• HC-3 HC-3 Audit Committee and Financial Statements Certification

    • HC-3.1 HC-3.1 Principle

      • HC-3.1.1

        The board must have rigorous controls for financial audit and reporting, internal control, and compliance with law.

        January 2014

    • HC-3.2 HC-3.2 Audit Committee

      • HC-3.2.1

        The board must establish an audit committee of at least three directors of which the majority must be independent including the chairman. The committee must:

        (a) Review the licensee's accounting and financial policies and practices;
        (b) Review the integrity of the licensee's financial and internal controls and financial statements (particularly with reference to information passed to the board - see Paragraph HC-1.2.10). The information needs of the board to perform its monitoring responsibilities must be defined in writing, and regularly monitored by the audit committee;
        (c) Review the licensee's compliance with legal requirements;
        (d) Recommend the appointment, compensation and oversight of the licensee's external auditor; and
        (e) Recommend the appointment of the internal auditor.
        January 2014

      • HC-3.2.2

        In its review of the systems and controls framework in Paragraph HC-3.2.1, the audit committee must:

        (a) Make effective use of the work of external and internal auditors. The audit committee must ensure the integrity of the licensee's accounting and financial reporting systems through regular independent review (by internal and external audit). Audit findings must be used as an independent check on the information received from management about the licensee's operations and performance and the effectiveness of internal controls;
        (b) Make use of self-assessments, stress tests, and/or independent judgements made by external advisors. The board should appoint supporting committees, and engage senior management to assist the audit committee in the oversight of risk management; and
        (c) Ensure that senior management have put in place appropriate systems of control for the business of the licensee and the information needs of the board; in particular, there must be appropriate systems and functions for identifying as well as for monitoring risk, the financial position of the licensee, and compliance with applicable laws, regulations and best practice standards. The systems must produce information on a timely basis.
        January 2014

      • HC-3.2.3

        The licensee must set up an internal audit function, which reports directly to the audit committee and administratively to the CEO.

        January 2014

      • HC-3.2.4

        The CEO must not be a member of the audit committee.

        January 2014

    • HC-3.3 HC-3.3 Audit Committee Charter

      • HC-3.3.1

        The audit committee must adopt a written charter which shall, at a minimum, state the duties outlined in Paragraph HC-3.2.1 and the other matters included in Appendix A to this Module.

        January 2014

      • HC-3.3.2

        A majority of the audit committee members must have the financial literacy qualifications stated in Appendix A.

        January 2014

      • Whistleblower Program

        • HC-3.3.3

          The board must adopt a "whistleblower" program under which employees can confidentially raise concerns about possible improprieties in financial or legal matters. Under the program, concerns may be communicated directly to any audit committee member or, alternatively, to an identified officer or employee who will report directly to the audit committee on this point.

          January 2014

    • HC-3.4 HC-3.4 CEO and CFO Certification of Financial Statements

      • HC-3.4.1

        To encourage management accountability for the financial statements required by the directors, the licensee's CEO and chief financial officer (CFO) must state in writing to the audit committee and the board as a whole that the licensee's interim and annual financial statements present a true and fair view, in all material respects, of the licensee's financial condition and results of operations in accordance with applicable accounting standards.

        January 2014