TIAA-CREF Funds Audit and Compliance Committees Charters
Adopted on December 4, 2007
Introduction
The Audit and Compliance Committees ("Committees") are standing committees of the respective Boards of Trustees ("Boards") of TIAA-CREF Funds ("Funds") established to assist the Boards in fulfilling their oversight responsibilities with respect to financial and operational reporting, the Funds' compliance program, internal control and general compliance with laws, regulations and ethics. In so doing, it is the intention of the Committees to maintain free and open communications among the Committees, the Boards, the Funds' independent registered public accounting firm (the "Independent Auditors"), the Funds' Chief Compliance Officer ("CCO"), and management, including its internal audit function (the "Internal Audit Division").
The organizational documents and the resolutions of the respective Boards provide for the Boards' delegation of the authority, duties and responsibilities granted hereunder. This Charter of the Committees, which has been approved by the Boards, constitutes a statement of the respective Committees' authority, structure, duties and responsibilities. It provides guidelines for the Committees' interactions with their respective Boards and the management of the Funds.
Authority
The Committees, through use of the Internal Audit Division and Independent Auditors, shall oversee such audits and examinations of the records and affairs of the Funds, as they deem necessary or appropriate. The Committees shall have unrestricted access to the Funds' records and personnel and shall be provided with resources necessary to discharge their responsibilities. The Committees shall have the authority to hire independent accounting experts, lawyers and other consultants, as they deem appropriate, to assist and advise the Committees in connection with their responsibilities.
Composition
The Committees shall have at least three members (including the Chairperson), and only independent trustees may be members. Trustees shall be considered independent as long as they are not "interested persons" within the meaning of the Investment Company Act of 1940 ("1940 Act") and are otherwise independent in accordance with other applicable laws, rules, regulations and policies of the Boards pertaining to trustee independence.
The Nominating and Governance Committees shall determine whether or not a member meets applicable independence requirements. Each of the Committees' members shall be financially literate, and at least one member of the Committees shall be designated as an audit committee financial expert as defined by Securities and Exchange Commission ("SEC") regulations. Following receipt of the recommendation of the Nominating and Governance Committees, the Boards shall appoint members of the Committees, including the Chairperson, annually. A majority of the members of the Committees shall constitute a quorum at any meeting of the Committees.
Meetings
The Committees shall meet at least five times annually, or more frequently as they deem appropriate. Management's chief internal audit executive (or his or her designee) shall submit individual meeting agendas prior to each regular meeting, and shall timely submit the proposed master agendas for the ensuing year prior to the close of the current year, to the Chairperson of the Committees for review and approval.
The Funds' CCO shall attend each regular meeting, to the extent reasonably possible, and the Committees shall regularly meet privately with the Funds' CCO in executive session. In addition, at their request, the Committees shall have the opportunity to meet privately, in separate executive sessions, with: the Funds' chief executive officer, general counsel, and chief financial officer; management's chief risk officer, chief internal audit executive, director of financial reporting, and controller; the Independent Auditors; and anyone else, as desired by the Committees.
The Committees shall regularly submit approved minutes of their meetings to the Boards.
Duties and Responsibilities
The Committees shall assist the Boards in overseeing the Funds' internal audit function, Independent Auditors, financial and operating reporting practices, internal controls, and compliance with applicable laws, regulations and ethics policies. In this regard, their duties and responsibilities include the following:
Independent Auditors
- Approve the selection, compensation, and retention (or termination), and oversee the work, of the Independent Auditors, including resolution of disagreements between management and the Independent Auditors regarding financial reporting matters that are brought to the Committees' attention. The Committees or their designated members, as applicable, shall approve the fees, scope and other terms of the audit engagement, all internal control-related services and any non-audit relationship with the Independent Auditors, in each case pursuant to the Committees' Pre-Approval Policy for External Audit Firm Services (the "Pre-Approval Policy"). The Committees, pursuant to the Pre-Approval Policy, may delegate the authority to grant such pre-approval for services other than audit or audit-related services to one or more designated members of the Committees, who shall present any such decisions to the full Committees at scheduled meetings. The Pre-Approval Policy may contain de minimis exceptions for non-audit services described in applicable regulations of the SEC, which shall be approved by the Committees prior to the completion of the audit.
- Evaluate the independence and effectiveness of the Independent Auditors. The Committees shall obtain quarterly from the Independent Auditors a written communication describing all relationships and periodic reporting of professional services between the Independent Auditors and the Funds (including the amount and nature of all compensation). In addition, the Committees shall discuss with the Independent Auditors any disclosed relationships or services that may impact the objectivity and independence of the Independent Auditors and take or recommend the Boards take appropriate action to ensure independence of the Independent Auditors.
- Obtain, as part of the engagement letter, an annual confirmation from the Independent Auditors that they shall perform only audit, audit-related, tax and non-audit services that have been approved pursuant to the Pre-Approval Policy.
- Review the performance of the Independent Auditors and, between the fifth and tenth years of service to the Funds or at such other times as the Committees deem appropriate, consider the rotation of the Independent Auditors and, as applicable and at such times as the Committees may deem appropriate, consider the rotation of the Independent Auditors' engagement partner(s).
- Obtain and review an annual certification letter from the Independent Auditors that confirms the Independent Auditors' compliance with the securities law rotation requirements for audit partners on the Funds' audit engagement team.
- Meet with the Independent Auditors: (i) to discuss the adequacy and effectiveness of internal controls of the Funds and elicit any recommendations for improvement of internal controls, management of business risk and legal and ethical compliance programs; (ii) as applicable, to discuss the Independent Auditors' attestation to and report on management's assessment of the effectiveness of the Funds' internal control structure for financial reporting; and (iii) to discuss the Independent Auditors' report on internal control, as filed by the Funds on Form N-SAR and provided to the Committees.
- Meet privately with the Independent Auditors to discuss: (i) the quality of the personnel responsible for the Funds' financial, accounting and internal audit matters; and (ii) other management personnel having an impact on internal accounting controls or financial records.
- Obtain and review, at least annually, a written report from the Independent Auditors that describes: (i) the Independent Auditors' internal quality control procedures; and (ii) any material issues raised by any internal quality control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the Independent Auditors and any steps taken to deal with such issues. Discuss with the Independent Auditors the contents of such report and the impact of the matters addressed in such report on the quality of services performed by the Independent Auditors.
- Review reports from management regarding compliance with management's policy not to employ, in a financial reporting oversight role, any individual who is a member of the Independent Auditors' current audit team for the Funds or who has served as a member of the Independent Auditors' audit team for the Funds during the one year period preceding the date of the initiation of the most recently commenced audit for the Funds or any of their affiliates. Specific approval from the Committees shall be required whenever management is considering hiring in a financial reporting oversight role a current employee of the Independent Auditors or an individual who was associated with the Funds' or any affiliates' auditors within the past three years.
Internal Audit
- Periodically review, to the extent related to services provided to the Funds, the Internal Audit Division Charter, which defines the purpose, authority and responsibilities of the Funds' internal audit function and the functional and organizational framework for providing services to the Funds' management and to the Committees.
- As the Committees deem appropriate, review the performance of management's chief internal audit executive to the extent related to such executive's services pertaining to Fund-related activities.
- Review and approve the annual Internal Audit Division Plan and any subsequent changes as they pertain to Fund-related activities.
- Review the Internal Audit Division's quarterly summary reports of audits executed, including the outstanding management plan statistics, any difficulties the internal audit team encountered in the course of their audits, any restrictions on the scope of their work or access to required information as they pertain to Fund-related activities. Also, discuss any changes required in the scope of the Internal Audit Division's internal audits as they pertain to Fund-related activities.
- Review the Internal Audit Division's responsibilities, budget and staffing as they pertain to Fund-related activities.
- Discuss with the chief internal audit executive the independence and objectivity of the Internal Audit Division, its relationship with management and the Independent Auditors and whether any restrictions have been placed on the scope of its examinations.
- Direct special investigations into significant matters as deemed warranted by the Committees.
Financial Reporting Practices
- Inquire of senior management and the Independent Auditors if there were any significant reporting or operational issues impacting the Funds' respective financial statements during the applicable accounting periods and, if so, how they were resolved.
- Review with senior financial management their assessment of the effectiveness of the internal control structure for financial reporting.
- Review with senior financial management the accounting and reporting policies and disclosure controls and procedures followed in the preparation of the financial statements.
- Review the Funds' draft financial statements and related disclosures after examination by the Independent Auditors, as presented to the Committees in the form proposed for, but prior to, filing with the appropriate regulatory agencies. In conjunction with such review, meet with the Independent Auditors at least annually and at such other times as may be required under applicable rules and regulations to discuss the required communications made by the Independent Auditors.
- Discuss with management and with the Independent Auditors, respectively, as appropriate:
— their judgments on the quality and appropriateness of the Funds' accounting principles as applied in management's financial reporting;
— any significant changes required in the Independent Auditors' audit plan;
— any serious difficulties or disputes with management encountered during the audit;
— consistency of the Funds' accounting policies and any changes made in accounting principles since the last reporting period; and
— significant estimates and judgments made in management's preparation of the financial statements, and the Independent Auditors' view as to appropriateness of such estimates and judgments;
- Receive and review periodic reports from management, the Independent Auditors and the Internal Audit Division on new and revised accounting and financial reporting matters under consideration or adopted by professional or regulatory bodies.
Compliance Program
- Review reports submitted by the Funds' CCO regarding the Funds' compliance program pursuant to Rule 38a-1 under the 1940 Act.
- Discuss with the Funds' CCO the administration of the Funds' compliance program and such other matters relating to the Funds' compliance program and the Funds' CCO function, as the Committees may from time to time deem appropriate.
- Consider, and as the Committees deem appropriate, make recommendations to the Boards regarding the compensation, services and performance reviews, as applicable, of the Funds' CCO.
Legal Compliance/General
- Review with the General Counsel any legal matter which the Committees have been advised could have a significant impact on the Funds' financial statements and, in this connection, receive and discuss any reports presented by management on potential management employee conflicts of interest and on controls to address any such potential conflict.
- Review procedures for: (i) the receipt, retention and treatment of any complaints received by the Funds or the Funds' service providers regarding accounting, internal accounting controls or auditing matters; and (ii) the confidential, anonymous submission by employees of the Funds or the Funds' service providers of any concerns regarding questionable accounting or auditing matters. Review a summary of such complaints received and reports on the current status and resolution of those complaints.
- Monitor the Funds' anti-money laundering program and approve any amendments thereto; obtain and review, at least annually, a report on the operation of the program and independent testing performed by the Internal Audit Division.
- With respect to CREF, (i) review with management the policies and procedures with respect to CREF's senior executive officers' expense accounts and perquisites and an annual report on expenditures for CREF's senior executive officers, trustees and certain other persons and (ii) consider the results of any review of these areas by the Internal Audit Division or external auditors.
Reports and Charter Evaluation
- Report regularly to the Boards on the Committees' findings and recommendations, including on any issues that arise with respect to the quality or integrity of the Funds' financial statements, the performance and independence of the Independent Auditors and the performance of the Internal Audit Division, the Funds' compliance with legal or regulatory requirements and any applicable codes of business conduct and ethics, and any other matters the Committees deem appropriate or the Boards request.
- Assess the adequacy of this Charter and recommend any amendments to the Boards on an annual basis or as the Committees deem appropriate.
