AUDIT COMMITTEE CHARTER

 

A.        Purpose

The audit committee (the "Committee") of the board of directors of the Corporation (the "Board") shall provide assistance to the Board in fulfilling its oversight responsibilities with respect to the Corporation's financial statements and reports and the financial reporting process.  In doing so, it is the responsibility of the Committee to maintain free and open communication between the Board, the independent auditors of the Corporation (the "Auditors") and the financial management of the Corporation and monitor their performance.

B.        Composition and Expertise

The Committee shall be comprised of not less than three and not more than five directors, all of whom shall qualify as “independent” and “financially literate” as such terms are used in Multilateral Instrument 52-110 Audit Committees (the “Instrument”) of the Canadian Securities Administrators .  Determinations as to whether a particular director satisfies the requirements for membership on the Committee will be made by the Board with reference to the Instrument.  To the extent possible, at least one member of the Committee should be a chartered accountant.  The Board shall appoint the members of the Committee and a Committee chair from amongst those appointed, to hold office at the pleasure of the Board.

C.        Meetings

A majority of the members of the Committee shall constitute a quorum and all actions of the Committee shall be taken by a majority of the members present at the relevant meeting.  Meetings of the Committee shall take place in person or by telephone and shall be called by the chair of the Committee.  Meetings may also be called by any member of the Committee, or by the chair of the Board, the chief executive officer or the chief financial officer of the Corporation or by the Auditors.  Unless otherwise specified by the chair of the Committee, the secretary or the assistant secretary of the Corporation shall act as secretary of the Committee and shall provide the chair of the Board and each member of the Committee with notice of meetings of the Committee and each shall be entitled to attend such meetings.  The chair of the Committee or the Committee may require any officer or employee of the Corporation or any subsidiary thereof to attend a Committee meeting and, further, may invite any such other individuals to attend a Committee meeting as deemed appropriate or advisable.

D.        Responsibilities

1.         The Committee shall:

a)       prior to the release of the annual audited financial statements of the Corporation, review such statements and the related Management’s Discussion and Analysis of Results of Operations and Financial Condition ("MD&A") and, if satisfied, report thereon to, and recommend their approval by, the Board and the sending thereof to the Corporation’s shareholders;

b)      prior to the release of the unaudited quarterly financial statements of the Corporation for the preceding fiscal quarter, review such statements and the related MD&A, and approve the sending thereof to the Corporation’s shareholders; and

c)       review all proposed public disclosure related to the foregoing, including the Corporation’s financial disclosure in its annual and quarterly reports to shareholders and in any other public disclosure document (prospectus, information circular, annual information form, press release etc.) required to be filed with any regulatory authority.

2.         The Committee shall recommend to the Board:

a)         the Auditors to be nominated for the purpose of preparing or issuing the Auditors' report or performing other audit, review or attest services for the Corporation; and

b)         the compensation of the Auditors.

3.         The Committee shall be directly responsible for overseeing the work of the Auditors engaged for the purpose of preparing or issuing the Auditors' report on the annual financial statements of the Corporation or performing other audit, review or attest services for the Corporation, including the resolution of disagreements between management and the Auditors regarding financial reporting.

4.         The Committee shall establish procedures for:

a)         the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters; and
b)         the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.

5.         The Committee shall review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former Auditors.

6.         The Committee shall pre-approve all non-audit services (“Non-audit Services”) to be provided to the Corporation or its subsidiaries by the Auditors.  In connection with the foregoing, the Committee:

a)         may delegate to one or more of its members (a “Delegate”) the authority to pre-approve Non-audit Services provided that such pre-approval is presented to the Committee at its first scheduled meeting following such pre-approval;

b)         shall be considered as having satisfied its pre-approval requirements for Non-audit Services if it adopts specific policies and procedures for the engagement of Non-audit Services and:

i)       such pre-approval policies and procedures are detailed as to the particular service;
ii)      the Committee is informed of each Non-audit Service; and
iii)     the procedures do not include delegation of the Committee’s responsibilities to management; and

c)         shall also be considered as having satisfied its pre-approval requirements for Non-audit Services if:

i)       the aggregate amount of all Non-audit Services that were not pre-approved is reasonably expected to constitute no more than 5% of the total amount of fees paid by the Corporation and its subsidiaries to the Auditors during the fiscal year in which the services are provided;
ii)      the Corporation or the subsidiary, as the case may be, did not recognize the relevant Non-audit Services as Non-audit Services at the time of the engagement; and
iii)     the relevant Non-audit Services are promptly brought to the attention of the Committee and approved, prior to the completion of the audit for the relevant fiscal year, by the Committee or by a Delegate.

E.        Policies and procedures

Subject to the requirements of Section D above, the policies and procedures of the Committee should remain flexible in order to enable it to react to changes in circumstances and conditions so as to ensure that the corporate accounting reporting practices of the Corporation are in accordance with all applicable legal and regulatory requirements and current best practices.  The purposes and procedures outlined in this Charter are meant to serve as guidelines rather than inflexible rules and the Committee is encouraged to adopt such additional procedures and standards as it deems necessary from time to time to fulfill its responsibilities.

In carrying out its responsibilities, the Committee shall also:

  1. review any material issues regarding accounting and auditing policies and practices or judgments relating thereto (including review the selection of, quality of, application of and proposed material changes to the accounting policies and practices being applied and related judgments to ensure that such are appropriate and consistent with the Corporation’s needs and requirements), and discuss the same with the Auditors and the financial management of the Corporation;
  2. review, at least annually, including reviewing with the Auditors and the financial management of the Corporation, the adequacy and effectiveness of the accounting and financial controls of the Corporation, and any recommendations for the improvement of its internal controls or particular areas where new or more detailed controls or procedures are desirable and, to the extent applicable, monitor the response of management in implementing any such recommendations;
  3. prior to the commencement of the annual audit of the Corporation’s books, records and accounts, meet with the Auditors and the financial management of the Corporation to review the objectives and general scope of the proposed audit (including the overall audit plan, the proposed timing and completion dates together with the estimated audit fees, and review and sign the Auditors’ engagement letter) and the procedures to be utilized and, at the conclusion thereof, review such audit, including any comments or recommendations of the Auditors;
  4. review and discuss with the Auditors, at least annually, all significant relationships which the Auditors and its affiliates have with the Corporation and its affiliates in order to determine the Auditors’ independence including (i) obtaining and reviewing, on a periodic basis, a written statement from the Auditors delineating all relationships between them and services provided by them which may reasonably be considered to bear on the objectivity and/or independence of the Auditors with respect to the Corporation, (ii) discussing with the Auditors any disclosed relationships or services that may impact the objectivity and/or independence of the Auditors and (iii) making any appropriate recommendations to the Board in response to the Auditors' report in order to ensure the independence of the Auditors;
  5. review with the Auditors and financial management of the Corporation, at least annually, any significant financial risks or exposures to the Corporation of which they are aware, if any, and assess the steps management has taken to minimize such risks, if any, to the Corporation;
  6. satisfy itself generally that there is a good working relationship between management and the Auditors, review any management letters or other reports of the Auditors and discuss any material differences of opinion between management and the Auditors;
  7. provide sufficient opportunity for the Auditors and the financial management of the Corporation to each meet with the Committee alone without members of the other parties, as applicable, being present to discuss the co‑operation that each party has received from the others during the course of the Auditor’s audit;
  8. act as a conduit whereby the Auditors and the internal financial management of the Corporation can bring any concerns to the attention of the Board;
  9. examine and consider such matters in relation to any audits of the Corporation’s accounts (including the results of such audits), financial controls, financial reporting and in relation to the general financial affairs of the Corporation as the Committee may deem necessary or desirable;
  10. review reports and recommendations received or published from time to time from regulatory authorities that may have a significant impact on the Corporation's financial statements or related corporate compliance policies;
  11. review with the Corporation's counsel, legal compliance matters or any legal matters that could have a significant impact on the Corporation's financial statements or related corporate compliance policies;
  12. keep a record of the actions and proceedings of the Committee and report thereon to the Board periodically or whenever requested to do so;
  13. review and assess annually and otherwise from time to time as the Committee or the Board determines, the adequacy of this Charter and make recommendations to the Board for such changes to the Charter as the Committee considers necessary or desirable; and
  14. perform such other activities consistent with this Charter, the Corporation's articles of incorporation, by‑laws and governing law (including the Instrument), as the Committee or the Board deems necessary or appropriate.

For purposes of performing their duties, the members of the Committee shall have the right to inspect all books, records and accounts of the Corporation and to discuss such books, records, accounts and any other matters relating to the financial position of the Corporation directly with the internal financial management of the Corporation, the Auditors and/or Corporation counsel. 
The Committee shall also have the authority to engage independent legal, financial, accounting and other advisors as it determines necessary to carry out its duties and to set and pay the compensation for any such advisors.
While the Committee has the responsibilities and powers set forth in this Charter, the Committee’s mandate and function is one of oversight.  It is not the duty of the Committee to plan or conduct internal or external audits or to determine that the Corporation's financial statements are complete and accurate and are in accordance with generally accepted accounting principles.  Such functions are the responsibility of financial management of the Corporation and/or the Auditors.  Nor is it the duty of the Committee to conduct investigations, to resolve disagreements, if any, amongst the financial management of the Corporation and the Auditors or to ensure compliance with applicable laws and regulations.  Nothing contained in this Charter is intended to expand applicable standards of liability under statutory or regulatory requirements for the directors of the Corporation or members of the Committee.  Each member of the Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Corporation from which it receives information, (ii) the accuracy of the financial and other information provided by such persons or organizations (absent actual knowledge to the contrary, which shall be promptly reported to the Board), and (iii) representations made by management as to all audit and non-audit relationships with and/or services provided by the Auditors.

Approved at a Meeting of the Board of directors held on Novemer 4, 2005.

Generally, for purposes of the Instrument, “independent” means an individual with no direct or indirect relationship with the Corporation which could, in the view of the Board, reasonably interfere with the exercise of such individual’s independent judgement and “financially literate” means an individual who has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporation’s financial statements.