FINAL CME Non-Audit Policy
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Chicago Mercantile Exchange Holdings Inc. Non-Audit Services Policy It is of fundamental importance that the shareholders of Chicago Mercantile Exchange Holdings Inc. (CME) possess confidence in the independence and objectivity of the outside auditors (“auditor”) chosen to audit CME financial statements. Accordingly, CME has adopted a non-audit services policy that prevents management from engaging the auditor in any assignment where the fee will exceed the lesser of $10,000 or 3% of the annual audit fee. The Chairperson of the Audit Committee will not approve a proposed non-audit engagement by an auditor if, when considered with all other non-audit activity by that auditor for CME, it would appear to a reasonable investor knowing all relevant facts and circumstances that the auditor, by rendering the non-audit service, becomes incapable of exercising objective and impartial judgment on all issues encompassed within the audit engagement. The standard for non-audit services employs two overarching principles: 1. Auditors should not provide non-audit services that involve performing management functions or making management decisions; and 2. Auditors should not audit their own work or provide nonaudit services in situations where the non-audit services are significant/material to the subject matter of the audits. Thresholds have been developed where the Audit Committee will pre-approve non-audit services by an auditor as follows: • $10 ...
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Chicago Mercantile Exchange Holdings Inc.
Non-Audit Services Policy
It is of fundamental importance that the shareholders of Chicago Mercantile Exchange
Holdings Inc. (CME) possess confidence in the independence and objectivity of the outside
auditors (“auditor”) chosen to audit CME financial statements. Accordingly, CME has adopted
a non-audit services policy that prevents management from engaging the auditor in any
assignment where the fee will exceed the lesser of $10,000 or 3% of the annual audit fee.
The Chairperson of the Audit Committee will not approve a proposed non-audit engagement
by an auditor if, when considered with all other non-audit activity by that auditor for CME, it
would appear to a reasonable investor knowing all relevant facts and circumstances that the
auditor, by rendering the non-audit service, becomes incapable of exercising objective and
impartial judgment on all issues encompassed within the audit engagement. The standard for
non-audit services employs two overarching principles:
1. Auditors should not provide non-audit services that involve performing management
functions or making management decisions; and
2. Auditors should not audit their own work or provide nonaudit services in situations
where the non-audit services are significant/material to the subject matter of the audits.
Thresholds have been developed where the Audit Committee will pre-approve non-audit
services by an auditor as follows:
•
$10,000 to $100,000 – Audit Committee Chairperson (reported to Audit Committee)
•
over $100,000 – Entire Audit Committee
In addition to the rules of the Securities and Exchange Commission relating to auditor
independence, the Audit Committee Chairperson will take into consideration any factors that
he/she considers relevant, including, among others:
•
whether the service facilitates the performance of the audit or improves the financial
reporting process;
•
whether the subject of the proposed engagement is appropriate; as a general principle,
auditors should not be engaged to provide non-audit services with respect to financial
data, financial information systems or procedures that they will be required to test as
part of their audit work;
•
whether the engagement fees for the non-audit work are material to the client and to
the audit firm;
•
whether personnel who will be involved in the non-audit work are also involved in the
audit work and, if so, whether the non-audit work will increase their knowledge of the
business and thereby enhance their ability to perform the audit function;
Non-Audit Services Policy
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•
whether the role of those performing the service (e.g., a role where neutrality,
impartiality and auditor skepticism are likely to be subverted) would be inconsistent with
the auditor’s role; in particular, whether the role would place the auditor in a role of
advocate for CME or whether the audit firm’s personnel would be assuming a
management role or creating a mutuality of interest with management.
Since any non-audit engagement may raise concerns that the objectivity and independence of
the auditors has been lessened, the Audit Committee Chairperson will seek to ensure that
CME has a reasonable expectation of deriving value from the proposed engagement that it
could not efficiently obtain from another vendor.
Most non-audit services provided by our auditors fall into the broad categories of other
financial audits, income taxes, and SEC filings. We utilize our auditor in these areas because
of the auditor’s knowledge of CME and the efficiencies that result from that knowledge. For
these services, no prior approval on a project basis will be required. Management will provide
periodic updates to the Audit Committee from time to time as to the level of our auditor’s fees
in these areas including a summary of all payments made to the auditor during the calendar
year. The following are examples of services that can be performed by the auditor without
prior approval by the Audit Committee:
Audits of the financial statements for:
•
CME Pension Plan
•
CME Tax Efficient Savings Plan
•
CME Trust
•
CME PAC Futures Political Fund
•
CME Foundation
•
GFX Corporation
Other:
•
Tax Compliance Services
•
SEC Filings.
Management will monitor rules or laws impacting other services that audit firms are permitted
to provide to their external audit clients. If additional service restrictions are placed on external
audit firms, those rules will be complied with. The Audit Committee will be notified within 24
hours of management learning of additional service restrictions.
David Gomach
Managing Director & Chief Financial Officer
Date
John Croghan
Chairperson – Audit Committee
Date
