the Company, under
the oversight of the Audit Committee and the Board, to assure compliance by the Company
with applicable legal and regulatory requirements; and (iii) the Internal Auditors, under the
oversight of the Audit Committee and the Board, to review the Company™s internal trans-
actions and accounting which do not require involvement in the detailed presentation of the
Company™s financial statements.
The Audit Committee shall pre-approve all audit services and non-audit services (includ-
ing the fees and terms thereof ) to be performed for the Company by the Outside Auditor
to the extent required by and in a manner consistent with the applicable law.
The Audit Committee shall meet as often as it determines necessary or appropriate, but not
less frequently than quarterly. The Chairperson shall preside at each meeting and, in the
absence of the Chairperson, one of the other members of the Audit Committee shall be des-
ignated as the acting chair of the meeting. The Chairperson (or acting chair) may direct ap-
propriate members of management and staff to prepare draft agendas and related
background information for each Audit Committee meeting. The draft agenda shall be re-
viewed and approved by the Audit Committee Chairperson (or acting chair) in advance of
distribution to the other Audit Committee members. Any background materials, together
with the agenda, should be distributed to the Audit Committee members in advance of the
meeting. All meetings of the Audit Committee shall be held pursuant to the by-laws of the
Company with regard to notice and waiver thereof, and written minutes of each meeting,
in the form approved by the Audit Committee, shall be duly filed in the Company records.
Reports of meetings of the Audit Committee shall be made to the Board at its next regu-
larly scheduled meeting following the Audit Committee meeting accompanied by any rec-
ommendations to the Board approved by the Audit Committee.
The Audit Committee may form and delegate authority to subcommittees consisting of one
or more members when appropriate.
The Audit Committee shall have the authority, to the extent it deems necessary or appro-
priate, to retain independent legal, accounting or other advisers. The Company shall pro-
vide for appropriate funding, as determined by the Audit Committee, for payment of
compensation to the Outside Auditor for the purpose of rendering or issuing an audit re-
port and to any advisers employed by the Audit Committee, subject only to any limitations
imposed by applicable rules and regulations. The Audit Committee may request any offi-
cer or associate of the Company or the Company™s outside counsel or Outside Auditor to
attend a meeting of the Audit Committee or to meet with any members of, or consultants
to, the Audit Committee. The Audit Committee shall meet with management, the Internal
Auditors and the Outside Auditor in separate executive sessions at least quarterly to discuss
matters for which the Audit Committee has responsibility.
The Audit Committee shall make regular reports to the Board. The Audit Committee shall
review and reassess the adequacy of this Charter annually and recommend any proposed
changes to the Board for approval. The Audit Committee shall annually review its own
performance.
Organization of the Audit Committee 51



In performing its functions, the Audit Committee shall undertake those tasks and respon-
sibilities that, in its judgment, would contribute most effectively to and implement the pur-
poses of the Audit Committee. In addition to the general tasks and responsibilities noted
above, the following are the specific functions of the Audit Committee:

Financial Statement and Disclosure Matters
1. Review and discuss with management, and to the extent the Audit Committee
deems necessary or appropriate, the Internal Auditors and the Outside Auditor, the
Company™s disclosure controls and procedures that are designed to ensure that the
reports the Company files with the Commission comply with the Commission™s rules
and forms.
2. Review and discuss with management, the Internal Auditors and the Outside Auditor

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