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IN THE NEWS

KESTREL GOLD INC. Announces Re-filing...   01.30.2017
Kestrel Gold Inc. (the “Corporation” or “Kestrel”) (TSX-V: KGC) (currently suspended from trading) announces that it has re-filed its Manag...

Kestrel Gold Inc. Announces Completio...   01.16.2015
Mr. Kevin Nephin, the President and CEO of Kestrel Gold Inc. announces that is has closed its previously announced non-brokered private placement o...

Kestrel Gold Inc. Announces Completio...   11. 7.2014
Mr. Kevin Nephin, the President and CEO of Kestrel Gold Inc. ("Kestrel" or the "Corporation") (TSX-V: KGC) announces several recent developments re...


AUDIT COMMITTEE CHARTER

 

TERMS OF REFERENCE FOR THE AUDIT COMMITTEE

  1. PURPOSE

    The primary function of the Audit Committee (the "Committee") is to assist the board of directors ("Board") in fulfilling its oversight responsibilities by reviewing:

    1. the financial information that will be provided to the shareholders and others;
    2. the systems of internal controls, management and the Board have established; and
    3. all external audit and review processes.

    Primary responsibility for the financial reporting, information systems, risk management and internal controls of the Corporation is vested in management and is reviewed by the Board.

  2. COMPOSITION AND OPERATIONS
    1. The Committee shall be composed of not fewer than three (3) directors a majority of whom must be independent and financially literate as those terms are defined in Multilateral Instrument 52-110, Audit Committees and possess:
      1. an understanding of the accounting principles used by the Corporation to prepare its financial statements;
      2. the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and reserves;
      3. experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Corporation's financial statements, or experience actively supervising one or more individuals engaged in such activities; and
      4. an understanding of internal controls and procedures for financial reporting.
    2. Members shall serve a one (1) year term and may serve consecutive terms, which is encouraged to ensure continuity of experience.
    3. The Chairman of the Audit Committee shall be independent of management.
    4. The quorum at meetings of the Audit Committee shall be its chairman and at least one of its other members. The Audit Committee may hold its meetings, and members of the Audit Committee may attend meetings, by means of  telephone or other forms of  telecommunications.
    5. The minutes of the Audit Committee meetings shall accurately reflect the decisions reached and shall be distributed to the Audit Committee members with copies to the Board, the Chief Executive Officer ("CEO") and the Chief Financial Officer.
    6. The Corporation's auditor shall be advised of the names of the Committee members and will receive notice of and be invited to attend meetings of the Committee, and to be heard at those meetings on matters relating to the auditor's duties.
    7. The Committee shall meet with the external auditors as it deems appropriate to consider any matter that the Committee or auditors determine should be brought to the attention of the Board or shareholders.
    8. The Committee shall meet at least once (by person or by teleconference) in each fiscal quarter to review and approve the Corporation's quarterly financial statements and managements' discussion and analysis ("MD&A") for the immediately preceding fiscal quarter and to review and recommend approval by the full Board of the annual financial statements and MD&A for the immediately preceding fiscal year and as often thereafter as required to discharge the duties of the Committee.
  3. DUTIES AND RESPONSIBILITIES

    Subject to the powers and duties of the Board, the Committee will perform the following duties.

    1. Financial Statements and Other Financial Information

      The Committee will review and recommend for approval to the Board financial information that will be made publicly available. This includes:

      1. review and recommend approval of the Corporation's annual financial statements and MD&A and report to the Board before the statements are approved by the Board;
      2. review and approve for release the Corporation's quarterly financial statements, MD&A and press release; and
      3. review the Annual Information Form, any Prospectus or private placement offering document and any other material financial information required by applicable regulatory authorities.

      Review and discuss:

      1. the appropriateness of accounting policies and financial reporting practices used by the Corporation;
      2. any significant proposed changes in financial reporting and accounting policies and practices to be adopted by the Corporation; and
      3. any new or pending developments in accounting and reporting standards that may affect the Corporation.

      Be satisfied that adequate procedures are in place for the review of the Corporation's public disclosure of financial information extracted or derived from the Corporation's financial statements, other than the public disclosure previously referred to and periodically assess the adequacy of those procedures.

    2. Risk Management, Internal Control and Information Systems

      The Committee will review and obtain reasonable assurance that the risk management, internal control and information systems are operating effectively to produce accurate, appropriate and timely management and financial information. This includes:

      1. review the Corporation's risk management controls and policies;
      2. consider whether the information systems appear to be reliable and the systems of internal controls are properly designed and effectively implemented through discussions with and reports from management and the external auditor; and
      3. review management steps to implement and maintain appropriate internal control procedures including a review of policies.
    3. External Audit and Review

      The Committee will oversee the work of the external auditor and will review the planning and results of external audit activities. This includes:

      1. review and recommend to the Board, for shareholder approval, engagement of the external auditor;
      2. review and recommend to the Board the external auditor's compensation;
      3. review the annual external audit plan, including but not limited to the following:
        1. engagement letter
        2. objectives and scope of the external audit work;
        3. procedures for quarterly review of financial statements;
        4. materiality limit;
        5. areas of audit risk;
        6. staffing;
        7. timetable; and
        8. proposed fees.
      4. meet with the external auditor to discuss the Corporation's annual financial statements and MD&A (and the quarterly financial statements and MD&A if deemed necessary) and the auditor's report including the appropriateness of accounting policies and underlying estimates and resolve any disagreements between management and the external auditors regarding financial reporting;
      5. implement procedures to meet with the external auditor on a regular basis in the absence of management if deemed necessary;
      6. review and advise the Board with respect to the planning, conduct and reporting of the annual audit, including:
        1. any difficulties encountered, or restriction imposed by management, during the annual audit;
        2. any significant accounting or financial reporting issue;
        3. if completed, the auditor's evaluation of the Corporation's system of internal controls, procedures and documentation or parts thereof;
        4. the post audit or management letter containing any findings or recommendation of the external auditor, including management's response thereto and the subsequent follow-up to any identified internal control weaknesses;
        5. any other matters the external auditor brings to the Committee's attention; and
        6. assess the qualifications, performance and independence of the external auditor and consider the annual appointment of external auditor for recommendation to the Board;
      7. review the auditor's report, if any, on all material subsidiaries;
      8. review and receive assurances on the independence of the external auditor;
      9. review and pre-approve all non-audit services to be provided by the external auditor's firm or its affiliates (including estimated fees), and consider the effect on the independence of the external audit;
      10. meet periodically, and at least annually, with the external auditor without management present; and
      11. take reasonable steps to ensure that, prior to public disclosure of the Corporation's annual financial statements and MD&A, the external auditor is a participating audit firm and is in compliance with any restriction or sanction imposed by the Canadian Public Accountability Board under Multilateral Instrument 52-108, Auditor Oversight.
    4. OTHER

      The Committee will also:

      1. review insurance coverage of significant business risks and uncertainties;
      2. review policies and procedures for the review and approval of officers' expenses and perquisites;
      3. periodically review the terms of reference for the Committee and make recommendations to the Board as required;
      4. establish procedures for:
        1. the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters; and
        2. the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.
      5. review and approve the Corporation's hiring policies regarding employees and former employees of the present and former external auditors of the Corporation; and
      6. make enquires about potential claims, assessments and other contingent liabilities.
  4. ACCOUNTABILITY
    1. The Committee Chair has the responsibility to make periodic reports to the Board, as requested, on financial matters relative to the Corporation.
    2. The Committee shall report its discussions to the Board by maintaining minutes of its meetings and providing an oral report at the next Board meeting.
  5. COMMITTEE TIMETABLE

    A proposed timetable of the Committee meetings shall be prepared at the beginning of each fiscal year.

  6. RELIANCE ON EXPERTS

    In contributing to the Committees' discharging of its duties under this mandate, each member shall be entitled to rely in good faith on:

    1. financial statements of the Corporation represented to the member by an officer of the Corporation, or in a written report of the external auditor, to present fairly the financial position of the Corporation and the results of its operations in accordance with generally accepted accounting principles; and
    2. any report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by any such person.

    The board is of the view that monitoring of the Corporation's financial reporting and disclosure policies and procedures cannot be reasonably met unless the following activities (the "Fundamental Activities") are, in all material respects, conducted effectively:

    1. the Corporation's accounting functions are performed in accordance with a system of internal financial controls designed to capture and record properly and accurately all of the Corporation's financial transactions;
    2. the internal financial controls are regularly assessed for effectiveness and efficiency;
    3. the Corporation's quarterly and annual financial statements and MD&A are properly prepared by management in accordance with generally accepted accounting principles; and
    4. the annual financial statements are reported on by an external auditor appointed by the shareholders of the Corporation.
  7. LIMITATION OF COMMITTEE'S DUTIES

    In contributing to the Committee's discharging of its duties under these terms of reference, each member of the Committee shall be obliged only to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.  Nothing in these terms of reference is intended, or may be construed, to impose on any member of the Committee a standard of care or diligence that is in any way more onerous or extensive than the standard to which all Board members are subject.  The essence of the Committee's duties is monitoring and reviewing to endeavour to gain reasonable assurance (but not to ensure) that the Fundamental Activities are being conducted effectively and that the objectives of the Corporation's financial reporting are being met and to enable the Committee to report thereon to Board.