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Corporate Responsibility

Purpose

To assist the board of directors in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control over financial reporting, the audit process, and the company's process for monitoring compliance with laws and regulations and the code of conduct.

 

Authority

The audit committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:

  • Retain outside counsel, accountants or others to advise the committee or assist in the conduct of an investigation
  • Seek any information it requires from employees-all of whom are directed to cooperate with the committee's requests or external parties
  • Meet with company officers, external auditors or outside counsel, as necessary.

Composition and Terms of Reference

The audit committee will consist of at least three members of the board of directors, all non executive and the majority independent. The board will appoint committee members and the committee chair and will provide the audit committee with written terms of reference which deal clearly with its authority and duties.

Each committee member will be both independent and financially literate, as defined by applicable regulation and the board of directors.

The constitution and terms of reference of the audit committee will be reviewed by the main Board and updated as appropriate.

 

Meetings

The committee will meet at least twice a year, with authority to convene additional meetings, as circumstances require. All committee members are expected to attend each meeting, in person or via telephone. The committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. It will hold private meetings with auditors (see below) and executive sessions. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Minutes will be prepared.

 

Responsibilities

The committee will carry out the following responsibilities:

 

Financial Statements

  • Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory announcements, and understand their impact on the financial statements
  • Review with management and the external auditors the results of the audit, including any difficulties encountered
  • Review the annual financial statements, and consider whether they are complete, consistent with the information known to committee members and reflect appropriate accounting principles
  • Review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information
  • Review with management and the external auditors all matters required to be communicated to the committee under generally accepted auditing standards
  • Understand how management develops interim financial information, and the nature and extent of internal and external auditor involvement
  • Review interim financial reports with management and the external auditors, before filing with regulators, and consider whether they are complete and consistent with the information known to committee members.

Internal Control

  • Consider the effectiveness of the company's internal control over annual and interim financial reporting, including information technology security and control
  • Understand the scope of internal and external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.

Internal Audit (when appointment of internal audit director/officer is made)

  • Review with management and the internal audit director, where applicable, the charter, plans, activities, staffing and organizational structure of the internal audit function
  • Ensure there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement or dismissal of the internal audit director
  • On a regular basis, meet separately with the director of internal audit to discuss any matters that the committee or internal audit believes should be discussed privately

External Audit

  • Review the external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit
  • Review the performance of the external auditors, and exercise final approval on the appoint­ment or discharge of the auditors
  • Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the company, including non audit services, and discussing the relationships with the auditors
  • On a regular basis, meet separately with the external auditors to discuss any matters that the committee or auditors believe should be discussed privately.

Compliance

  • Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) of any instances of non compliance
  • Review the findings of any examinations by regulatory agencies, and any auditor observations
  • Review the process for communicating the code of conduct to company personnel, and for monitoring compliance therewith
  • Obtain regular updates from management and company legal counsel regarding compliance matters.

Reporting Responsibilities

  • Regularly report to the board of directors about committee activities, issues and related recommendations
  • Provide an open avenue of communication between internal audit, the external auditors and the board of directors
  • Report annually to the shareholders, describing the committee's composition, responsibili­ties and how they were discharged, and any other information required by rule
  • Review any other reports the company issues that relate to committee responsibilities.

Other Responsibilities

  • Perform other activities related to this charter as requested by the board of directors
  • Review arrangements by which staff of the company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters
  • Ensure arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action
  • Institute and oversee special investigations as needed
  • Review and assess the adequacy of the committee charter annually, requesting board approval for proposed changes
  • Confirm annually that all responsibilities outlined in this charter have been carried out
  • Evaluate the committee's and individual members' performance on a regular basis.

Disclaimers

  • While the audit committee has the responsibilities and powers set forth in this Charter, it is not the duty of the audit committee to plan or conduct audits or to determine that the financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the external auditor. Nor is it the duty of the audit committee to conduct investigations, to resolve disagreements, if any, between management and the external auditors or to assure compliance with laws and regulations.
  • The audit committee members are not professional accountants or auditors, and their function is not intended to duplicate or certify that the external auditor is "independent".
  • The Committee relies on the expertise and knowledge of management, the internal auditors, and the external auditors in carrying out its oversight responsibilities.
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