Audit Committee

Charter of the Audit Committee of the Board of Directors of Synopsys, Inc. 
(As last amended on December 9, 2022)

Purpose

The Audit Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of Synopsys, Inc. (“Synopsys”) to act on behalf of the Board in fulfilling its financial oversight responsibilities relating to: (i) the integrity of Synopsys’ financial statements and accounting and financial reporting processes and Synopsys’ systems of internal accounting and financial controls; (ii) the performance of the internal audit services function; (iii) the annual independent audit of Synopsys’ financial statements and internal control over financial reporting, the engagement of the independent registered public accounting firm (the “Independent Auditors”) and the evaluation of the Independent Auditors’ qualifications, independence and performance; (iv) the compliance by Synopsys with legal and regulatory requirements that pertain to Synopsys’ financial statements and systems of internal control over financial reporting, and Synopsys’ disclosure controls and procedures; (v) the evaluation and management of risks associated with financial reporting, accounting, auditing and tax matters; and (vi) the fulfillment of the other responsibilities set out herein and as the Board may from time to time prescribe. In addition, the Committee shall serve as the “qualified legal compliance committee” of Synopsys within the meaning of Part 205 of Chapter II of Title 17 of the Federal Register (in such capacity, the “QLCC”). 

Membership

The Committee shall be comprised of three (3) or more directors as determined by the Board, each of whom shall meet the independence and other requirements set forth in (i) the rules of The Nasdaq Stock Market (the “Nasdaq Rules”) and (ii) the rules of the Securities and Exchange Commission (“SEC”), and be free from any relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment as a Committee member, one of whom shall be designated by the Board as Chairperson. No member may have participated in the preparation of the financial statements of Synopsys or any current subsidiary of Synopsys at any time within the past three (3) years. All members of the Committee shall have a basic understanding of finance and accounting and be able to read and understand fundamental financial statements at the time of appointment as required by the Nasdaq Rules. Additionally, at least one member shall have past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background as required by the Nasdaq Rules and be an “audit committee financial expert” as defined in Item 407 of Regulation S-K promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Act”). 

The Committee may form and delegate authority to subcommittees or to management of Synopsys as appropriate and as permitted by applicable law. The operation of the Committee shall be subject to the Bylaws of Synopsys as in effect from time to time and Section 141 of the Delaware General Corporation Law. The approval of this Audit Committee Charter by the Board shall be construed as a delegation of authority to the Committee with respect to the responsibilities set forth herein.

Authority

The Committee shall have full access to all books, records, facilities and personnel of Synopsys as deemed necessary or appropriate by any member of the Committee to discharge his or her responsibilities hereunder, and to investigate any matter brought to its attention within the scope of its duties. The Committee shall have authority to retain at Synopsys’ expense, special legal, accounting or other advisors or consultants as it deems necessary or appropriate in the performance of its duties as set forth in Section 10A(m)(5) of the Act and the rules and regulations of the SEC (the “SEC Rules”). The Committee shall have authority to require that any of Synopsys’ personnel, counsel, Independent Auditors or investment bankers, or any other consultant or advisor to Synopsys attend any meeting of the Committee or meet with any member of the Committee or any of its special legal, accounting or other advisors and consultants.  The Committee shall have the authority to pay, out of Synopsys funds, ordinary administrative expenses that, as determined by the Committee, are necessary or appropriate in carrying out its duties. 

Responsibilities and Duties

In carrying out its duties and responsibilities, the Committee’s policies and procedures should remain flexible in order to best react to changing conditions and to ensure to the directors and stockholders that the corporate accounting and reporting practices of Synopsys are in accordance with all requirements and are of the highest quality. To implement the Committee’s responsibilities and duties, the Committee shall be charged with the functions and processes set forth below, with the understanding, however, that the Committee may supplement or (except as otherwise required by law or the applicable Nasdaq Rules) deviate from these activities as appropriate under the circumstances.

Audit/Internal Controls

1.      Meet with the Independent Auditors and financial management of Synopsys to review the scope of the proposed audit for the current year and the audit procedures to be utilized, and at the conclusion thereof review such audit, including any comments or recommendations of the Independent Auditors.

2.      Meet with the representatives of the Independent Auditors, both with and without members of management present. Among the items to be discussed in these meetings are the Independent Auditors’ evaluation of Synopsys’ financial and accounting personnel and the cooperation that the Independent Auditors receive during the course of the audit.

3.      Review with the Independent Auditors and Synopsys’ financial and accounting personnel the adequacy and effectiveness of the internal control over financial reporting of Synopsys, and elicit any recommendations for the improvement of such internal control procedures or particular areas in which new or more detailed controls or procedures are desirable. Particular emphasis should be given to the adequacy of such internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper. 

4.      Review with the Independent Auditors any problems or difficulties the Independent Auditors may have encountered in connection with the annual audit or otherwise and any communications provided by the Independent Auditors and Synopsys’ responses to those communications. Such review shall address any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information, any disagreements with management regarding U.S. generally accepted accounting principles (“GAAP”) and other matters, material adjustments to the financial statements recommended by the Independent Auditors and adjustments that were proposed but “passed”, regardless of materiality. The Committee shall be directly responsible for the resolution of any conflicts or disagreements between management and the Independent Auditors regarding financial reporting, accounting practices or policies. 

5.      Oversee the internal audit function of Synopsys, including consultation with the VP of Internal Audit to determine areas for review and audit, review of the activities of the internal audit function, review of significant reports prepared by the internal audit department together with management’s response and follow-up to these reports, and the coordination of the internal audit program with the Independent Auditors, with particular attention to the balance between independent and internal auditing resources. The Committee shall meet privately with the VP of Internal Audit as necessary. The Committee shall annually review the experience and qualifications of the senior members of the internal audit department and the quality control procedures of the internal audit department.

6.      Discuss, periodically, policies for risk assessments and risk management with members of Synopsys’ Treasury department and internal audit groups.

Financial Statements

7.      Review and discuss with management and Independent Auditors the release of the annual and quarterly financial results.

8.      Review with management and the Independent Auditors the results of the annual audit, including the Independent Auditors’ assessment of the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments and estimates (including material changes in estimates), any audit adjustments noted or proposed by the Independent Auditors (whether “passed” or implemented in the financial statements), the adequacy of the disclosures in the financial statements, any significant changes to Synopsys’ accounting principles and any other items required to be communicated by the Independent Auditors in accordance with applicable accounting standards. Based on such review and discussion as well as the actions taken under Section 9 below, the Committee shall make a determination whether to recommend to the Board that the audited financial statements be included in Synopsys’ Annual Report on Form 10-K.

9.      Review with the Independent Auditors and management significant issues that arise regarding accounting principles and financial statement presentation, including the effect of new or proposed regulatory and accounting initiatives on Synopsys’ financial statements and other public disclosures.

10.      Review the information to be presented in earnings press releases prior to public release, including a review of any proposed use of pro forma or adjusted non-GAAP information.

11.      Periodically review with management, legal counsel and other advisors, as appropriate, any legal and regulatory matters that may have a material impact on Synopsys’ financial statements.

Independent Auditors

12.      The Committee shall be directly responsible for the appointment, compensation, retention and oversight of the work of the Independent Auditors engaged for the purposes of preparing or issuing an audit report or performing other audit, review or attest services for Synopsys, and the Independent Auditors shall report directly to the Committee. The Committee shall, at least annually, review the performance of the Independent Auditors. In doing so, the Committee shall consult with management and shall obtain and review a report by the Independent Auditors describing their internal control procedures, issues raised by their most recent internal quality control review, or review or investigation by regulatory authorities, including the Public Company Accounting Oversight Board (United States) (the “PCAOB”). The Committee shall consider whether it is appropriate to adopt a policy of rotating Independent Auditors on a periodic basis. 

13.      Pre-approve all audit and permissible non-audit services (as set forth in Section 10A(i)(1) of the Act) to be provided to Synopsys by the Independent Auditors (or subsequently approve non-audit services in those circumstances in which a subsequent approval is necessary and permissible). As permitted pursuant to Section 10A(i)(3) of the Act, authority for such pre-approval (and subsequent approval when permitted) may be delegated to one or more Committee members, provided, however, that all approvals pursuant to this delegated authority be subsequently presented to the full Committee.

14.      At least annually, receive the written disclosures and the letter from the Independent Auditors required by applicable requirements of the PCAOB and the Nasdaq Rules regarding the Independent Auditors’ communication with the Committee concerning independence, and actively engage in a dialogue with the Independent Auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the Independent Auditors and take appropriate action to oversee the independence of the Independent Auditors.

15.      The Committee shall receive and discuss the draft auditor’s report with the Independent Auditors, including a discussion of any critical audit matters and any related disclosures.

16.      Monitor the rotation of the partners of the Independent Auditors on Synopsys’ audit engagement team as required by applicable law.

17.      Consider, and if deemed appropriate, adopt a policy regarding Committee pre-approval of employment by Synopsys of individuals formerly employed by the Independent Auditors and engaged on Synopsys’ account.

Qualified Legal Compliance Committee Matters

18.      Adopt written procedures for the confidential receipt, retention, and consideration of any report of evidence of a material violation of an applicable U.S. federal or state securities law, a material breach of fiduciary duty arising under U.S. federal or state law, or a similar material violation of any U.S. federal or state law (a “material violation”).

19.      The Committee, as QLCC, has the authority and responsibility (i) to inform Synopsys’ General Counsel and Chief Executive Officer (or the equivalents thereof) of any report of evidence of a material violation (unless doing so would be futile, within the meaning of 17 CFR 205.3(b)(4)); (ii) to determine whether an investigation is necessary regarding any report of evidence of a material violation by Synopsys, its officers, directors, employees or agents and, if it determines an investigation is necessary or appropriate, to: (A) notify the full Board; (B) initiate an investigation, which may be conducted either by the General Counsel (or the equivalent thereof) or by outside attorneys; and (C) retain such additional expert personnel as the Committee deems necessary; and (iii) at the conclusion of any such investigation, to: (A) recommend, by majority vote, that Synopsys implement an appropriate response to evidence of a material violation; and (B) inform the General Counsel and the Chief Executive Officer (or the equivalents thereof) and the Board of the results of any such investigation under this section and the appropriate remedial measures to be adopted.

The Committee, as QLCC, has the authority and responsibility, acting by majority vote, to take all other appropriate action, including the authority to notify the SEC in the event that Synopsys fails in any material respect to implement an appropriate response that the Committee has recommended Synopsys to take.
Charter
Review and reassess the adequacy of this charter once each year and, if appropriate, make recommendations to the Board as to changes to this charter as the Committee may deem necessary or advisable.

Other Responsibilities

20.      Provide oversight assistance in connection with legal and ethical compliance programs as established by management and the Board as requested by the Board.

21.      Establish procedures for the receipt, retention and treatment of complaints received by Synopsys regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of Synopsys of concerns regarding questionable accounting or auditing matters (as set forth in Section 10A(m)(4) of the Act and SEC Rules).

22.      Review and approve or ratify related party transactions as required by the Nasdaq Rules or as otherwise required to be disclosed in Synopsys’ financial statements or periodic filings with the SEC, and in accordance with Synopsys’ Related-Person Transactions Policy. It is management’s responsibility to bring such related party transactions to the attention of the members of the Committee.

23.      Annually prepare a report to stockholders as required by the rules and regulations of the SEC to be included in Synopsys’ annual proxy statement.

24.      Oversee and set appropriate policy regarding Synopsys’ financial derivatives transactions.

25.      Periodically review Synopsys’ Tax Risk Management Policy and review tax matters pursuant to the terms of such policy.

26.      Periodically evaluate the Committee’s performance and measure against best practices.

27.      Coordinate with other committees of the Board to oversee environmental, social and governance matters (“ESG Matters”), including Synopsys’ reporting standards with respect to ESG Matters and related disclosures.

28.      Take such other actions as may be necessary or appropriate under the Nasdaq Rules or the SEC Rules or to otherwise fully and efficiently discharge the functions set forth above.

Compensation

Members of the Committee shall receive such fees, if any, for their service as Committee members as may be determined by the Board in its sole discretion. Such fees may include retainers or per meeting fees. Fees may be paid in such form of consideration as is determined by the Board in accordance with applicable law, the Nasdaq Rules and the Act.

Members of the Committee may not receive any compensation from Synopsys except the fees that they receive for service as a member of the Board or any committee thereof. 

Meetings

The Committee shall meet at least four times annually, and thereafter with such frequency as it shall determine necessary or appropriate for it to fulfill its responsibilities under this charter.

Minutes

The Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board.