Audit Committee Charter
The overall purpose of the Audit Committee (the "Committee") of VR Resources Ltd. (the "Company") is to ensure that the Company's management has designed and implemented an effective system of internal financial controls, to review and report on the integrity of the financial statements and related financial disclosure of the Company, and to review the Company's compliance with regulatory and statutory requirements as they relate to financial statements, taxation matters and disclosure of financial information.
It is the intention of the Board that through the involvement of the Committee, the external audit will be conducted independently of the Company's management to ensure that the independent auditors serve the interests of Stakeholders rather than the interests of management of the Company. The Committee will act as a liaison to provide better communication between the Board and the external auditors. The Committee will monitor the independence and performance of the Company's independent auditors.
Composition, Procedures and Organization
The Committee shall consist of at least three members of the Board of Directors (the "Board").
Where possible, at least two (2) members of the Committee shall be independent and the Committee shall endeavour to appoint a majority of independent directors to the Committee, who in the opinion of the Board, would be free from a relationship which would interfere with the exercise of the Committee members' independent judgment. At least one (1) member of the Committee shall have accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices applicable to the Company. For the purposes of this Charter, an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company's financial statements.
The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, shall appoint the members of the Committee for the ensuing year. The Board may at any time remove or replace any member of the Committee and may fill any vacancy in the Committee.
Unless the Board shall have appointed a chair of the Committee, the members of the Committee shall elect a chair and a secretary from among their number.
The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other.
The Committee shall have access to such officers and employees of the Company and to the Company's external auditors, and to such information respecting the Company, as it considers to be necessary or advisable in order to perform its duties and responsibilities.
Meetings of the Committee shall be conducted as follows:
- the Committee shall meet at such times and at such locations as may be requested by the chair of the Committee. The external auditors or any member of the Committee may request a meeting of the Committee;
- the external auditors shall receive notice of and have the right to attend all meetings of the Committee; and
- management representatives may be invited to attend all meetings except private sessions with the external auditors.
The internal auditors and the external auditors shall have a direct line of communication to the Committee through its chair and may bypass management if deemed necessary. The Committee, through its chair, may contact directly any employee in the Company as it deems necessary, and any employee may bring before the Committee any matter involving questionable, illegal or improper financial practices or transactions.
Roles and Responsibilities
- The overall duties and responsibilities of the Committee shall be as follows:
- to assist the Board in the discharge of its responsibilities relating to the Company's accounting principles, reporting practices and internal controls and its approval of the Company's annual and quarterly financial statements and related financial disclosure;
- to establish and maintain a direct line of communication with the Company's internal and external auditors and assess their performance;
- to ensure that the management of the Company has designed, implemented and is maintaining an effective system of internal financial controls; and
- to report regularly to the Board on the fulfilment of its duties and responsibilities.
- The duties and responsibilities of the Committee as they relate to the external auditors shall be as follows:
- to recommend to the Board a firm of external auditors to be engaged by the Company, and to verify the independence of such external auditors;
- to review and approve the fee, scope and timing of the audit and other related services rendered by the external auditors;
- review the audit plan of the external auditors prior to the commencement of the audit;
- to review with the external auditors, upon completion of their audit:
- contents of their report;
- scope and quality of the audit work performed;
- adequacy of the Company's financial and auditing personnel;
- co-operation received from the Company's personnel during the audit;
- internal resources used;
- significant transactions outside of the normal business of the Company;
- significant proposed adjustments and recommendations for improving internal accounting controls, accounting principles or management systems;
- the non-audit services provided by the external auditors;
- to discuss with the external auditors the quality and not just the acceptability of the Company's accounting principles; and
- to implement structures and procedures to ensure that the Committee meets the external auditors on a regular basis in the absence of management.
- The duties and responsibilities of the Committee as they relate to the internal control procedures of the Company are to:
- review the appropriateness and effectiveness of the Company's policies and business practices which impact on the financial integrity of the Company, including those relating to internal auditing, insurance, accounting, information services and systems and financial controls, management reporting and risk management;
- review compliance under the Company's code of conduct and to periodically review these policies and recommend to the Board changes which the Committee may deem appropriate;
- review any unresolved issues between management and the external auditors that could affect the financial reporting or internal controls of the Company; and
- periodically review the Company's financial and auditing procedures and the extent to which recommendations made by the internal audit staff or by the external auditors have been implemented.
- The Committee is also charged with the responsibility to:
- review the Company's quarterly statements of earnings, including the impact of unusual items and changes in accounting principles and estimates and report to the Board with respect thereto;
- review and approve the financial sections of:
- the annual report to Shareholders, if any;
- the annual information form, if required;
- annual and interim MD&A;
- news releases discussing financial results of the Company; and
- other public reports of a financial nature requiring approval by the Board, and report to the Board with respect thereto;
- review regulatory filings and decisions as they relate to the Company's financial statements;
- review the appropriateness of the policies and procedures used in the preparation of the Company's financial statements and other required disclosure documents, and consider recommendations for any material change to such policies;
- review and report on the integrity of the Company's financial statements;
- review the minutes of any audit committee meeting of subsidiary companies, if any;
- review with management, the external auditors and, if necessary, with legal counsel, any litigation, claim or other contingency, including tax assessments that could have a material effect upon the financial position or operating results of the Company and the manner in which such matters have been disclosed in the Company's financial statements; and
- review the Company's compliance with regulatory and statutory requirements as they relate to financial statements, tax matters and disclosure of financial information.
- The Committee shall have the authority:
- to engage independent counsel and other advisors as it determines necessary to carry out its duties;
- to set and pay the compensation for any advisors employed by the Committee; and
- to communicate directly with the internal and external auditors.
- Reporting Violations and Questions
Defined Persons must report, in person or in writing, any known or suspected violations of laws, governmental regulations or this Charter to either the Chair of the Audit Committee or the Lead Director. Additionally, Defined Persons may contact the Company Corporate Secretary with a question or concern about this Charter or a business practice. Any questions or violation reports will be addressed immediately and seriously, and can be made anonymously.