Audit Committee Matters

Audit Committee Matters

Audit Committee Report

AUDIT COMMITTEE RESPONSIBILITIES

The Audit Committee operates under a written charter. The charter, which was last amended effective February 28, 2018, includes the Audit Committee’s duties and responsibilities.

The Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of Nasdaq’s accounting, auditing, financial reporting practices and risk management. As part of this effort, the Audit Committee reviews the disclosures in the company’s annual report on Form 10-K, quarterly reports on Form 10-Q and quarterly earnings releases. In addition, the Committee assists the Board by reviewing and discussing the effectiveness of controls over Nasdaq’s regulatory programs and ERM structure and process, Global Ethics and Corporate Compliance Program and confidential whistleblower process. The Committee charter complies with the applicable provisions of the SarbanesOxley Act of 2002 and related rules of the SEC and The Nasdaq Stock Market.

For a description of the Audit Committee’s key accomplishments in 2017, please refer to “Board Committees — Audit Committee — 2017 Highlights” on page 44.

REVIEW OF AUDITED FINANCIAL STATEMENTS

The Audit Committee:

  • reviewed and discussed the audited financial statements with management;
  • discussed with the independent registered public accounting firm all communications required by generally accepted auditing standards, including those described in Auditing Standard No. 1301, “Communications with Audit Committees” as adopted by the PCAOB; and
  • received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence, and discussed with the independent registered public accounting firm the firm’s independence.

Based on the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the company’s annual report on Form 10-K.

The Audit Committee
Thomas A. Kloet, Chair
Melissa M. Arnoldi
Charlene T. Begley
John D. Rainey
Lars R. Wedenborn

The Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of Nasdaq’s accounting, auditing, financial reporting practices and risk management.

Annual Evaluation and 2018 Selection of Independent Auditors

The Audit Committee annually evaluates the performance of the company’s independent auditors, including the senior audit engagement team, and determines whether to reengage the current independent auditors or consider other audit firms. The Audit Committee annually considers the impact of changing auditors when assessing whether to retain the current independent auditor.
Factors considered in deciding whether to retain Ernst & Young LLP include:

  • global capabilities, technical expertise and knowledge of the company’s operations;
  • quality of communications with the Audit Committee and management;
  • independence;
  • the quality and efficiency of the services provided, including input from management on Ernst & Young LLP’s performance and how effectively Ernst & Young LLP demonstrated its independent judgment and objectivity;
  • external data on audit quality and performance, including recent PCAOB reports on Ernst & Young LLP and its peer firms;
  • the appropriateness of fees;
  • tenure as our independent auditor, considering the quality of advice and operational efficiencies resulting from Ernst & Young LLP’s institutional knowledge of our operations, risks, business strategies and policies; and
  • the controls and processes in place that help ensure Ernst & Young LLP’s continued independence.

The Audit Committee assessed Ernst & Young LLP’s performance as independent auditor during fiscal year 2017, including the performance of the Ernst & Young LLP lead audit engagement partner and the audit team. As part of its assessment, the Audit Committee reviewed a variety of indicators of audit quality including:

  • an annual report from Ernst & Young LLP describing the independent auditors’ internal quality control procedures; and
  • any material issues raised by the most recent internal quality control review, or peer review.

The Audit Committee also received from Ernst & Young LLP a formal written statement describing all relationships between the firm and Nasdaq that might bear on the firm’s independence, consistent with the applicable requirements of the PCAOB. The Audit Committee discussed with the independent registered public accounting firm any relationships that may impact the firm’s objectivity and independence and satisfied itself as to the firm’s independence.

Ernst & Young LLP has been retained as the company’s external auditor continuously since 1986. The current lead engagement partner was designated commencing with the 2014 audit. In conjunction with the mandated rotation of Ernst & Young LLP’s lead engagement partner, the Audit Committee is directly involved in the selection of the new lead engagement partner and team.

Based on its review, the Audit Committee has retained Ernst & Young LLP and believes its continued retention is in the best interests of Nasdaq and its stockholders.

The Audit Committee annually evaluates the performance of the company’s independent auditors, including the senior audit engagement team, and determines whether to reengage the current independent auditors or consider other audit firms.

AUDIT FEES AND ALL OTHER FEES

The table below shows the amount of fees Nasdaq paid to Ernst & Young LLP for fiscal years 2017 and 2016, including expenses.

1 Audit services were provided globally in 2017 and 2016. Fees related to audits of international subsidiaries are translated into U.S. dollars.
2 The 2017 and 2016 audit-related fees primarily include due diligence on strategic initiatives, including mergers and acquisitions, as well as other attestation reports issued.
3 The 2017 and 2016 other fees primarily relate to the Swedish Financial Supervisory Authority’s listing requirements for companies applying for a listing on Nasdaq Stockholm AB. The validation of the company is required to be performed by an external accounting firm. The fees are collected from the listing company by us and paid to Ernst & Young LLP on behalf of the listing company.
4 Fees exclude services provided to certain separate non-profit entities and services provided in relation to Nasdaq’s role as administrator for the Unlisted Trading Privileges Plan.

Audit fees primarily represent fees for the audit of Nasdaq’s annual financial statements included in our annual report on Form 10-K, the review of Nasdaq’s quarterly reports on Form 10-Q, statutory audits of subsidiaries as required by statutes and regulations, accounting consultations on matters addressed during the audit or interim reviews, comfort letters and consents and internal control attestation and reporting requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Audit-related fees primarily represent fees for consultations associated with strategic initiatives, including mergers and acquisitions.

As outlined in the Audit Committee charter, the Audit Committee is responsible for the appointment, retention, approval of compensation and oversight of the services provided by Nasdaq’s independent registered public accounting firm. The Audit Committee preapproves both audit and non-audit services performed by the independent registered public accounting firm, and Nasdaq’s Audit Committee pre-approved all such services in 2017 and 2016. These responsibilities and activities satisfy the auditor oversight requirements of the Sarbanes-Oxley Act.

Proposal 4: Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit Nasdaq’s financial statements.

The Audit Committee has appointed Ernst & Young LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain Ernst & Young LLP. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of Nasdaq and its stockholders.
Representatives of Ernst & Young LLP will be present at the Annual Meeting and will have the opportunity to make a statement and be available to respond to appropriate questions by stockholders. The Audit Committee and the Board of Directors believe that the continued retention of Ernst & Young LLP as the independent registered public accounting firm is in the best interests of the company and its stockholders.

The Board of Directors unanimously recommends a vote FOR ratification of the appointment of Ernst & Young LLP as Nasdaq’s independent registered public accounting firm for the fiscal year ending December 31, 2018.

 

“Managing the relationship with the company’s independent registered public accounting firm is a significant responsibility of the Audit Committee. We invite representatives of Ernst & Young LLP to attend Audit Committee meetings, and they actively participate. We also meet regularly in Executive Session with those representatives. This regular communication helps ensure the efficiency and quality of the external audit services.”

Nasdaq’s Audit Committee

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