The Committee's purposes shall include those stated in Section 3.1 of the Corporate Governance Code.
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 company.
A majority of the members of the committee including the Chairman shall be independent directors under the criteria stated in Appendix A to the Corporate Governance Code and non-executives if the board chooses to appoint non-board members (experts) in the committee.
The board must satisfy itself that at least a majority of the committee has recent and relevant financial ability and experience, which includes:
• an ability to read and understand corporate financial statements including a company's balance sheet, income statement and cash flow statement and changes in shareholders' equity,
• an understanding of the accounting principles which are applicable to the company's financial statements,
• experience in evaluating financial statements that have a level of accounting complexity comparable to that which can be expected in the company's business,
• an understanding of internal controls and procedures for financial reporting, and
• an understanding of the audit committee's functions and importance.
Committee Duties and Responsibilities
In serving those purposes the Committee shall:
• be responsible for the selection, appointment, remuneration, oversight and termination where appropriate of the outside auditor, subject to ratification by the company's board and shareholders. The outside auditor shall report directly to the committee,
• make a determination at least once each year of the outside auditor's independence, including:
• 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
• obtaining from the outside auditor a written report listing any relationships between the outside auditor and the company or with any other person or entity that may compromise the auditor's independence,
• review and discuss with the outside 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,
• review and discuss with management and the outside auditor each annual and each quarterly financial statements of the company including judgments made in connection with the financial statements,
• review and discuss and make recommendations regarding the selection, appointment and termination where appropriate of the head of internal audit and the budget allocated to the internal audit and compliance function, and monitor the responsiveness of management to the committee's recommendations and findings,
• review and discuss the adequacy of the company's internal auditing personnel and procedures and its internal controls and compliance procedures, and any risk management systems, and any changes in those,
• oversee the company's compliance with legal and regulatory requirements, and
• review and discuss arrangements under which company employees can confidentially raise concerns about possible improprieties in financial reporting or other matters, and ensure that arrangements are in place for independent investigation and follow-up regarding such matters.
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 company present. Only the committee may decide if a non-member of the committee should attend for a particular meeting or a particular agenda item. It is expected that the outside auditor's lead representative will be invited to attend regularly but this shall always be subject to the committee's decision.
The committee shall report regularly to the full board on its activities.
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 company shall provide appropriate funding for the compensation of any such persons.
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 may be in the form of an oral report made at any regularly scheduled board meeting.