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Purpose
The Audit Committee of BGC Partners, Inc. (the “Company”) is appointed by the Board of Directors of the
Company (the “Board”) to oversee the accounting, financial reporting, internal control, internal audit,
conflict of interest and enterprise risk management processes of the Company and the audits of the Company’s
financial statements and internal control over financial reporting. In that regard, the Audit Committee assists the
Board in monitoring (1) the Company’s accounting and financial reporting processes and the integrity of the
financial statements of the Company, (2) the Company’s internal controls, including its internal control over
financial reporting and its disclosure controls and procedures, (3) the qualifications and independence of the
Company’s independent registered public accounting firm (the “independent auditor”), (4) the
performance of the Company’s internal audit function and the independent auditor, (5) the management of the
Company’s risk management program,(6) any applicable waivers under the Company’s Policy Statement on Hedging of Company Equity Securities and (7)
the compliance by the Company with various legal, regulatory and exchange listing requirements. The Committee shall
prepare the report required by the rules of the Securities and Exchange Commission (the “Commission”) to
be included in the Company’s annual proxy statement.
Committee Membership
The Audit Committee shall consist of no fewer than three members. Each member of the Audit Committee shall be a
member of the Board and shall meet the independence and experience requirements of the Nasdaq Stock Market and the
Securities Exchange Act of 1934 and the rules and regulations thereunder (the “Exchange Act”). All
members of the Committee shall be able to read and understand fundamental financial statements. No member of the
Committee shall have participated in the preparation of the financial statements of the Company or any current
subsidiary of the Company at any time during the past three years. At least one member of the Committee shall be an
“audit committee financial expert” as defined by the Commission and qualify as a financially
sophisticated audit committee member under Nasdaq rules. The designation or determination by the Board of a person
as an “audit committee financial expert” will not impose on such person individually, or on the
Committee or the Board as a whole, any greater duties, obligations or liability than would exist in the absence of
such designation or determination. Notwithstanding the foregoing, members who do not meet the definition of
independence may serve on the Committee to the extent permitted by Commission rules and regulations, as such rules
and regulations are in effect from time to time. The members of the Committee shall be appointed and may be removed
by the Board.
Committee Meetings
The Audit Committee shall meet as often as it determines necessary but not less frequently than quarterly. The
Committee shall meet periodically in separate executive sessions with management, the internal auditors and the
independent auditor, and have such other direct and independent interaction with such persons from time to time as
the members of the Committee deem appropriate. The Committee may request any officer or employee of the Company or
the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Board shall elect (and may remove) one or more members to serve as Committee Chairperson (or Co-Chairperson, as
the case may be). If the Board has not designated a Committee Chairperson, the members of the Committee shall elect
a Committee Chairperson by majority vote. The duties and responsibilities of the Chairperson of the Committee shall
be to call regular meetings, to set the agenda of the Committee Meetings, to preside at Committee meetings, and to
perform such other functions of the Committee as may be delegated to him or her, including functions relating to the
approval of fees for audit, audit-related and non-audit services and the approval of certain related-party
transactions and other functions pursuant to the Company’s Code of Business Conduct and Ethics.
Committee Authority and Responsibilities
The Committee shall have the sole authority to appoint, determine funding for, and oversee the independent auditor,
when such auditor is acting in such capacity (subject, if applicable, to stockholder ratification). The Committee
shall be directly responsible for the compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor regarding financial reporting) for the
purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to
the Committee.
The Committee shall pre-approve all auditing services, audit-related services and permitted non-audit services such
as accounting consultations (including the fees and terms thereof) to be performed for the Company by its
independent auditor, subject to the de minimis exception for non-audit services that are approved by the Committee
prior to the completion of the audit. The Committee may form and delegate authority to the Committee Chairperson or
to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals
of audit, audit-related and permitted non-audit services, provided that decisions of the Chairperson or any such
subcommittee to grant pre-approvals shall be presented to the full Committee at its next scheduled meeting.
The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to engage and
determine funding for independent legal, accounting or other advisors. The Company shall provide for appropriate
funding, as determined by the Committee, for payment of compensation to the independent auditor for the purpose of
rendering or issuing audit reports or performing other audit, review or attestation services for the Company and to
any advisors employed by the Committee, as well as funding for the payment of ordinary administrative expenses of
the Committee that are necessary or appropriate in carrying out its duties.
The Committee shall make reports to the Board to the extent it deems necessary or appropriate. The Audit Committee
shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for
approval.
In addition to performing such other duties and responsibilities, consistent with this Charter, the Company’s
Restated Certificate of Incorporation and Amended and Restated Bylaws, the Delaware General Corporation Law, the
Company’s Corporate Governance Guidelines, the federal securities laws, the rules and regulations of Nasdaq
and such other requirements applicable to the Company, the Audit Committee, to the extent it deems necessary or
appropriate, shall:
Financial Reporting, Internal Control and Disclosure Matters
- Review and discuss with management and the independent auditor the annual audited financial statements,
including disclosures made in management’s discussion and analysis, and recommend to the Board whether the
audited financial statements should be included in the Company’s Annual Report on Form 10-K (the
“Form 10-K”).
- Review and discuss with management and the independent auditor the Company’s quarterly financial
statements, including disclosures made in financial results press releases and in management’s discussion
and analysis, prior to the publication of each such press release and the filing of each Quarterly Report on
Form 10-Q (a “Form 10-Q”), including the results of the independent auditor’s review of the
quarterly financial
- Discuss with management and the independent auditor significant financial reporting issues and judgments made in
connection with the preparation of the Company’s financial statements, including any significant changes
in the Company’s selection or application of accounting principles, alternatives considered, and any
critical audit
- Review and discuss with management and the independent auditor any major issues as to the adequacy of the
Company’s internal control over financial reporting, any special steps adopted in light of any material
weaknesses or significant control deficiencies, and the adequacy of disclosures about changes in internal
control over financial reporting.
- Review and discuss with management (including the senior internal audit executive) management’s report on
internal control over financial reporting prior to the filing of the Form 10-K.
- Review and discuss with management (including the senior internal audit executive) and the independent auditor
the independent auditor’s attestation report with respect to the Company’s internal control over
financial reporting prior to the filing of the Form 10-K.
- Review and discuss with management and the independent auditor any major issues as to the effectiveness of the
Company’s disclosure controls and
- Review and discuss quarterly reports from the independent auditor on:
- all critical accounting policies and practices to be used;
- all alternative treatments of financial information within generally accepted accounting principles
(“GAAP”) that have been discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred by the independent auditor; and
- other material written communications between the independent auditor and management, such as any
management letter or schedule of unadjusted
- Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well
as off-balance sheet structures on the Company’s financial statements and disclosures.
- Discuss with the independent auditor the matters required to be discussed by applicable rules of the Public
Company Accounting Oversight Board (the “PCAOB”) relating to the conduct of the audits, including
any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or
access to requested information, and any significant disagreements with
- Review disclosures made to the Committee by the Company’s Chief Executive Officer and Chief Financial
Officer during their certification process for the Form 10-K and each Form 10-Q about any significant
deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud
involving management or other employees who have a significant role in the Company’s internal
- Ensure that a public announcement of the Company’s receipt of an audit opinion that contains a going
concern qualification is made
- Discuss with management the forward-looking guidance and the Company’s use of “pro forma,”
“adjusted” or other non-GAAP information in the Company’s financial results press
Oversight of the Company’s Relationship with the Independent Auditor
- Review and evaluate the lead partner of the independent auditor
- Obtain and review a report from the independent auditor at least annually regarding (a) the independent
auditor’s internal quality-control procedures, (b) any material issues raised by the most recent internal
quality-control review, or peer review, of the independent auditor, 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 independent auditor, and (c) any steps taken by the independent auditor to deal with
any such issues.
- Evaluate the qualifications, performance, and independence of the independent auditor, including considering
whether the independent auditor’s quality controls are adequate and the provision of permitted non-audit
services is compatible with maintaining such auditor’s independence, taking into account the opinions of
management and internal auditors with respect to such matters. The Committee shall present its conclusions with
respect to the independent auditor to the
- Obtain from the independent auditor a formal written statement delineating all relationships and services
between the independent auditor and the Company and other matters required to be disclosed to the Committee by
PCAOB rules. It is the responsibility of the Committee to actively engage in a dialogue with the independent
auditor with respect to any disclosed relationships or services that may impact the objectivity and independence
of such auditor and for purposes of taking, or recommending that the full Board take, appropriate action to
oversee the independence of such
- Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audits and
the audit partner responsible for reviewing the audits as required by PCAOB or Commission rules. Consider
whether, in order to ensure continuing auditor independence, it is appropriate to adopt a policy of rotating the
independent auditing firm on a regular
- Recommend to the Board policies for the Company’s hiring of employees or former employees of the
independent
- Discuss with the independent auditor material issues on which the national office of the independent auditor was
consulted by the Company’s audit
- Meet with the independent auditor prior to the audits to discuss the planning and staffing of the audits.
- Ensure that the Company conducts an annual vote regarding the stockholder ratification of the appointment of the
Company’s independent auditor in accordance with the Company’s Corporate Governance
Oversight of the Company’s Internal Audit Function
- Discuss with the senior internal audit executive and the independent auditor and management the internal audit
department responsibilities, budget and staffing, performance and any recommended changes in the planned scope
of the internal
- Discuss with the independent auditor and management any changes in the senior audit
Risk Management Oversight
- Oversee the management of the Company’s risk management program, including the identification,
prioritization, assessment and management of a broad range of risks (including strategic, operational,
financial, cybersecurity, legal/regulatory, reputational, and market).
- Review at least annually an assessment prepared by management of critical risks, their relative magnitude, and
management’s actions to mitigate such risks, and discuss such assessment with management and the internal
Compliance Oversight Responsibilities
- Obtain from the independent auditor assurance that the audit was conducted in accordance with Section 10A of the
Exchange
- Obtain reports from management that the covered persons of the Company and its affiliated entities are in
conformity with applicable legal requirements and the Company’s Code of Business Conduct and
- Advise the Board with respect to the Company’s policies and procedures regarding compliance with
applicable laws and regulations and with the Company’s Code of Business Conduct and Ethics and the
Company’s Complaint and Investigation Procedures for Accounting, Internal Controls, Auditing Matters and
Employment and Labor Practices.
- Review and approve all related party transactions, including in accordance with the Company’s Code of
Business Conduct and
- Review and approve applicable exceptions to the Company’s Policy Statement on Hedging of Company Equity
- Establish and administer procedures for the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal controls and auditing matters, and the confidential, anonymous submission
by employees of complaints involving questionable accounting or auditing matters, including, without limitation,
requiring quarterly reports from internal and external legal counsel regarding such complaints and reports with
respect to specific matters raised where appropriate, and in accordance with the Company’s Complaint and
Investigation Procedures for Accounting, Internal Controls, Auditing Matters and Employment and Labor
- Discuss with management and the independent auditor any correspondence with regulators or governmental agencies
and any published reports which raise material issues regarding the Company’s financial statements,
accounting or internal
- Discuss with the Company’s General Counsel legal matters that may have a material impact on the
Company’s financial statements, accounting or internal controls, or on the Company’s compliance
policies.
Limitation of Audit Committee’s Role
While the Audit Committee has the authority and responsibilities set forth in this Charter, it is not the role of the
Committee to plan or conduct audits, to determine whether the Company’s financial statements and disclosures
are complete and accurate and in accordance with GAAP and applicable rules and regulations, to determine whether the
Company’s internal controls are effective, to determine whether the independent auditors are
“independent” under applicable standards, to manage the Company’s risks, or to ensure its
compliance with all legal, regulatory, and exchange-listing requirements. These are the responsibilities of
management and the independent auditor, as applicable.
Rather, the Committee serves a board-level oversight role, in which it provides advice, counsel, and direction to
management and the independent auditor on the basis of the information it receives, discussions with management and
the independent auditors, and the experience of the Committee’s members in business, financial, and accounting
matters.