Audit Committee Charter
1. Purpose of Audit Committee
The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Kiska Metals Corporation is to provide an open avenue of communication between management, the independent auditor, and the Board and to assist the Board in its oversight of the:
- integrity, adequacy and timeliness of the company’s financial reporting and disclosure practices;
- processes for identifying and managing the principal financial risks of the company and the company’s internal control systems that ensures fair, complete and accurate financial reporting;
- company’s compliance with legal and regulatory requirements related to financial reporting; and
- independence and performance of the company’s external auditor.
The Committee shall also perform any other activities consistent with this Charter, the company’s by-laws and governing laws as the Committee or Board deems necessary or appropriate.
2. Membership an operations
The Committee shall consist of at least three directors. Members of the Committee and the Chairman shall be appointed by the Board and may be removed by the Board in its discretion. At least one of the members of the Committee shall be independent and all members shall have sufficient financial literacy, which means the ability to read and understand a balance sheet, income statement, cash flow statement and the notes attached thereto, to enable them to discharge their responsibilities in accordance with applicable laws and/or requirements of the TSX Venture Exchange on which the company’s securities trade. At least one member of the Committee shall have accounting or related financial management expertise that allows that member to read and understand financial statements and the related notes attached thereto in accordance with generally accepted accounting principles (“GAAP”).
The Committee’s role is one of oversight. Management is responsible for preparing the company’s financial statements and other financial information and for the fair presentation of the information set forth in the financial statements in accordance with GAAP. Management is also responsible for establishing systems of internal control and for maintaining the appropriate accounting and financial reporting principles and policies designed to assure compliance with accounting standards and all applicable laws and regulations.
The external auditor’s responsibility is to audit the company’s financial statements and provide its opinion, based on its audit conducted in accordance with generally accepted auditing standards, that the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of the company in accordance with GAAP. The external auditor is also responsible for issuing an attestation report on management’s assessment of the effectiveness of the Company’s systems of internal control as of the end of the Company’s most recent fiscal year end. The Committee is directly responsible for the appointment, compensation, evaluation, termination and oversight of the work of the external auditor. The external auditor shall report directly to the Committee, as they are accountable to the Board and the Committee as representatives of the company’s shareholders. As such, it is not the duty or responsibility of the Committee or any of its members to plan or conduct any type of audit or accounting review or procedure.
The Committee will meet at least four times per year to perform its responsibilities as set out in this Charter; however, it may perform its duties by consent resolution instead of meetings. The foregoing notwithstanding, the Audit Committee shall meet at least once per year.
The Committee may ask members of management or others to attend meetings to provide information as necessary. The Committee shall meet separately with each of management and the independent auditor to discuss matters that the Committee or these groups believe should be discussed privately with the Committee. Additional meetings via teleconference shall be held as required in the opinion of the Audit Committee or the external auditor. Minutes of all meetings of the Committee will be provided to the Board. Written or verbal reports on Committee meetings whose minutes have not been completed will be provided at each meeting of the Board.
4. Committee Responsibilities and Duties
In performing its oversight responsibilities, the Committee shall:
- Review and assess the adequacy of this Charter and recommend any proposed changes to the Board for approval at least once per year.
- Review the appointments of the company’s Chief Financial Officer and any other key financial executives involved in the financial reporting process.
- Review with management and the external auditor the adequacy and effectiveness of the company’s systems of internal control and the adequacy and timeliness of its financial reporting processes.
- Review with management and the external auditor the annual audited financial statements, the unaudited quarterly financial statements, the management discussion and analysis reports and other financial reporting documents, including the CEO and CFO quarterly certifications, prior to filing or distribution, including financial matters required to be reported under applicable legal or regulatory requirements.
- Review with management and the external auditor and approve earnings news releases and other financial information and earnings guidance disclosures contained in such news releases prior to their release.
- Where appropriate and prior to release, review with management and approve any other news releases that contain significant financial information that has not previously been released to the public.
- Review the company’s financial reporting and accounting standards and principles and significant changes in such standards or principles or in their application, including key accounting decisions affecting the financial statements, alternatives thereto and the rationale.
- Review the quality and appropriateness, not just the acceptability, of the accounting policies and the clarity of financial information and disclosure practices adopted by the company, including consideration of the external auditors’ judgments about the quality and appropriateness of the company’s accounting policies. This review shall include discussions with the external auditor without the presence of management.
- Review with management and the external auditor significant related party transactions and potential conflicts of interest.
- Recommend to the Board and shareholders the external auditor selected to examine the company’s accounts and financial statements. The Committee has the responsibility to approve all audit engagement terms and fees. The Committee shall pre-approve all audit, non-audit and assurance services provided to the company by the external auditor, but the Chairman or his appointee may be delegated the responsibility to approve these services where the fee is not significant.
- Review with management and the external auditor and approve the annual audit plan and results of and any problems or difficulties encountered during any external audits and management’s responses thereto.
- Receive the report of the external auditor on completion of the audit.
- Monitor the independence of the external auditors by reviewing all relationships between the independent auditor and the company and all audit, non-audit and assurance work performed for the company by the independent auditor on at least a semi-annual basis. The Committee will receive an annual written confirmation of its independence from the external auditor.
- Review the company’s procedures and establish procedures for the Committee for the:
- receipt, retention and resolution of complaints regarding accounting, financial disclosure, internal controls or auditing matters; and
- confidential, anonymous submission by employees regarding questionable accounting, auditing and financial reporting and disclosure matters or violations of the Company’s Code of Ethics.
- Conduct or authorize investigations into any matter that the Committee believes is within the scope of its responsibilities. The Committee has the authority to retain independent counsel, accountants or other advisors to assist it in the conduct of any investigation, at the expense of the Company.
- The Committee shall report its recommendations and findings to the Board after each meeting and shall conduct and present to the Board an annual performance evaluation of the effectiveness of the Committee.
5. Key Practices
The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Kiska Metals Corporation has adopted the following key practices to assist it in fulfilling its responsibilities described in the company’s Audit Committee Charter.
Review of Financial Statements
Prior to releasing to the public, the Committee will review and approve the company’s annual and quarterly reports, including the financial statements, the management discussion and analysis reports and other information contained therein, in detail with the company’s Chief Executive Officer and Chief Financial Officer. The company’s external auditors may be present at these meetings. The Committee will require management to review the annual financial statements and related regulatory filings with the full Board prior to their filing with the applicable regulatory agencies.
Review of CEO and CFO Certification Process
The Committee will review the company’s process for the CEO and CFO certifications required by the various regulatory agencies in the jurisdictions in which the company operates with respect to the company’s financial statements, disclosures and internal controls, including any significant changes or deficiencies in such controls. The Chairman of the Committee or his appointee shall review the company’s disclosure controls and procedures.