Audit Committee Charter

I. Mandate

The primary function of the audit committee (the “Committee”) is to assist the Board of
Directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company’s systems of internal controls regarding finance and accounting, and the Company’s auditing, accounting and financial reporting processes. Consistent with this function, the Committee will encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels. The Committee’s primary duties and responsibilities are to:


  • Serve as an independent and objective party to monitor the Company’s financial reporting and internal control system and review the Company’s financial statements.
  • Review and appraise the performance of the Company’s external auditors.
  • Provide an open avenue of communication among the Company’s auditors, financialand senior management and the Board of Directors.

II. Composition

The Committee shall be comprised of three directors as determined by the Board of
Directors, the majority of whom shall be free from any relationship that, in the opinion of
the Board of Directors, would interfere with the exercise of his or her independent
judgment as a member of the Committee.


At least one member of the Committee shall have accounting or related financial
management expertise. All members of the Committee that are not financially literate will
work towards becoming financially literate to obtain a working familiarity with basic finance
and accounting practices. For the purposes of the Company’s Charter, the definition of
“financially literate” is 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 presumably be expected
to be raised by the Company’s financial statements.


The members of the Committee shall be elected by the Board of Directors at its first
meeting following the annual shareholders’ meeting. Unless a Chair is elected by the full
Board of Directors, the members of the Committee may designate a Chair by a majority
vote of the full Committee membership.

III. Meetings

The Committee shall meet a least twice annually, or more frequently as circumstances
dictate. As part of its job to foster open communication, the Committee will meet at least
annually with the Chief Financial Officer and the external auditors in separate sessions.

IV. Responsibilities and Duties

To fulfill its responsibilities and duties, the Committee shall:

1. Review and update this Charter annually.

2. Review the Company’s financial statements, MD&A and any annual and interim
earnings, press releases before the Company publicly discloses this information and
any reports or other financial information (including quarterly financial statements),
which are submitted to any governmental body, or to the public, including any
certification, report, opinion, or review rendered by the external auditors.

3. Review annually the performance of the external auditors who shall be ultimately
accountable to the Board of Directors and the Committee as representatives of the
shareholders of the Company.

4. Obtain annually, a formal written statement of external auditors setting forth all
relationships between the external auditors and the Company, consistent with
Independence Standards Board Standard 1.

5. Review and discuss with the external auditors any disclosed relationships or services
that may impact the objectivity and independence of the external auditors.

6. Take, or recommend that the full Board of Directors take, appropriate action to
oversee the independence of the external auditors.

7. Recommend to the Board of Directors the selection and, where applicable, the
replacement of the external auditors nominated annually for shareholder approval.

8. At each meeting, consult with the external auditors, without the presence of
management, about the quality of the Company’s accounting principles, internal
controls and the completeness and accuracy of the Company’s financial statements.

9. Review and approve the Company’s hiring policies regarding partners, employees
and former partners and employees of the present and former external auditors of
the Company.

10. Review with management and the external auditors the audit plan for the year-end
financial statements and intended template for such statements.

11. Review and pre-approve all audit and audit-related services and the fees and other
compensation related thereto, and any non-audit services, provided by the
Company’s external auditors. The pre-approval requirement is waived with respect
to the provision of non-audit services if:>

i. the aggregate amount of all such non-audit services provided to the
Company constitutes not more than five percent of the total amount of
revenues paid by the Company to its external auditors during the fiscal year
in which the non-audit services are provided;

ii. such services were not recognized by the Company at the time of the
engagement to be non-audit services; and

iii. such services are promptly brought to the attention of the Committee by the
Company and approved prior to the completion of the audit by the
Committee or by one or more members of the Committee who are
members of the Board of Directors to whom authority to grant such
approvals has been delegated by the Committee.

Provided the pre-approval of the non-audit services is presented to the Committee’s
first scheduled meeting following such approval such authority may be delegated by
the Committee to one or more independent members of the Committee.

12. In consultation with the external auditors, review with management the integrity of
the Company’s financial reporting process, both internal and external.

13. Consider the external auditors’ judgments about the quality and appropriateness of
the Company’s accounting principles as applied in its financial reporting.

14. Consider and approve, if appropriate, changes to the Company’s auditing and
accounting principles and practices as suggested by the external auditors and

15. Review significant judgments made by management in the preparation of the
financial statements and the view of the external auditors as to appropriateness of
such judgments.

16. Following completion of the annual audit, review separately with management and
the external auditors any significant difficulties encountered during the course of
the audit, including any restrictions on the scope of work or access to required

17. Review any significant disagreement among management and the external auditors
in connection with the preparation of the financial statements.

18. Review with the external auditors and management the extent to which changes
and improvements in financial or accounting practices have been implemented.

19. Review any complaints or concerns about any questionable accounting, internal
accounting controls or auditing matters.

20. Review certification process.

21. Establish a procedure for the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or auditing matters.

22. Review any related-party transactions.

V. Annual Work Plan

To fulfill its responsibilities and duties, the Committee shall:

Review audit plan and year-end statements template
Review accounting systems and procedures
Review auditors’ letter of recommendation
Review financial and accounting human resources
Review Committee’s charter and membership
Review and recommend year-end financial statements
Review MD&A
Review external auditors’ work, independence and fees
Recommend auditors for the ensuing year
Review and reassess the adequacy of the Code of Ethics
for Financial Reporting Officers
Review any proposed prospectus filings or similar filings