Audit Committee

Audit Committee

Approved: 5.12.2022




The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Flowserve Corporation (the “Company”) is to: (a) represent and assist the Board in discharging its oversight responsibility relating to (i) financial, accounting and reporting policies and practices, including the integrity of the Company’s financial statements and system of internal controls, (ii) the Company’s compliance with applicable legal and regulatory requirements, (iii) the qualifications and independence of the independent registered public accounting firm performing the Company’s external audit (“External Auditors”), (iv) the performance of the External Auditors, and (v) the performance of the Company’s internal audit function; (b) be responsible for the appointment, compensation, retention and oversight of the Company’s External Auditors; (c) oversee preparation of the Committee report required by the rules of the Securities and Exchange Commission (“SEC”) to be included in the Company’s annual proxy statement; and (d) directly oversee risk management relating to financial reporting and public disclosure and legal and regulatory compliance. While the Committee has oversight responsibilities and powers set forth in this charter, the fundamental responsibility for the Company’s financial statements and disclosures rests with management and the External Auditors.


The Committee must have at least three members. All Committee members must have been determined by the Board to be independent, as defined and to the extent required in the New York Stock Exchange (“NYSE”) listing standards and SEC rules and regulations applicable to directors and audit committee members, as they may be amended from time to time, and must qualify as independent directors under the Company’s Corporate Governance Guidelines. Each Committee member must be financially literate, as determined by the Board in its business judgment, and at least one Committee member must be an “audit committee financial expert,” as determined by the Board in accordance with applicable SEC rules and regulations and NYSE listing standards, as they may be amended from time to time. Committee members and the Committee Chairman shall be appointed by and may be removed by the Board on the recommendation of the Corporate Governance and Nominating Committee. Committee members shall not simultaneously serve on the audit committees of more than two other public companies.


The Committee has all powers necessary to carry out its purpose and discharge its responsibilities. These include the power to directly retain outside legal counsel, accountants, experts and other advisors as the Committee determines necessary to perform its responsibilities, without additional approval from the Board, the power to investigate any matter within the scope of its duties, with full access to books, records, facilities and personnel necessary to do so. The Company shall provide appropriate funding, as determined by the Committee, for payment of compensation to the External Auditors and any other advisors retained by the Committee and for the payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

The Committee may, in its sole discretion, delegate any of its responsibilities to one or more subcommittees composed of one of more members of the Committee to the extent permitted by applicable law and listing standards.


Among its duties and responsibilities, the Committee shall:

Financial Statement and Disclosure Matters

1. Meet to review and discuss with management and the External Auditors: (a) the quality and integrity of the annual financial statements and the quarterly financial statements; (b) any reports of the External Auditors with respect to interim periods; and (c) the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its quarterly Form 10-Q and annual Form 10-K filings with the SEC, including any significant unusual disclosures.

2. Review, prior to the annual audit, the scope of the External Auditors’ engagement.

3. Provide the External Auditors with full access to the Committee and the Board as may be necessary to enable the External Auditors to report on any and all appropriate matters.

4. Discuss with the External Auditors the matters required to be discussed by rules and standards of the SEC or of the Public Company Accounting Oversight Board (“PCAOB”), including Auditing Standard No. 1301 (Communications with Audit Committees), as amended, including any significant events, transactions or changes in accounting principles or estimates that potentially affect the quality of financial reporting, analyses of the effects of alternative GAAP methods on the financial statements and the treatment preferred by the External Auditors, audit problems or difficulties and management’s response, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management, as well as any critical audit matters identified by the External Auditors.

5. Recommend to the Board whether the Company’s audited financial statements should be included in the Company’s Annual Report on Form 10-K.

6. Review and discuss reports from management and the External Auditors regarding the adequacy and effectiveness of the Company’s internal controls over financial reporting, including any significant deficiencies or material weaknesses in internal controls and significant changes in internal controls or incidents of fraud that involve Company management or other employees who have a significant role in the Company’s internal controls.

7. Receive and discuss reports from management regarding the adequacy and effectiveness of the Company’s disclosure controls and procedures.

8. Review with management legal, compliance, or regulatory matters that may have a material impact on the Company’s financial statements.

9. Receive and discuss all communications prepared for the Committee by the External Auditors that are required by the rules of the SEC or of the PCAOB and applicable professional standards. Obtain the External Auditors’ summary of aggregated deficiencies regarding internal controls over financial reporting.

10. Review and discuss with management the Company’s earnings and other financial related press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.

11. Periodically discuss and review with management the Company’s risks related to the Company’s financial statements and related public disclosures, financial reporting processes and control environment, and the steps management has taken to monitor and control such risks.

12. Review and discuss on a quarterly basis the key estimates and assumptions used by management in preparing the financial statements and related reports, including, among other things, reviewing periodically the Company’s contingent liability reserves, allowance for doubtful accounts and other applicable provisions of the Company’s financial statements.

13. Review management’s presentation of financial statements and related materials and evaluate whether the Board receives an objective and adequate flow of information as to matters that lie within the scope of the Committee’s responsibilities.

14. Provide an open avenue of communication between the External Auditors, the internal auditors, the Board and the management of the Company.

15. Oversee preparation of the report of the Committee required by the SEC rules to be included in the Company’s annual proxy statement.

Oversight of the Company’s Relationship with the External Auditors

16. Be directly responsible for the appointment, compensation, retention and oversight of the work of the External Auditors (including resolution of disagreements between management and the External Auditors regarding financial reporting). In this regard, the Committee shall appoint and retain (subject to ratification by the Company’s shareholders), compensate, evaluate and terminate, when appropriate, the External Auditors, who shall report directly to the Committee.

17. Pre-approve (except as delegated to the Committee Chairman to the extent allowed by law) all audit and non-audit services to be performed by the External Auditors, including approving the itemized fees for both the annual audit and non-audit services and confirmations from the External Auditors that any such non-audit services are permitted by law, with a focus on identifying any matters that might affect the scope of the audit or the independence of the External Auditors. When any such power is delegated to the Committee Chairman, he or she must disclose all determinations to the full Committee at the next scheduled meeting of the Committee.

18. Obtain and review a report by the External Auditors at least annually describing: (a) the firm’s system of internal quality-control procedures; (b) the results of the most recent internal quality-control review, or peer review, of the firm, and of an inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more external audits carried out by the firm, including any reports on inspections of the firm conducted by the PCAOB, and any material issues raised and any steps taken to address these issues; and (c) (to assess the auditor’s independence) all relationships between the External Auditors and the Company and any other relationships that could impact independence.

19. Evaluate, at least annually, the External Auditors’ qualifications, performance and independence, including the review and evaluation and regular rotation as required by law of the lead partner of the External Auditors, as well as whether there should be a regular rotation of the audit firm hired as the Company’s External Auditors.

20. Present its conclusions with respect to the External Auditors to the Board.

21. Set clear policies regarding the Company’s hiring of employees or former employees of the External Auditors.

Oversight of the Company’s Internal Audit Function

22. Annually review and discuss the performance and effectiveness of the internal audit function.

23. Review the performance of the Head of Internal Audit.

24. At least annually, review and pre-approve the Company’s annual internal audit budget and plan, including the scope, timing and staffing for the internal audit plan.

25. Review how the Company’s internal audit function coordinates with the External Auditors and make inquiries of the Company’s internal auditors as to any significant accounting exposures and management’s responses thereto. As desired, review any matters with the Company’s internal auditors that are also reviewed separately with either the External Auditors or management under this charter.

26. Meet with the Company’s internal auditors to:

  • review reports prepared for the Committee by, the Company’s internal auditors, including reports regarding significant findings by the Company’s internal audit staff and the response of management to the findings;
  • review any significant substantiated allegations of unethical behavior or fraudulent activities by Company employees related to any business practices, actions or inactions, including, without limitation, internal controls, financial accounting or reporting matters; and
  • assess whether the scope of the Company’s internal audit program has been substantially completed, including whether problems were encountered and, if so, management’s response.

Oversight of the Company’s Relationship with the External Auditors

27. Review the performance of the Chief Compliance Officer.

28. Oversee the Company’s compliance program with respect to legal and regulatory requirements, including the Company’s Code of Business Conduct, and review and discuss with the Chief Compliance Officer information regarding reports made under the Code of Business Conduct.

29. Establish procedures for: (a) the receipt, retention, treatment and resolution of allegations or complaints received by the Company from its employees or third parties regarding any Company business practices, actions or inactions, including, without limitation, accounting, internal accounting controls, auditing or federal securities law matters; and (b) the confidential, anonymous submission by Company employees of concerns regarding any Company business practices, actions or inactions, including accounting, internal accounting controls, auditing or federal securities law matters.

30. Review the formulation of appropriate standards and policies and review the procedure for compliance with antitrust laws, business conduct policies and the Foreign Corrupt Practices Act. Review periodic reports received from the General Counsel or the Company’s internal auditors regarding compliance with the same.

31. Provide oversight and conduct a periodic review of the design, implementation and status of the Antifraud Program. This includes the results of fraud risk assessments, internal control issues identified to be addressed as a result of the Antifraud Program activities and quarterly reports concerning the disposition of allegations, related to auditing, accounting and internal controls matters, received, processed and investigated through the Ethics Hotline and other channels.

32. Review and reassess the adequacy of this charter at least annually.

33. Conduct an annual performance review of the Committee.

34. Attend or participate, at least annually, in training and education programs to ensure that the Committee’s membership stays current as to relevant developments in accounting and financial reporting.

In addition, the Committee shall coordinate and communicate with the Finance and Risk Committee, as appropriate, to carry out its responsibilities under this Charter and to perform its responsibilities with respect to reviewing in a general manner and discussing the Company’s policies regarding risk assessment and risk management, in accordance with the NYSE listing standards.


The Committee shall meet at least eight times per year, at such times and places as the Committee or the Committee Chairman shall determine. The Committee shall meet separately in executive session, periodically, with each of management, the principal internal auditor of the Company, the External Auditors and the Chief Compliance Officer. The Committee shall report regularly to the full Board with respect to its activities, including with respect to its activities in overseeing risk management within its area of oversight responsibility, but not less frequently than quarterly. A majority of the Committee members shall constitute a quorum.

Sujeet Chand Carlyn R. Taylor Kenneth I. Siegel Thomas B. Okray
  • Member
  • Chair
  • Financial Expert
  • Independent Director