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EXHIBIT 99.1
CHARTER OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS
OF
KPMG CONSULTING, INC.
I. PURPOSES; AUTHORITY.
A. The primary purpose of the Audit Committee (the "Committee")
is to assist the Board of Directors (the "Board") of KPMG
Consulting, Inc. (the "Company") in fulfilling its oversight
responsibilities with respect to financial reports and other
financial information. In this regard, the Committee is to:
1. Serve as an independent and objective body to monitor
the Company's financial reporting process and
internal control systems;
2. Serve, together with the Board, as the ultimate
authority to which the independent auditor (the
"Independent Auditor") and the internal auditing
department ("Internal Audit") are accountable, and
have, together with the Board, the ultimate authority
and responsibility to select, evaluate and, where
appropriate, replace the Independent Auditor (or to
nominate the Independent Auditor to be proposed for
stockholder approval in any proxy statement);
3. Monitor the independence and performance of the
Independent Auditor and Internal Audit, including
reviewing their audit efforts; and
4. Provide an open avenue of communication among the
Independent Auditor, financial and senior management,
Internal Audit, and the Board.
B. The Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it shall
have direct access to the Independent Auditor, Internal Audit
and anyone else in the Company. The Committee may retain, at
the Company's expense, such special legal, accounting, or
other consultants or experts as it deems necessary in the
performance of its duties. Alternately, the Committee may
refer any matter to the Board to determine whether an
investigation of a particular matter is appropriate and, if
so, how it shall be conducted.
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II. COMPOSITION AND EXPERTISE; MEETINGS.
A. The Committee shall be comprised of three or more directors as
determined by the Board.
B. All members of the Committee shall be independent directors,
free from any relationship to the Company that may interfere
with the exercise of their independence from management and
the Company.
C. All members of the Committee shall be financially literate. To
be financially literate, a person shall be able to read and
understand fundamental financial statements, including a
balance sheet, income statement and cash flow statement, or
shall become able to do so within a reasonable period of time
after his or her appointment to the Committee.
D. At least one member of the Committee shall have, and continue
to 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
responsibilities.
E. Committee members shall be appointed by, and serve at the
pleasure of, the Board. Committee members shall have the
qualifications specified in this Charter and shall meet any
other requirements of The Nasdaq Stock Market, Inc.
("Nasdaq"). Determinations as to whether a particular director
satisfies the requirements for membership on the Committee
shall be made by the Board.
F. The Board shall appoint a Chairman who will preside at
Committee meetings and report on behalf of the Committee to
the Board. If the Chairman is not present at a meeting, the
members of the Committee shall, by majority vote, elect a
member to serve as the Chairman for that meeting.
G. The Committee generally will meet four times annually, but may
meet more or less frequently as circumstances dictate. In
addition to regularly scheduled meetings, the Committee shall
meet at the request of any member. The Committee shall meet
privately in executive session at least annually with the
Director of Internal Audit and the Independent Auditor. In
addition, the Committee shall meet privately in executive
session at any time upon the request of management, the
Director of Internal Audit or the Independent Auditor.
H. A majority of the entire Committee shall constitute a quorum
for the transaction of business. The action of a majority of
the members present at a meeting at which a quorum is present
shall be the action of the Committee. Any action required or
permitted to be taken at a meeting of the Committee may be
taken
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without a meeting if the unanimous written consent that sets
forth the action is signed by each member of the Committee and
filed with the minutes of the proceedings of the Committee.
The Committee may establish such other rules of procedure for
its business as it deems desirable.
III. DUTIES AND RESPONSIBILITIES.
The Committee's specific responsibilities and duties shall include the
following:
A. Review Procedures.
1. Review and reassess the adequacy of this Charter at
least annually and recommend to the Board any
appropriate extensions or changes in the duties of
the Committee. Submit the Charter to the Board of
Directors for approval and have the document
published at least every three years in accordance
with Securities and Exchange Commission ("SEC")
regulations;
2. Review the Company's annual audited financial
statements in draft and substantially final form
prior to filing or distribution. Review should
include discussion with management and the
Independent Auditor of significant issues regarding
accounting principles, practices and judgments and
discussions with the Independent Auditor about the
quality of the accounting principles as applied in
the preparation of the Company's financial
statements. If significant issues are identified
prior to filing or distribution of the annual audited
financial statements, the Committee shall be informed
of these issues and shall either meet to review them
or discuss them by telephone conference call;
3. With respect to the Company's annual and quarterly
financial statements, discuss any items required to
be communicated by the Independent Auditor in
accordance with Statement of Auditing Standards
Number 61. The Chairman of the Committee may
represent the entire Committee for purposes of this
discussion;
4. In consultation with management, the Independent
Auditor, and Internal Audit, consider the integrity
of the Company's financial reporting processes and
controls. Review recommendations presented by the
Independent Auditor in their "management letter,"
including the status of previous recommendations,
together with management's responses, and discuss the
adequacy of staffing, including the quality of the
Company's financial and accounting personnel;
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5. Review the Independent Auditor's audit plan and
discuss the general audit approach, scope, staffing
and reliance upon management and Internal Audit;
6. Following completion of the annual audit, review
separately with each of management, the Independent
Auditor and Internal Audit any significant
difficulties encountered during the course of the
audit, including any restrictions on the scope of
work or access to required information; and
7. Review any significant disagreements, disputes or
difficulties among management and the Independent
Auditor or Internal Audit in connection with the
preparation of the financial statements and other
matters related to the conduct of the audit which are
to be communicated to the Committee under generally
accepted auditing standards.
B. Internal Audit Department and Legal Compliance.
1. Review an annual report from Internal Audit regarding
its activities, audit plan, budget and staffing.
Review any significant reports prepared for
management by Internal Audit and management's
response and follow-up to these reports;
2. On a least an annual basis, review with the Company's
counsel any legal matters that could have a
significant impact on the Company's financial
statements, the Company's compliance with applicable
laws and regulations, and inquiries received from
regulators or governmental agencies; and
3. Review management's monitoring of compliance with the
Company's Code of Business Conduct, including
particularly whether management has the proper review
system to ensure that the Company's financial
statements, reports and other financial information
disseminated to governmental organizations and the
public satisfy legal requirements.
C. Other Audit Committee Responsibilities.
1. Prepare a report to stockholders to be included in
the Company's annual proxy statement as required by
the SEC regulations;
2. Annually report to the Board on the Committee's
activities. Provide the Board with such additional
reports as are appropriate; and
3. Perform any other activities consistent with this
Charter, the Company's Bylaws and governing law as
the Committee or the Board deems necessary or
appropriate.
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IV. RELATIONSHIP WITH INDEPENDENT AUDITOR.
A. The Independent Auditor is ultimately accountable to the
Committee an the Board of Directors. The Committee shall
review the independence and performance of the Independent
Auditor and shall review the fees and any other significant
compensation to be paid to them. The Committee shall annually
recommend to the Board the appointment of the Independent
Auditor or approve any discharge of the Independent Auditor
when circumstances warrant.
B. On a least an annual basis, the Committee shall review a
formal written statement from the Independent Auditor
delineating all relationships between the Independent Auditor
and the Company, consistent with Independence Standards Board
Standard 1. The Committee shall discuss with the Independent
Auditor any disclosed relationships or services that may
impact the objectivity and independence of the Independent
Auditor and, if appropriate, take action or recommend that the
Board take appropriate action to oversee the independence of
the Independent Auditor.
V. LIMITATION ON COMMITTEE RESPONSIBILITIES.
While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the Independent Auditor. Nor is it the duty of
the Committee to conduct investigations, to resolve disagreements, if any, among
management, the Independent Auditor or Internal Audit or to assure compliance
with laws and regulations.
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