AUDIT REVIEW COMMITTEE CHARTER
As adopted by the Deere & Company Board of Directors on
April 26,1977 and amended August 29, 1990; August 25
1993; December 5, 1995;
September 11, 2001; February 26, 2003; and December 3, 2003.
RESOLVED, that the Audit Review Committee Charter is as follows:
RESOLVED, that there be and hereby is created a committee to be known as
the Audit Review Committee to assist the Board of Directors in fulfilling its
oversight responsibilities pertaining to the accounting, auditing and financial
reporting processes of the Company, and that the Audit Review Committee shall
consist of at least three directors, all of whom meet the independence and financial
literacy requirements of law and of the New York Stock Exchange. A quorum shall
exist when at least half the members of the committee are present. At least one
member of the committee will meet the accounting or related financial
management expertise requirement established by the Board of Directors. The
members of the Audit Review Committee and the Chair thereof shall be designated
by the Board of Directors.
FURTHER RESOLVED, that the certified public accountants engaged to audit
the Company (the "external auditors") shall be ultimately accountable
to the Board of Directors and this Audit Review Committee.
FURTHER RESOLVED, that this Audit Review Committee shall have the sole
authority and be directly responsible for the selection, retention, evaluation
and, where appropriate, replacement of the external auditors as well as for the
compensation and oversight of the work of the external auditors.
FURTHER RESOLVED, that the following are the primary responsibilities of
the Audit Review Committee and are set forth only for its guidance. The Audit
Review Committee may, from time to time, adopt procedures as it deems
appropriate in carrying out its oversight functions and may perform such other
functions as may be assigned to it by law or regulation, this Charter, the
Company's Articles of Incorporation, or Bylaws, or by the Board of Directors.
The Audit Review Committee shall:
- Select, retain, evaluate and,
where appropriate, replace, a firm of certified public accountants to
conduct the audit of the Company's financial statements to be filed with
the Securities and Exchange Commission, and approve all audit engagement
fees and terms.
- Assist the Board of Directors
in its oversight of (i) the integrity of the
Company's financial statements; (ii) the Company's compliance with legal
and regulatory requirements; (iii) the external auditors' qualifications
and independence; and (iv) the performance of the
Company's internal audit function and external auditors.
- Determine whether to
recommend to the Board of Directors that the Company's financial
statements be included in its Annual Report on Form 10-K for filing with
the Securities and Exchange Commission. To carry out this responsibility,
the Audit Review Committee shall:
Consider whether the
provision by the external auditors of services not related to the audit of
the annual financial statements included in the Company's Form 10-K and
the reviews of the interim financial statements included in the Company's
Forms 10 Q, including disclosures in the Management's Discussion and
Analysis, for such year is compatible with maintaining the external
Review the scope of, and
plans for, the annual audit by the external auditors.
Meet with each of management,
the internal auditors, the external auditors and the General Counsel at
least quarterly, both collectively and in separate executive sessions.
Meet with management and the
external auditors in order to discuss (i) the
critical accounting policies and practices to be used, including critical
accounting estimates, the selection of initial accounting policies,
reasons why certain policies are or are not considered critical, and how
current and future events affect that determination; (ii) the alternative
treatments of financial information within generally accepted accounting
principles for policies and practices related to material items that have
been discussed with management, including ramifications of the use of such
alternative disclosures and treatments and the treatment preferred by the
external auditors; and (iii) other material written communications between
the external auditors and management, such as any management letter or
schedule of unadjusted differences, the management representation letter,
internal controls reports, schedules of material adjustments and proposed
reclassifications, listings of adjustments and reclassifications not
recorded, engagement letters and independence letters.
Discuss at least quarterly
with management and the external auditors the quarterly financial
information prior to the Company's filing of quarterly reports on Form
10-Q or 10-K, including disclosures in the Management's Discussion and
Analysis, and any matters to be communicated to the Audit Review Committee
under generally accepted auditing standards, or to authorize the Chair of
the Audit Review Committee to conduct such discussions.
Discuss with management
earnings press releases, financial information and earnings guidance
provided to analysts and rating agencies, with particular attention to the
use of pro forma or adjusted non-GAAP information.
Review annually the Company's
procedures relating to its Business Conduct Guidelines and meet
periodically with the General Counsel concerning litigation and legal and
Meet at a minimum of once
each fiscal year with members of the internal audit department to review
and discuss the internal audit function, including staffing, and the
system of internal accounting control, such meetings to include private
sessions with the senior executive in charge of the internal audit
Review and reassess the
adequacy of this Charter annually and submit it to the Board of Directors
Report Audit Review Committee
activities to the full Board of Directors on a regular basis.
Discuss with management and
the external auditors policies with respect to risk assessment and risk
Set clear hiring policies for
employees and former employees of the Company's external auditors,
consistent with applicable law and regulation.
Assure the rotation of the
lead, concurring and other audit partners as required by applicable law.
Review with the lead audit
partner whether any of the audit partners receive any discretionary
compensation from the audit firm with respect to procuring engagements
with the Company to provide services other than audit, review or attest
Establish procedures for (i) the receipt, retention and treatment of complaints
about accounting, internal accounting controls or auditing matters and
(ii) the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters.
Approve all engagements for
the provision of audit services and permissible non-audit services by the
Company's external auditors or any other public accountant when applicable
law or regulation requires public accountant independence in connection
with the engagement. Such approval may be made by any member of the
committee between meetings of the committee. Such approval shall then be
reported at the next committee meeting.
Review with the external
auditors any audit problems or difficulties and management's response.
Review at least annually a
report by the external auditors describing (i)
the external auditors' internal quality control procedures; (ii) any
material issues raised by the most recent internal quality control review
or peer review of the external auditors, or by any inquiry or
investigation by governmental or professional authorities, within the
preceding five years, with respect to one or more independent audits
carried out by the external auditors, and any steps taken to deal with any
such issues; and (iii) all relationships between the external auditors and
Conduct a review on an annual
basis of the committee's performance.
Retain legal, accounting or
other consultants for advice and assistance as deemed necessary or
appropriate by the committee.
- review the disclosure
to be included in the Management's Discussion and Analysis;
- review and discuss the
results of each external audit of the Company's audited financial
statements with management and the external auditors;
- discuss with the external
auditors the matters required to be discussed by Statement on Auditing
Standards No. 61 relating to the conduct of the audit;
- review and discuss
with the external auditors the written disclosures required by
Independence Standards Board Standard No. 1 regarding their independence
and, where appropriate, recommend that the Board of Directors take
appropriate action in response to the disclosures to satisfy itself of
the independence of the Company's external auditors;
upon the reviews and discussions, prepare and issue its report for
inclusion in the Company's proxy statement.
FURTHER RESOLVED, that the Company shall provide for
appropriate funding, as determined by the committee, for payment: to the
external auditors; to any legal, accounting or other consultants retained by the
committee; and for ordinary administrative expenses of the committee that are
necessary and appropriate in carrying out its duties.
FURTHER RESOLVED, that in discharging its oversight responsibilities,
the Audit Review Committee shall have unrestricted access to the Company's
management, books and records.
FURTHER RESOLVED, that it is the responsibility of management of the
Company to establish and maintain internal financial controls and to prepare
financial statements in accordance with accounting principles generally
accepted in the United States of America and it is the responsibility of the
external auditors for the Company to audit those financial statements and to
express an opinion on the financial statements. The Audit Review Committee's
responsibility is one of oversight. The Audit Review Committee is not providing
any special assurance as to the Company's financial statements or the audit of
those financial statements by the external auditors.
FINALLY RESOLVED, that members of the Audit Review Committee shall be
entitled to rely, to the fullest extent permitted by law, on the accuracy of
the representations made and the financial and other information provided to
the Audit Review Committee by persons and organizations within and outside the