Audit Committee

The board of directors have approved the mandate for the audit committee which includes, among other duties and responsibilities: monitoring the financial reporting process and systems of internal control; monitoring the independence and performance of the external auditors; and, reviewing internal and year-end financial statements and other regulatory filings for approval of the board of directors.

Audit Committee Charter

Audit Committee Charter
(June 1, 2004, as amended)
Membership and Meetings

Membership

The Committee will be comprised of no fewer than three members as appointed by the Board of Directors all of which, in the opinion of the Board, are independent Directors.
Each Committee member will meet the independence, financial literacy and other membership requirements of the Toronto Stock Exchange and the rules and regulations of the AIM market of the London Stock Exchange and such other securities regulatory authorities having jurisdiction over the Company (the "Commissions").
At least one member of the Committee will have recent relevant experience of audit and financial matters.
Each Committee member will serve at the pleasure of the Board for a period not exceeding three years. Committee members may serve for up to two additional three year periods at the discretion of the Board or until such Committee member is no longer a Board member.

Meetings

The Committee will meet in person or by conference call as often as it deems necessary, but not less frequently than four times per year.
Meetings of the Committee should be attended, when requested by the Committee, by the Company's Chief Financial Officer, legal counsel, representatives of the Company's principal external auditors ("Independent Auditors") and others as deemed appropriate by the Committee.
The Committee will meet privately with management in connection with the consideration and approval of the Company's interim unaudited financial statements. The Independent Auditors will be engaged by the Company to conduct a review of each of the Company's interim unaudited financial statements. In connection with the Company's annual audited financial statements, the Committee will meet privately with management and the Independent Auditor. In addition, the Committee may also meet privately from time to time with such other persons or groups as the Committee deems appropriate.
The Committee Chair will be responsible for calling the meetings of the Committee, establishing meeting agenda with input from management, supervising the conduct of the meetings and providing the Board with a timetable of significant financial statement milestones.
A majority of the number of appointed Committee members will constitute a quorum for conducting business at a meeting of the Committee.

Purposes

The Committee will assist the Board in the oversight of:
  • the integrity of the financial statements of the Company;
  • the Independent Auditor's qualifications and independence;
  • the performance of the Company's Independent Auditors;
  • the compliance by the Company with legal and regulatory requirements; and
  • the identification of any other risks to the Company's interests.

The Committee will also prepare any report required by the rules of the Commission to be included in any proxy statement prepared by the Company or in the annual directors' report to shareholders.

Committee Authority and Responsibilities

Relationship with the Independent Auditors

The Committee will make recommendations to the Board with respect to the appointment or replacement of the Independent Auditor. In accordance with applicable laws, shareholders will be asked to ratify and approve the appointment of the Independent Auditor. The Committee will make a recommendation to the Board with regards to compensation and oversight of the work of the Independent Auditor for the purpose of preparing or issuing an audit report or related work. The Independent Auditor will report directly to the Committee.

Pre-approval of Audit and Non-Audit Services

The Committee has the authority to pre-approve all auditing services and permitted non-audit services to be performed by the Independent Auditor for the Company and its subsidiaries.

Resources of the Committee

The Committee has the authority to retain independent legal, accounting or other advisors.
The Company will provide for funding, as and when deemed reasonably necessary or advisable by the Committee, for payment of compensation to the Independent Auditor and to any advisors employed by the Committee.
Upon the request of the Committee, the Company will provide to each Committee member, upon appointment and continuing thereafter, training including training in the role of internal and external auditing and risk management.

Reports to the Board

The Committee will make available to the Board all Committee recommendations and Committee meeting minutes.

Charter Reviews

The Committee will review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

Performance Assessment

The Board of Directors will annually review the Audit Committee's performance.

Whistle-blowing Procedures

The Committee will oversee the Company's whistle-blowing policy as developed and approved by the Board of Directors.

Financial Statement and Disclosure Matters

The Committee will:

Review and discuss with the Board, and the Independent Auditor as deemed necessary:
The annual audited and quarterly unaudited financial statements of the Company, related press releases, disclosures made in Management's Discussion and Analysis and Annual Information Form.
Significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including any significant changes in the Company's selection or application of accounting principles, any major issues relating to the adequacy of the Company's internal controls over financial reporting and any special steps adopted in light of material control deficiencies.
The effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company's financial statements.
Review and discuss reports from the Independent Auditors on:
All critical accounting policies and practices used.
All material alternative financial treatments available within generally accepted accounting principles, the ramifications of each alternative and the treatment preferred by the Independent Auditor.
Other material written communications between the Independent Auditor and management, such as any management letter or schedule of unadjusted differences.
Ensure that adequate procedures are in place for the review of the Company's public disclosure of financial information extracted or derived from the Company's financial statements and periodically assess the adequacy of these procedures.
Discuss with management and the Board the Company's earnings press releases (including any use of "pro forma" or "adjusted non-GAAP information"), financial information and earnings guidance provided to analysts and rating agencies.
Discuss with management and the Board the Company's major financial risk exposures and the policies and procedures management has taken to monitor and control such exposures.
Discuss with the Independent Auditor the conduct of the audit, including any difficulties encountered in the course of the audit, any restrictions on the scope of activities or access to requested information, and any disagreements with management.

Oversight of the Company's Relationship with the Independent Auditor

The Committee will:

At least annually, review a report from the Independent Auditor describing:
the Independent Auditor's internal quality-control procedures;
any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm;
any steps taken to deal with any such issues, and
all relationships between the Independent Auditor and the Company.
Evaluate the qualifications, performance and independence of the Independent Auditor, including:
Seeking confirmation from the Independent Auditor that it is:
a 'participating audit' firm for the purposes of NI 52-108 (Auditor Oversight); and
in compliance with any restrictions or sanctions imposed by the Canadian Public Accountability Board.
Consider whether the auditor's quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor's independence and produce an annual report explaining how these controls provide adequate protection of auditor independence.
This review should also include an evaluation of the lead audit partner. The Committee shall present its conclusions with respect to the Independent Auditor and lead audit partner to the Board.
Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis.
Establish policies for the Company's hiring of partners, employees or former partners or employees of the present and former Independent Auditor.
As appropriate, seek to discuss with the national office of the Independent Auditor issues on which they were consulted by the Company's audit team and matters of audit quality and consistency.
Meet with the Independent Auditor prior to the audit to discuss the planning and staffing of the audit.

Oversight of the Company's Accounting Function

The Committee will:

review and make recommendations to the Board in respect of the appointment and replacement of the Chief Financial Officer.
review and make recommendations to the Board relating to the Company's internal system of financial controls.
review the effectiveness of internal control over financial reporting

Limitation of Audit Committee's Role

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the Independent Auditor.

Annual General Meeting of Shareholders

The Committee Chair will be present at the annual general meeting of shareholders of the Company to answer any questions relating to the audit function.

Public Disclosure

This Charter will be disclosed, as required, in the appropriate public disclosure documents of the Company.