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  • Appendix A Appendix A Audit Committee

    • Committee Duties

      The Committee's duties shall include those stated in Paragraph HC-3.2.1.

      January 2011

    • Committee Membership and Qualifications

      The Committee shall have at least three members. Such members must have no conflict of interest with any other duties they have for the investment firm licensee.

      A majority of the members of the committee including the Chairman shall be independent directors and non-executive directors.

      The Board must satisfy itself that at least a majority of the committee has recent and relevant financial ability and experience, which includes:

      (a) An ability to read and understand corporate financial statements including an investment firm licensee's balance sheet, income statement and cash flow statement and changes in shareholders' equity;
      (b) An understanding of the accounting principles which are applicable to the investment firm licensee's financial statements;
      (c) Experience in evaluating financial statements that have a level of accounting complexity comparable to that which can be expected in the investment firm licensee's business;
      (d) An understanding of internal controls and procedures for financial reporting; and
      (e) An understanding of the audit committee's controls and procedures for financial reporting.
      January 2011

    • Committee Duties and Responsibilities

      In serving those duties, the Committee shall:

      (a) Be responsible for the selection, appointment, remuneration, oversight and termination where appropriate of the external auditor, subject to ratification by the investment firm licensee's Board and shareholders. The external auditor shall report directly to the committee;
      (b) Make a determination at least once each year of the external auditor's independence, including:
      (i) Determining whether its performance of any non-audit services compromised its independence (the committee may establish a formal policy specifying the types of non-audit services which are permissible) and;
      (ii) Obtaining from the external auditor a written report listing any relationships between the external auditor and the investment firm licensee or with any other person or entity that may compromise the auditor's independence;
      (c) Review and discuss with the external auditor the scope and results of its audit, any difficulties the auditor encountered including any restrictions on its access to requested information and any disagreements or difficulties encountered with management;
      (d) Review and discuss with management and the external auditor each annual and each quarterly financial statements of the investment firm licensee including judgments made in connection with the financial statements;
      (e) Review and discuss and make recommendations regarding the selection, appointment and termination where appropriate of the head of internal audit and head of compliance and the budget allocated to the internal audit and compliance function, and monitor the responsiveness of management to the committee's recommendations and findings;
      (f) Review and discuss the adequacy of the investment firm licensee's internal auditing and compliance personnel and procedures and its internal controls and compliance procedures, and any risk management systems, and any changes in those;
      (g) Oversee the investment firm licensee's compliance with legal and regulatory requirements; and
      (h) Review and discuss possible improprieties in financial reporting or other matters, and ensure that arrangements are in place for independent investigation and follow-up regarding such matters.
      Amended: October 2012
      January 2011

    • Committee Structure and Operations

      The committee shall elect one member as its chair.

      The committee shall meet at least four times a year. Its meetings may be scheduled in conjunction with regularly-scheduled meetings of the entire Board.

      The committee may meet without any other director or any officer of the investment firm licensee present. Only the committee may decide if a non-member of the committee should attend a particular meeting or a particular agenda item. Non-members who are not directors of the investment firm licensee may attend to provide their expertise, but may not vote. It is expected that the external auditor's lead representative will be invited to attend regularly but that this shall always be subject to the committee's decision.

      The committee shall report regularly to the full Board on its activities.

      January 2011

    • Committee Resources and Authority

      The committee shall have the resources and authority necessary for its duties and responsibilities, including the authority to select, retain, terminate and approve the fees of outside legal, accounting or other advisors as it deems necessary or appropriate, without seeking the approval of the Board or management. The investment firm licensee shall provide appropriate funding for the compensation of any such persons.

      January 2011

    • Committee Performance Evaluation

      The committee shall prepare and review with the Board an annual performance evaluation of the committee, which shall compare the committee's performance with the above requirements and shall recommend to the Board any improvements deemed necessary or desirable to the committee's charter. The report must be in the form of a written report provided at any regularly scheduled Board meeting.

      Amended: July 2012
      January 2011