Corporate Governance

Audit Committee Charter

PURPOSE:

Acting pursuant to Section 141 of the Delaware General Corporation Law and Section 1 of Article IV of the Bylaws (the "Bylaws") of Dell Inc. ("Dell"), the Board of Directors of Dell (the "Board") has established an Audit Committee (the "Committee"), which shall be charged with the responsibility of assisting the Board in fulfilling its responsibilities to provide oversight with respect to (a) the integrity of Dell's financial statements and other financial information provided to Dell's stockholders and others, (b) Dell's internal control over financial reporting, (c) the independence, engagement and performance of Dell's independent auditors, (d) the performance of Dell's internal audit function and (e) Dell's compliance with legal requirements and the compliance by Dell's directors and executive officers with Dell‘s Code of Conduct. In so doing, the Committee will provide a focal point for free and open communications among Dell's independent directors, management, internal auditors and independent auditors.

MEMBERSHIP:

The Committee will consist of a minimum of three members of the Board, all of whom (i) shall be "independent" under the standards set forth in Dell's Corporate Governance Principles, (ii) shall meet the criteria for independence set forth in Section 301 of the Sarbanes-Oxley act of 2002 and Rule 10A-3(b)(1) under the Securities Act of 1933, as amended (the "Act") (subject to the exemptions provided in Rule 10A-2(c) under the Act), (iii) shall not 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 and (iv) shall be able to read and understand fundamental financial statements, including Dell's balance sheet, income statement and cash flow statement. At least one member of the Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background which results in the individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibility or qualify as an audit committee financial expert under Item 407(d) of Regulation S‑K under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in which case such member shall be presumed to have such financial sophistication. The members of the Committee will be recommended by the Governance and Nominating Committee of the Board and appointed by and serve at the discretion of the Board.

No member of the Committee may serve simultaneously on the audit committees of more than three public companies, including Dell, unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the Committee and Dell discloses such simultaneous service.

RESPONSIBILITIES:

The responsibilities of the Committee shall include:

External Audit:

    1. Appointing, retaining, compensating and overseeing the work of Dell's independent audit firm (including resolving any disagreements between management and the independent audit firm regarding financial reporting), which shall report to, and be directly accountable to, the Committee.
    2. Reviewing annually with Dell's independent auditors and management the scope and general extent of the proposed audit.
    3. Reviewing, at least annually, and seeking to assure the independence of Dell's independent auditors. This review shall cover and include services, fees, quality control procedures and a formal written statement from the independent auditors regarding relationships between the independent auditors and Dell, consistent with Ethics and Independence Rule 3526 of the PCAOB Professional Standards. The Committee shall (i) engage in dialogue with Dell's independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and (ii) take or recommend that the Board take appropriate action to oversee independence of Dell's independent auditor.
    4. Pre-approving all audit and permitted non-audit services to be performed by Dell's independent auditors, including adopting, as the Committee sees fit, a pre-approval policy consistent with applicable law, listing standards, and PCAOB professional standards.
    5. Discussing with Dell's independent auditors the matters required to be discussed by Statement on Accounting Standards No. 61 (Codification of Statements on Auditing Standards, AU § 380, Communications with Audit Committees or Others with Equivalent Authority and Responsibility), or any standard that supersedes or amends such standard.
    6. Reviewing any problems or difficulties encountered by Dell's independent auditors during the course of the audit, including those that the independent auditors would be required to disclose to the Committee under Section 10A(b) of the Exchange Act.
    7. Reviewing Dell's use of independent public accountants other than Dell's appointed independent auditors.
    8. Reviewing the performance of Dell’s independent auditors including, as appropriate, consultation with management, a review of a report prepared by Dell’s independent auditors describing their internal quality control procedures, issues raised by their most recent internal quality control review or peer review (as applicable) or by any inquiry or investigation by governmental or professional authorities for the preceding five years, and the response of the independent auditors to any such review or investigation, including any steps taken to deal with any such issues.
    9. Establishing policies for Dell's hiring of employees and former employees of Dell's independent auditor.
  1. Ensuring that the Board’s choice of independent auditor is submitted annually for stockholder ratification, provided that if the auditor selection fails to achieve the support of a majority of the for-and-against votes cast, the Committee will take the stockholders’ views into consideration and reconsider the choice of auditor and solicit the views of major stockholders to determine why broad levels of stockholder support were not achieved.

Financial Statements and Reporting:

    1. Reviewing and discussing with Dell's management and independent auditors Dell's accounting and financial reporting policies and practices, including any significant changes therein. This shall include consideration of alternative accounting treatments, significant estimates and judgments, as well as a review of the quality and acceptability of such accounting and reporting policies and practices.
    2. Reviewing with Dell's management and independent auditors the effect of new or proposed auditing, accounting and reporting standards and management's plans to implement any required changes.
    3. Reviewing and discussing with Dell's management, independent auditors and Vice President of Corporate Audit significant risks and exposures to Dell and the steps management has taken or plans to take to minimize or manage such risks.
    4. Reviewing with Dell's management and independent auditors the results of the independent auditors' review of quarterly financial statements, management's discussion and analysis, and any significant accounting or disclosure issues, prior to filing Quarterly Reports on Form 10-Q with the Securities and Exchange Commission.
    5. Reviewing with Dell's management and independent auditors Dell's annual audited financial statements, the results of the audit and management's discussion and analysis, and recommending to the Board inclusion of the financial statements in Dell's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission.
    6. Reviewing the disclosures made by the Chief Executive Officer and the Chief Financial Officer in connection with their required certifications accompanying Dell's periodic reports to be filed with the Securities and Exchange Commission, including disclosures to the Committee of (a) significant deficiencies in the design or operation of internal controls, (b) significant changes in internal controls and (c) any fraud involving management or other employees who have a significant role in the Company's internal controls.
    7. Reviewing and discussing Dell's quarterly financial results (including any use of “pro forma” or “adjusted” non-GAAP), and related press release, including any related earnings forecasts, as applicable, with management and the independent auditors prior to the release to the public.

Internal Controls:

    1. Reviewing with Dell's management, Vice President of Corporate Audit and independent auditors the adequacy of Dell's internal control over financial reporting, including computerized information system controls and security.
    2. Reviewing with Dell's management the scope and results of management's evaluation of Dell's disclosure controls and assessment of Dell's internal control over financial reporting, including the related certifications to be included in Dell's periodic reports filed with the Securities and Exchange Commission.
    3. Reviewing with Dell's independent auditors the scope and results of their audit of Dell's internal control over financial reporting.
    4. Reviewing with Dell's Vice President of Corporate Audit the proposed scope and plan for conducting internal audits of Dell's internal controls over financial reporting and obtaining reports of significant findings and recommendations, together with management's corrective action plans.
    5. Seeking to ensure that Dell's internal audit function has sufficient authority, support and access to Dell's personnel, facilities and records to carry out its work without restrictions or limitations.
    6. Reviewing Dell's corporate audit function, including its charter, plans, activities, staffing and organizational structure.
    7. Reviewing the progress of Dell's internal audit program, key findings and management's action plans to address findings.
    8. Advising the Board or Dell's Chief Executive Officer, as applicable, with respect to any proposed appointment, replacement or dismissal by either of them of Dell's Vice President of Corporate Audit.

Other Responsibilities:

    1. Seeking to ensure the adequacy of procedures for the receipt, retention and treatment of complaints regarding Dell's accounting, internal accounting controls or auditing matters, or other ethics or compliance issues, including the confidential or anonymous submission of complaints or concerns of employees regarding such matters.
    2. Preparing the Committee report required by the rules of the Securities and Exchange Commission to be included in Dell's annual proxy statement or Annual Report on Form 10-K.
    3. Conducting annually a self-assessment with the goal of continuing improvement.
    4. Reviewing and assessing annually the adequacy of this Charter and the performance of the Committee, and recommending to the Board for approval any proposed changes to this Charter or the Committee.

In addition to the above responsibilities, the Committee will undertake such other duties as the Board delegates to it and will report periodically to the Board regarding the Committee's examinations and recommendations.

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of Committee to plan or conduct audits or to determine that Dell's financial statements are complete and accurate and are in accordance with generally accepted accounting principles. That is the responsibility of management and the independent auditors.

RESOURCES AND AUTHORITY:

The Committee shall have the resources and authority to discharge its responsibilities, including the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or other advisors. Dell shall provide funding, as determined by the Committee, for payment of compensation to the independent auditors, as well as for any independent advisors or administrative support employed by the Committee. The Committee will also have the authority to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of Dell, and to request any Dell officer or employee, external counsel, internal auditor, or external auditor to attend meetings of the Committee or otherwise meet with any members of, or advisors to, the Committee.

The Committee may delegate any of its responsibilities to a subcommittee composed of one or more members of the Committee to the extent permitted by applicable law and listing standards.

Any action duly and validly taken by the Committee pursuant to the power and authority conferred under this Charter shall for all purposes constitute an action duly and validly taken by the Board and may be certified as such by the Secretary or other authorized officer of Dell.

MEETINGS AND REPORTS:

The Committee shall hold regular meetings at least four times each year, generally in conjunction with the regularly scheduled meetings of the Board, shall hold meetings four times each year in connection with the release of Dell's quarterly financial results (which meetings may be held at the same time and place as a regular meeting) and shall hold such special meetings as the Chair of the Committee, the Lead Director or the Chairman of the Board may request, with further actions to be taken by unanimous consent when deemed necessary or desirable by the Committee. From time to time, the Committee shall meet separately and privately with Dell's independent auditors, Vice President of Corporate Audit and other members of management to discuss matters warranting attention or private consideration by the Committee.

The Committee shall maintain written minutes of its meetings, which will be filed with the minutes of the Board. At each regularly scheduled meeting of the Board, the Chair of the Committee shall provide the Board with a report of the Committee’s activities, recommendations and proceedings.