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MANDATE
Audit Committee Charter
The Audit Committee (the "Committee") is appointed by the
Board of Directors (the "Board") to assist the Board in
fulfilling its oversight responsibilities.
The Committee's primary duties and responsibilities are to:
- Review and assess management's overall
process to identify principal risks that
could affect financial reporting and the
achievement of the Corporation's business
plans, and to monitor the process to manage
such risks.
- Oversee and monitor the Corporation's
compliance with legal and regulatory
requirements.
- Be directly responsible for the
appointment, compensation and oversight of
the external auditors.
- Oversee audits of the Corporation's
financial statements.
- Oversee and monitor the qualifications,
independence and performance of the
Corporation's external auditors.
- Oversee and monitor the integrity of the
Corporation's financial reporting process
and system of internal controls regarding
financial reporting and accounting
compliance.
- Provide an avenue of communication among
the external auditors, management, and the
Board.
- Report to the Board regularly.
The Committee has the authority to conduct any review or
investigation appropriate to fulfilling its
responsibilities. The committee shall have unrestricted
access to personnel and information in the Corporation, and
to the external auditor, and to any resources necessary to
carry out its responsibility including the ability to
retain, at the Corporation's expense, special legal,
accounting or other consultants or experts it deems
necessary in the performance of its duties.
MAJOR RESPONSIBILITIES AND FUNCTIONS
Review Procedures
Review and update the Committee's charter at least annually
and provide a summary of the Committee's composition and
responsibilities in the Corporation's annual report or other
public disclosure documentation.
Annual Financial Statements
- Discuss and review with management and
the external auditors the Corporation's
annual audited financial statements and
related documents prior to their filing or
distribution.
- Review and formally recommend approval
to the Board, the Corporation's:
(a) year-end audited financial statements;
(b) Management's Discussion and Analysis;
and
(c) Annual Information Form.
The review shall include a report prepared
by the external auditors about the quality
of the most significant accounting
principles and practices governing the
Corporation's financial statements, and
which involve the most complex, subjective
or significant judgemental decisions or
assessments.
Quarterly Financial Statements
- Review with management and, where
applicable the external auditors, and either
approve, including authorization for public
release, or formally recommend for approval
to the Board the Corporation's:
(a) quarterly unaudited financial statements
and related documents, including
Management's Discussion and Analysis; and
(b) any significant changes to the
Corporation's accounting principles.
- Where applicable, review and discuss
quarterly reports from the external auditors
regarding:
(a) all critical accounting policies and
practices to be used;
(b) all alternative treatments of financial
information within generally accepted
accounting
principles that have been discussed with
management, the ramifications of the use of
such alternative disclosures and treatments,
and the treatment preferred by the external
auditors; and (c) other material written
communications between the external auditors
and management, such as any management
letter or schedule of unadjusted
differences.
Internal Control Environment
- Ensure that management provide to the
Committee an annual report on the
Corporation's control environment as it
pertains to the Corporation's financial
reporting process and controls.
- Review and discuss significant financial
risks or exposures and assess the steps
management has taken to monitor, control,
report and mitigate such risk to the
Corporation.
- Review the effectiveness of the overall
process for identifying the principal risks
affecting the achievement of business plans
and provide the Committee's view to the
Board of Directors.
- Review significant findings prepared by
the external auditors, together with
management's responses.
Other Review Items
- Review policies and procedures with
respect to officers' and directors' expense
accounts and perquisites, including their
use of corporate assets, and consider the
results of any review of these areas by the
external auditors.
- Review all insider transactions and
related party transactions between the
Corporation and any officers or directors.
- Review legal and regulatory matters,
including correspondence with regulators and
governmental agencies that may have a
material impact on the interim or annual
financial statements, related corporation
compliance policies, and programs and
reports received from regulators or
governmental agencies.
- Review policies and practices with
respect to off-balance sheet transactions
and trading and hedging activities, and
consider the results of any review of these
areas by the external auditors.
- Review with the Chief Executive Officer,
the Chief Financial Officer of the
Corporation and the external auditors:
(a) all significant deficiencies identified
and material weaknesses in the design or
operation of the Corporation's internal
controls and procedures for financial
reporting which could adversely affect the
Corporation's ability to record, process,
summarize and report financial information
required to be disclosed by the Corporation
in the reports that it files or submits
under governing legislation; and
(b) any fraud, whether or not material, that
involves management of the Corporation or
other employees who have a significant role
in the Corporation's internal controls and
procedures for financial reporting.
- Review all prospectuses and information
circulars as to financial information.
External Auditors
- Be directly responsible, in the
Committee's capacity as a committee of the
Board and subject to the rights of
shareholders and applicable law, for the
appointment, compensation and oversight of
the work of the external auditors (including
resolution of disagreements between
management and the external auditors
regarding financial reporting) for the
purpose of preparing or issuing an audit
report or related work. The external
auditors shall report directly to the
Committee.
- Meet on a regular basis with the
external auditors (without management
present) and have the external auditors be
available to attend Committee meetings or
portions thereof at the request of the
Chairman of the Committee or a majority of
the members of the Committee.
- Review and discuss with the external
auditors all significant relationships that
the external auditors and their affiliates
have with the Corporation and its affiliates
in order to determine the external auditors'
independence, including, without limitation:
(a) receiving and reviewing,
as a part of the auditors'
report, a formal written
statement from the external
auditors delineating all
relationships that may
reasonably be thought to
bear on the independence of
the external auditors with
respect to the Corporation
and its affiliates; and
(b) discussing with the
external auditors any
disclosed relationships or
services that the external
auditors believe may affect
the objectivity and
independence of the external
auditors.
- Review and evaluate:
(a) the external auditor's
and the lead partner of the
external auditor team's
performance, and make a
recommendation to the Board
regarding the reappointment
of the external auditors at
the annual meeting of the
Corporation's shareholders
or regarding the discharge
of such external auditors;
(b) the terms of engagement
of the external auditors,
together with their proposed
fees;
(c) external audit plans and
results;
(d) any other related audit
engagement matters; and
(e) the engagement of the
external auditors to perform
non-audit services, together
with the fees therefore, and
the impact thereof, on the
independence of the external
auditors.
- Upon reviewing and discussing the
information provided to the Committee in
accordance with paragraphs 17 and 18,
evaluate the external auditors'
qualifications, performance and
independence, and consider whether the
provision of permitted non-audit services is
compatible with maintaining auditor
independence, taking into account the
opinions of management. The Committee shall
present its conclusions with respect to the
external auditors to the Board.
- Ensure the rotation of the lead (or
coordinating) audit partner having primary
responsibility for the audit and the audit
partner responsible for reviewing the audit
as required by law. Consider whether, in
order to assure continuing external auditor
independence, it is appropriate to adopt a
policy of rotating the external auditing
firm on a regular basis.
- Consider with management and the
external auditors the rationale for
employing audit firms other than the
principal external auditors, including a
review of management consulting services and
related fees provided by the external
auditors compared to those of other audit
firms.
Approval of Audit and Non-Audit Services
- Review and, where appropriate, approve
the provision of all audit services
(including the fees and terms thereof) in
advance of the provision of those services
by the external auditors.
- Review and, where appropriate, approve
the provision of all permitted non-audit
services (including the fees and terms
thereof) in advance of the provision of
those services by the external auditors
(subject to the de minimus exception for
non-audit services prescribed in applicable
legislation which are approved by the
Committee prior to the completion of the
audit).
- If the pre-approvals contemplated in
paragraphs 23 and 24 are not obtained,
approve, where appropriate and permitted,
the provision of all audit and non-audit
services promptly after the Committee or a
member of the Committee to whom authority is
delegated becomes aware of the provision of
those services.
- Delegate, if the Committee deems
necessary or desirable, to subcommittees
consisting of one or more members of the
Committee, the authority to grant the
pre-approvals and approvals described in
paragraphs 23 through 25. The decision of
any such subcommittee to grant pre-approval
shall be presented to the full Committee at
the next scheduled Committee meeting.
Other matters
- Review and concur in the appointment,
replacement, reassignment, or dismissal of
the Chief Financial Officer, and other key
financial executives in the financial
reporting process.
- Review and approve hiring policies
regarding partners, employees and former
partners and employees of the present and
former external auditor.
- Report Committee actions to the Board
with such recommendations, as the Committee
may deem appropriate.
- Conduct or authorize investigations into
any matters within the Committee's scope of
responsibilities.
- The Corporation shall provide for
appropriate funding, as determined by the
Committee, for payment of compensation to
the external auditors for the purpose of
rendering or issuing an audit report and to
any advisors employed by the Committee.
- The Committee shall review and reassess
the adequacy of this Charter annually and
recommend any proposed changes to the Board
for approval.
- The Committee shall evaluate its
performance annually.
- Perform such other functions as required
by law, the Corporation's charter or bylaws,
or the Board.
- Consider any other matters referred to
it by the Board.
- Establish procedures for:
(a) the receipt, retention
and treatment of complaints
received by the Corporation
regarding accounting,
internal accounting controls
or audit matters, and
(b) the confidential
submission by employees of
the Corporation of concerns
regarding questionable
accounting controls or
auditing matters.
OPERATION OF COMMITTEE
Reporting
The Committee shall report to the Board. The
full Board shall be kept informed of the
Committee's activities by a report following
each Committee meeting.
Composition of Committee
The Committee shall consist of not less than
three Directors as determined by the Board,
all of whom shall qualify as independent
Directors and who are free from any
relationship that would interfere with the
exercise of his or her independent judgement.
All members of the Committee shall have the
financial literacy to be able to read and
understand the Corporation's financial
statements and to understand the breadth and
complexity of the issues that can reasonably
be expected to be raised by the
Corporation's financial statements.
Appointment of Committee Members
Members of the Committee shall be appointed
at a meeting of the Board, typically held
immediately after the annual shareholders'
meeting, provided that any member may be
removed or replaced at any time by the Board
and shall in any event cease to be a member
of the Committee upon ceasing to be a member
of the Board.
Vacancies
Where a vacancy occurs at any time in the
membership of the Committee, it may be
filled by the Board.
Chairman
The Corporate Governance Committee shall
recommend an independent director as
Chairman of the Committee to the Board for
approval. The Board shall appoint the
Chairman of the Committee.
If the Chairman of the Committee is not
present at any meeting of the Committee, one
of the other members of the Committee
present at the meeting shall be chosen by
the Committee to preside.
Secretary
The Committee shall appoint a Secretary who
need not be a member of the Committee or a
director of the Corporation. The Secretary
shall keep minutes of the meetings of the
Committee.
Compensation
Committee members may not, other than in
their respective capacities as members of
the Committee, the Board or any other
committee of the Board, accept any
consulting, advisory or other compensatory
fee from the Corporation or its affiliates.
For greater certainty, director's fees are
the only compensation an audit committee
member may receive from the Corporation or
its affiliates, other than direct
compensation up to any maximum threshold
permitted at law and any money received as
pension or deferred income that is not
contingent on continued service.
Committee Meetings
The Committee shall meet at least quarterly
at the call of the Chairman. The Chairman of
the Committee may call additional meetings
as required. In addition, a meeting may be
called by any director or by the external
auditors.
Committee meetings may be held in person, by
video-conference, by means of telephone or
by any combination of any of the foregoing.
Notice of Meeting
Notice of the time and place of every
meeting may be given orally, in writing, by
facsimile or by electronic communication to
each member of the Committee and to external
auditors at least 48 hours prior to the time
fixed for such meeting.
A member and the external auditors may, in
any manner, waive notice of the meeting.
Attendance of a member at the meeting shall
constitute waiver of notice of the meeting,
except where a member attends a meeting for
the express purpose of objecting to the
transaction of any business on the grounds
that the meeting was not lawfully called.
Quorum
A majority of committee members, present in
person, by video-conference, by telephone or
by a combination thereof, shall constitute a
quorum.
Attendance at Meetings
The Chief Executive Officer and the Chief
Financial Officer are expected to be
available to attend meetings, but a portion
of every meeting will be reserved for
in-camera discussion without members of
management being present.
The Committee should meet, on a regular
basis and without management present, with
the external auditors and management in
separate executive sessions to discuss any
matters that the Committee or these groups
believe should be discussed privately with
the Committee.
The Committee may by specific invitation
have other resource persons in attendance.
The Committee shall have the right to
determine who shall and who shall not be
present at any time during a meeting of the
Committee.
Minutes
Minutes of Committee meetings shall be sent
to all Committee members and to the external
auditors.
Engaging Outside Resources
The Committee is empowered to engage such
outside resources, as it deems advisable, at
the expense of the Corporation.
Approved by the Board as of the 22nd
day of March, 2006.
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