THE WILLIAM AND FLORA HEWLETT FOUNDATION
AUDIT COMMITTEE CHARTER
Adopted: September 14, 2018

I.

PurposeThe Audit Committee (the “Committee”) shall assist the board of directors in its oversight
responsibility relating to:•financial and regulatory tax reporting, including ensuring the integrity of the foundation’sfinancial statements;•

the foundation’s financial control environment and monitoring compliance with legal andregulatory requirements; and•evaluating the external auditor’s qualifications, independence, and performance.

The Committee will also be directly responsible for the appointment, compensation, oversight,and termination of the foundation’s independent auditor. The auditor will report to theCommittee, which will receive and consider all required communications from the auditors andwill act as the liaison of the board.
II.

StatusThe Committee is a permanent standing committee of the board, authorized in Section 6.4 of thefoundation’s Amended and Restated Bylaws.
III.

Authority and Responsibilities

The Committee shall perform the following duties:
A. Auditor Selection, Retention, Compensation, and Independence•The Committee shall select and, if necessary, terminate the auditor, subject to thesupervision of the board;•The Committee shall negotiate the auditor’s compensation, subject to the supervision ofthe board;Audit Committee CharterPage 2•

The Committee shall annually review outside auditor independence for compliance withlegal standards and best practices by (1) considering the auditor’s performance of any nonaudit services and (2) obtaining and reviewing a report from the auditor describing anyrelationships between the auditor and the foundation, the provision of non-audit services,or any other relationships that may adversely affect the independence of the auditor (forexample, if the foundation’s Chief Financial Officer and Treasurer, Controller, or Directorof Investment Accounting worked for the audit firm on the foundation’s audit in theprevious two years, the auditor will not be considered independent);•The Committee shall review and, if appropriate, must approve in advance non-audit
services to be provided to the foundation by the auditor; and•Without regard to performance of the auditor, every seven years the Committee shallreview the desirability of changing audit firms, and require, in any event, that the lead
engagement partner be changed at least every seven years.

B. Financial Statements•

The Committee shall review and discuss the audited financial statements withmanagement and the auditor, including:− the auditor’s judgment as to the quality of the foundation’s accounting principles
and underlying estimates, including significant financial reporting issues oradjustments and judgments made regarding the preparation of the financialstatements;− all critical accounting policies and practices used within the foundation and any
discussions with management about those policies and practices;− any schedules of unadjusted differences from the audit;− the timeliness and quality of initial drafts of financial statements;− the continued appropriateness of accounting principles or practices and theirconsistency with nonprofit and foundation norms; and− management representation letters and other substantive correspondence between
management and the auditor.

•The Committee must receive a certification of the President, the Chief Financial Officerand Treasurer, and the Vice President and Chief Investment Officer representing that they
have reviewed the financial statements, that to their knowledge the financial statements do
not contain any untrue statements or omit any material facts, and that the financial
statements fairly represent the foundation’s financial condition for the period covered.

____________________________________________________________________________________________________________________650.234.4500
hewlett.org

2121 Sand Hill Road, Menlo Park CA 94025

Audit Committee CharterPage 3•

The Committee shall report to the board the completion of the review of the annual
financial statements and any related significant discussion and make a recommendation onwhether or not to accept the auditor’s report.

C. Internal Controls•

The Committee shall periodically review the adequacy and effectiveness of thefoundation’s internal controls with the auditor and management, including any significantdeficiencies in internal controls and significant changes in those controls reported to theCommittee by the auditor or management.

D. Communications•The Committee shall solicit the auditors on (1) any serious difficulties encountered indealing with management affecting the performance of the audit and (2) any instance offraud or illegal acts of which the independent auditors are aware.

E. Tax Compliance•The Committee shall review procedures to assure compliance with tax law pertaining to
the foundation’s tax status, including payout requirements; and•The Committee shall receive a statement by the President and the Chief Financial Officerand Treasurer to the effect that they have reviewed the Form 990-PF information return,that to their knowledge it does not contain any untrue statements or omit any materialfacts, that the financial information presented fairly represents the foundation’s financial
condition for the period covered, that it was filed with the IRS in a timely manner, and thatthe foundation is maintaining internal controls designed to ensure that material
information related to the foundation’s information return be made known to them.

F. Conflict of Interest Policies and Procedures•

The Committee shall annually review the foundation’s conflict-of-interest policies andmake recommendations to the board for change, if appropriate, and review procedures toassure compliance with the foundation’s conflict-of-interest policies.

G. Whistleblower Process•

The Committee shall review and approve a formal confidential process that allows
employees to report any inappropriateness within the foundation’s financial management
and that prevents retaliation against employees or others for those reports.

____________________________________________________________________________________________________________________650.234.4500
hewlett.org

2121 Sand Hill Road, Menlo Park CA 94025

Audit Committee Charter
Page 4IV.

Membership

The board shall appoint the membership of the Committee, who must comprise at least threemembers of the board and may include nonvoting advisors (who may be directors or not). The
chair of the board shall serve as an ex officio non-voting member of the Committee.
No voting member of the Committee may be an officer or employee of the foundation, or receive
any consulting, advisory, or other compensatory fee from the foundation (other than for service asa member of the board), or have a material financial interest in any entity doing business with thefoundation.
Members of the Committee should be able to read and understand relevant financial statements.
V.

Meetings

The chair of the Committee shall preside at each meeting of the Committee and set the length ofeach meeting and the agenda of items to be addressed at each meeting. The chair of theCommittee shall ensure that the agenda for each meeting is circulated in advance of the meeting.
The Committee shall meet at least twice a year at the times and places that the Committee
determines. Meetings may be held in person or by conference telephone at the discretion of thechair of the Committee. The Committee shall maintain minutes or other records of its meetingsand activities. The Committee shall, through its chair, report its decisions and actions to the board
no later than the next regular board meeting. The Committee shall meet at least annually in
executive session and regularly, in each case separately, with management and with theindependent auditor.
The presence of a majority of the voting Committee members constitutes a quorum at eachCommittee meeting. Members are deemed present if (a) present in person, or (b) able to hear andcommunicate with the other members through telephonic or other means of communication. Each
Committee member has one vote, and the majority vote of the quorum is the act of theCommittee. Alternatively, the Committee may take action without a meeting in accordance withthe provision for unanimous written consent of the foundation’s Amended and Restated Bylaws.
VI.

Outside Advisors

The Committee may retain separate legal counsel or other advisors at the foundation’s expense as
appropriate to assist it in the performance of its functions.

____________________________________________________________________________________________________________________650.234.4500
hewlett.org

2121 Sand Hill Road, Menlo Park CA 94025