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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 2013

    • 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 licensee.

      A majority of the members of the committee including the Chairman shall be independent directors.

      The CEO must not be a member of this committee.

      The committee members must have sufficient technical expertise to enable the committee to perform its functions effectively. Technical expertise means that members must have recent and relevant financial ability and experience, which includes:

      (a) An ability to read and understand corporate financial statements including a 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 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 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 2013

    • 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 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 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 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 activities, performance and adequacy of the licensee's internal auditing and compliance personnel and procedures and its internal controls and compliance procedures, risk management systems, and any changes in those;
      (g) Oversee the licensee's compliance with legal and regulatory requirements, codes and business practices, and ensure that the licensee communicates with shareholders and relevant stakeholders (internal and external) openly and promptly, and with substance of compliance prevailing over form;
      (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;
      (i) The committee must monitor rotation arrangements for audit engagement partners. The audit committee must monitor the performance of the external auditor and the non-audit services provided by the external auditor; and
      (j) The review and supervision of the implementation of, enforcement of and adherence to the licensee's code of conduct.
      January 2013

    • 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 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 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 must meet with the external auditor at least twice per year, and at least once per year in the absence of any members of executive management.

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

      January 2013

    • 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 licensee shall provide appropriate funding for the compensation of any such persons.

      January 2013

    • 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.

      January 2013