2003 Audit Charter: SBUX

The primary function of the Audit and Compliance Committee (the "Committee") is to assist the
Board of Directors of Starbucks Corporation (the "Company") in fulfilling its oversight
responsibilities by reviewing the financial information which will be provided to shareholders
and others, the quality of the Company's accounting policies and reporting practices, the systems
of internal control which management and the Board of Directors have established, compliance
with the Company's Standards of Business Conduct, and the internal and external audit
In fulfilling its function, it is the responsibility of the Committee to provide an open avenue of
communication between the Board of Directors, management, the internal audit department and
the independent auditors. The Committee is to be the Board's principal agent in ensuring the
independence and objectivity of the independent auditors, the integrity of management, and the
adequacy of disclosure to shareholders. The opportunity for the independent auditors to meet
with the entire Board of Directors as needed is not to be restricted, however. The independent
auditors are ultimately accountable to the Board of Directors and the Committee, as
representatives of the Company's shareholders; the Committee has the sole authority to select,
evaluate, and, where appropriate, replace the independent auditors.
The Committee members are not acting as professional accountants or auditors, and their
functions are not intended to duplicate or substitute for the activities of management and the
independent auditors, nor can the Committee certify that the independent auditors are
"independent" under applicable rules. The Committee serves a Board-level oversight role in
which it provides advice, counsel and direction to management and the independent auditors on
the basis of information it receives, discussions with the accountants and the experience of the
Committee's members in business, financial and accounting matters.
The Committee shall be comprised of at least three (3) members, all of whom shall meet the
independence requirements of The Nasdaq Stock Market, Inc. The Committee shall also meet all
financial knowledge and experience qualifications required under rules promulgated by The
Nasdaq Stock Market, Inc., the Securities and Exchange Commission or other governing body,
as may be in effect from time to time. Members and a Chairperson of the Committee shall be
recommended by the Nominating and Corporate Governance Committee and appointed by the
full Board of Directors.
The Committee has the authority to investigate any activity of the Company within its scope of
responsibilities, and shall have unrestricted access to members of management and all
information relevant to its responsibilities. All employees are directed to cooperate as requested
by members of the Committee. The Committee is empowered to retain persons having special
competence as necessary to assist the Committee in fulfilling its responsibility.
The Committee shall meet at least seven times per year, and may hold additional meetings in
person or telephonically as often as may be necessary or appropriate, in the discretion of the
Chairperson of the Committee. Prior to each meeting, the Chairperson of the Committee may
communicate with the independent auditors to review the agenda and solicit input on any
additional topics that should be covered.
Members of the Committee are expected to use all reasonable efforts to attend each meeting. As
necessary or desirable, the Chairperson may request that members of management, the internal
audit director, and representatives of the independent auditors be present at meetings of the
Minutes of each meeting shall be prepared under the direction of the Chairperson of the
Committee and circulated to Committee members for review and approval and then circulated to
the Starbucks directors who are not members of the Committee. Copies are to be made available
to the independent auditors.
Specific Duties
The Committee shall:
1. Enable direct communication between the independent auditors and the Committee at any
time. Instruct the independent auditors to report directly to the Committee any serious
difficulties or disputes with management.
2. Recommend to the Board of Directors the retention or replacement of the independent
auditors, and provide a written summary of the basis for any recommended change.
3. Review the scope of the independent auditor's audit examination, including their engagement
letter, prior to the annual audit. Review and approve the audit fees agreed upon by
management. Approve any permitted non-audit services to be provided by the independent
auditors. (The Chairperson has the authority to approve any additional audit or permitted
non-audit services provided to the Company, provided that the approval of such services is
ratified by the entire Committee at the next regularly scheduled Committee meeting.) Obtain
a formal written statement from the independent auditors describing all relationships between
the auditors and the Company which might reasonably bear on their independence, consistent
with Independence Standards Board Standard 1; discuss with the independent auditors any
potential impact to their objectivity and independence, and make any necessary
recommendations to the full Board of Directors.
4. Upon completion of the audit, review financial results for the year with management and the
independent auditors, prior to their release to the public. This review is to encompass:
  • The financial statements and disclosures to be included in the Company's Annual
    Report to Shareholders, the Annual Report on Form 10-K, or similar publicly filed
  • Significant transactions not a normal part of the Company's operations.
  • Significant changes during the year in the Company's accounting principles or their
  • Significant adjustments proposed by the independent auditors.
  • The independent auditors' audit opinion and their judgment on the quality of the
    Company's accounting policies and financial reporting.
    5. Review the audit process with management and the independent auditors, upon completion of
    their annual audit, to evaluate:
  • The cooperation received by the independent auditors, including access to all
    requested information.
  • Any instances where management has obtained "second opinions" from other
    external auditors.
  • Any disagreements with management that, if not satisfactorily resolved, would have
    caused them to modify their report on the financial statements.
  • Management's comments regarding the audit.
    6. Review the independent auditor's required communication of any material weaknesses in
    internal controls, and assess the adequacy of management's corrective actions.
    7. Based upon the review and discussion of the annual financial statements with management
    and the independent auditors, recommend to the Board that the annual financial statements be
    included in the Company's Annual Report Form 10-K.
    8. Report to shareholders in the Company's annual proxy statement on those matters required
    by the Securities and Exchange Commission.
    9. Review the internal audit department's staffing, budget and responsibilities. Review and
    approve the internal audit plan. Enable direct communication between the Audit Committee
    and the director of internal audit at any time, as needed, to address concerns.
    10. Review and approve any dismissal of the internal audit director.
    11. Review periodically, with internal audit and the independent auditors, the adequacy of the
    Company's accounting and financial personnel and any relevant recommendations
    concerning internal controls, accounting principles, and accounting/reporting systems.
    12. Review the effect of any important new pronouncements of the accounting profession and
    other regulatory bodies on the Company's accounting and reporting policies.
    13. Review any inquiries related to accounting or financial reporting matters received from the
    Securities and Exchange Commission or other agencies, and management's response thereto.
    Ensure that any complaints received by the Company regarding its accounting, internal
    control, or auditing matters are addressed.
    14. Review and approve or ratify all significant related party transactions and potential conflict
    of interest situations.
    15. Establish, review and update periodically the Company's Standards of Business Conduct and
    review with management the Company's systems to monitor compliance with these standards
    and applicable legal requirements. Review and address any concerns regarding questionable
    accounting or auditing matters submitted through the confidential reporting mechanism.
    16. Review periodically with management, the compliance officer and the Board any legal and
    regulatory matters that may have a material impact on the Company's financial statements,
    compliance policies, and compliance programs.
    17. Review and reassess the adequacy of this Charter and the Timetable of Audit and
    Compliance Committee Activities annually, or as circumstances dictate, and update as
    18. Periodically evaluate and take steps to improve the effectiveness of the Committee in
    meeting its responsibilities under this Charter.
    This Charter is intended to provide a set of flexible guidelines for the effective
    functioning of the Committee. The Committee may modify or amend this Charter and the
    authority and responsibilities of the Committee set forth herein at any time.