AUDIT AND ETHICS COMMITTEE REPORT
The primary responsibilities of our Audit and Ethics Committee (“Audit Committee”) is to assist the Board with oversight of the Company’s financial statements and system of internal controls, the independent auditor’s performance, qualifications and independence, the performance of the Company’s internal audit functions, and the Company’s compliance with legal and regulatory requirements. Our Audit Committee acts under a charter, which can be found on the TXNM Energy’s web site at www.txnmenergy.com/sustainability/governance/governance-documents.aspx. We review the adequacy of the charter at least annually. Each member of the Audit Committee is independent as required by the applicable listing standards of the New York Stock Exchange, our Corporate Governance policies and the Securities and Exchange Commission (“SEC”). Two current members are audit committee financial experts as defined by SEC rules. We held five meetings in 2024 with KPMG LLP (“KPMG”), the Company’s independent registered public accounting firm for 2024, with one meeting at which we reviewed extensive reports and had discussions with KPMG and other members of management.
In carrying out our responsibilities, we look to management and the independent registered public accounting firm. The Company’s management is responsible for the preparation and fair presentation of the Company’s financial statements, maintaining effective internal controls and the financial reporting processes, including the integrity and objectives of the financial statements. Management is also responsible for assessing and maintaining the effectiveness of internal controls over the financial reporting in compliance with Sarbanes-Oxley Section 404 requirements. The independent auditors are responsible for auditing the Company’s annual financial statements and expressing an opinion as to whether such financial statements are fairly stated in conformity with generally accepted accounting principles. In addition, the independent registered public accounting firm is responsible for auditing the Company’s internal controls over financial reporting and for expressing an opinion on the effectiveness of internal control over financial reporting. The independent auditors perform their responsibilities in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”).
In performing our oversight function, we reviewed and discussed the consolidated financial statements with management and KPMG. Management and KPMG informed us that the Company’s consolidated financial statements were fairly stated in accordance with generally accepted accounting principles. We discussed significant accounting policies applied by the Company in its financial statements, as well as alternative treatments. We discussed with KPMG the matters required to be discussed by the independent auditors with the Committee under the rules and standards adopted by the PCAOB, including critical audit matters addressed during the audit. In addition, we reviewed and discussed management’s report on internal controls over financial reporting and the related audit performed by KPMG which confirmed the effectiveness of the Company’s internal controls over financial reporting.
We received the written disclosures and the letter from KPMG required by applicable PCAOB rules regarding KPMG’s independence, and we discussed with KPMG its independence.
We discussed with the Company’s internal auditors and KPMG the overall scope and plans for their respective audits. We met with the internal auditors and the independent auditors at each regularly scheduled meeting, both with and without management present. Discussions included the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
We have also assessed the performance of KPMG and have appointed KPMG to audit the Company’s financial statements for 2025, subject to shareholder ratification of that appointment.
Based on the reviews and discussions referred to above, reliance on management and KPMG, and subject to the limitations of our role described above, we recommended to the Board the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for filing with the SEC.
Audit and Ethics Committee
Maureen T. Mullarkey (Chair)
E. Renae Conley
Alan. J. Fohrer
Sidney M. Gutierrez
Steven C. Maestas
INDEPENDENT AUDITOR FEES
Audit Fees for 2024 and 2023
The following table represents aggregate fees billed to the Company for fiscal years ended December 31, 2024 and December 31, 2023 by KPMG, our principal independent registered public accounting firm.
| | | | | | | | |
| Fees | Fiscal Year Ended
(in thousands)
($) |
| 2024 | 2023 |
| Audit Fees | 2,475 | 2,546 |
| Audit-related Fees | 1,022 | 802 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees | 3,497 | 3,348 |
Audit Fees are primarily for the audit of our annual financial statements, review of financial statements included in our 10-Q filings and the annual Sarbanes-Oxley Audit, and statutory and regulatory filings. Audit-related fees include services provided in connection with Regulation AB Attestation procedures, financing arrangements, and other agreed upon procedures.
All fees have been approved by the Audit Committee. The reported aggregate fees billed for professional services include travel related expenses to perform the services and applicable gross receipts taxes. |
The Audit Committee requires the independent registered public accounting firm selected to audit the Company’s financial statements to obtain the approval of the Audit Committee before performing any non-audit services permitted by applicable law so that the Audit Committee may determine whether the provision of such services is compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. Thus, the Audit Committee preapproves all audit services and all permitted non-audit services performed by the principal accounting firm.
