Role of Audit Committee
The Audit Committee (“Committee”) of the Board of Directors (“Board”) of Trebuchet Investment Vehicles (“funds”) was established to assist the Board in fulfilling its oversight responsibilities relating to the Company’s financial reporting, financial control, risk management, external auditor independence, valuations and shareholder communications as required by a private equity company in Canada or elsewhere as the case may be. However, the ultimate responsibility for the integrity of the Company’s financial reporting rests with the full Board.
The Committee shall use the legal, regulatory and listing requirements in each reporting jurisdiction and reference the TSX Guide to Good Disclosure for National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) as a guideline, exceeding current regulations concerning private companies. Nothing herein is intended to expand, or shall result in the expansion of, applicable standards of liability under Canadian law for directors or a corporation.
Membership and Composition
Committee members, including independent board members, are appointed by the Board and shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The Board may remove independent directors, with or without cause, by a majority vote of the Board. Any vacancy in the Committee occurring for any cause may be filled by a majority vote of the Board then in office. If and whenever a vacancy exists, the remaining members of the Committee may exercise all of its powers and responsibilities so long as a quorum remains in office.
The Audit Committee should consist of:
- at least three members;
- only non-executive directors, each of whom are “financially literate” and with relevant experience pertaining to the funds main business
- a majority of independent directors; and
- at least one member who is a qualified accountant or other financial professional with experience of financial and accounting matters.
The Chairperson of the Committee should be an independent non-executive director, who is not also the Chairperson of the Board.
The Committee shall ensure that none of its members shall serve on the Audit Committee of more than five other companies contemporaneously with such member serving on this Committee.
“Independence” is defined in the Canadian National Instrument 58-101 and Multilateral Instrument 52-110. Briefly stated, an independent director is a non-executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with—or could reasonably be expected or perceived to interfere with—the independent exercise of the director’s ability to act in the best interest of the Company.
“Financially literate” means that the director is able 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 responsibilities of the Committee are to:
- Satisfy itself that adequate procedures are in place for the review of the Company’s disclosure of financial information and periodically assess the adequacy of those procedures.
- Review the Company’s financial statements, and releases before the Company discloses this information.
- Recommend to the Board (i) the external auditor to be nominated for the purpose of issuing an auditor’s report or performing other audit, review or attest services for the Company and (ii) the compensation of the external auditor.
- Directly be responsible for overseeing the work of the external auditor engaged for the purpose of issuing an auditor’s report or performing other audit, review or attest services for the Company.
- Resolve disagreements between management and the external auditor regarding financial reporting.
- Pre-approve all non-audit services to be provided to the Company or its subsidiary entities by the Company’s external auditors (a designated Committee member may approve non-audit services, and the Committee should ratify the action at the next meeting following such approval).
- Review and assess the external audit arrangement.
- Provide procedure for the selection or removal of external auditors.
- Provide procedure for assessment of external auditors.
- Oversee the independence of the auditors.
- Ensure the engagement partner is rotated every 6 years and the independent review partner, if needed, is rotated every 3 years.
- Review and approve hiring policies, if applicable, of the present and former external auditor of the Company.
- Oversee risk management and internal controls.
- Establish a procedure for receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls, or auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting, auditing or other matters.
The Committee shall perform such other functions as may from time to time be assigned to the Committee by the Board.
It is not the Committee’s role to determine the financial statements are complete and prepared in accordance with IFRS or to conduct an audit. The financial statements are the responsibility of management. The Company engages an independent external auditor to perform an audit and express an opinion on the fair presentation of the financial statements in accordance with generally accepted accounting principles.
It is, however, the responsibility to of the Committee to recommend to the Board whether or not the annual audited financial statements should be approved prior if they are required to their being filed with the appropriate regulatory authorities. Approval and the filing of interim unaudited financial statements may be delegated by the Board to the Committee, as warranted. With respect to the annual audited and interim financial statements, the Committee shall discuss significant issues regarding accounting principles, practices, and judgments of the CEO and the independent auditors as and when the Committee deems it appropriate to do so. The Committee shall satisfy itself that the information contained in the annual audited financial statements and the quarterly interim financial statements are not significantly erroneous, misleading or incomplete and that the audit or interim review functions have been effectively carried out.
Meetings and Attendance
- The Committee shall meet at least quarterly and should meet often enough to undertake its roles effectively and may meet in person, telephonically or electronically, as appropriate.
- The Chairperson of the Committee will call a meeting of the Committee if so requested by any member of the Committee or by the Chairperson of the Board.
- A quorum shall be a majority of the members.
- Should the Chairperson of the Committee be absent from the meeting, the members of the Committee present at the meeting have the authority to choose one of their numbers to chair that particular meeting.
- Proceedings of all meetings will be minuted, and such minutes will be approved by the Committee and signed by the Chairperson of the meeting. Minutes of meetings will be tabled at regular Board meetings.
- The Committee has authority to delegate any or all of its responsibilities to a subcommittee of the Committee, as permitted by the laws and regulations that govern its actions.
- Matters arising for determination at Committee meetings shall be decided by a majority of votes of directors present and voting and any such decision shall for all purposes be deemed a decision of the Committee.
- Actions of the Committee may be taken by a written instrument signed by all members of the Committee, and such actions shall be effective as though they had been decided by a majority of votes cast at a meeting of the Committee called for such purpose.
- In the case of equality of votes, the Chairperson of the meeting, in addition to his deliberative vote, has a casting vote.
Committee Members’ Interests
Directors should endeavor to avoid conflicts between their own personal interests and those of the Company, and, where conflicts exist, to fully disclose such conflicts to the Board and refrain from participating in decisions relating to the subject matter of such conflicts.
The Committee will report the following matters to the full Board:
- All significant results of the Committee’s activities;
- Assessment of whether external reporting is consistent with Committee members’ information and knowledge and is adequate for shareholder needs.
- Assessment of management processes supporting external reporting.
- Procedures for the selection and appointment of the external auditor and for the rotation of external audit engagement partners.
- Recommendations for the appointment or the removal of the external auditor.
- Assessment of the performance and independence of the external auditors (where the external auditor provides non-audit services, the report should state whether the Committee is satisfied that provision of those services has not compromised the auditor’s independence).
- The results of the Committee’s review of risk management and internal controls.
- Identify any exemptions to the corporate governance guidelines on Audit Committees.
Procedure for Selection of External Auditor
The funds and bonds we sponsor requires a yearly vote for the auditor, the committee and board of directors will follow existing policy. If, for another reason a replacement for the current external auditor is required the Committee will work with management in the selection process of an auditor. The Committee will identify the attributes required of an auditor. Prospective auditors will be provided with sufficient information regarding the Company structure, activities, personnel and financial condition to develop a proposal.
In selecting an auditor, the Committee will consider the qualification and experience of personnel, capabilities of providing services for the structure presented and the auditor’s submitted proposal as well as cost. All funds will initially have a pre-appointed auditor of the fund. The appointment of a new external auditor will be submitted for ratification at the next shareholder meeting after the appointment if appropriate.
Access to Information and Advice
- It will have (i) authority to communicate directly with external auditors without management present, (ii) rights to seek explanations and, (iii) unrestricted access to all information and reports relevant to fulfilling its responsibilities, including the books and records of the Company, its subsidiaries and joint ventures.
- The Committee may, as it deems appropriate, invite non-Committee board members to attend meetings or will engage independent legal, financial, compensation or other professional counsel and other advisers at the Company’s expense to a maximum of seven thousand five hundred (7500.00) dollars per year per ten (10,000,000) million of initial fund equity per year. The Committee may set and pay the compensation for any advisers employed by the Committee within the external consultant maximum. Unless a conflict exists, or to do so would be inconsistent with the Committee’s duties, the Committee may request such information, advice or assistance via the Chairperson of the Committee.
Review of Committee Performance and Charter
At least annually the Chairperson of the Board will evaluate the Committee and its members’ performance, including compliance with this charter, and assess whether changes to the Committee or this policy are warranted. Any such proposed changes shall be submitted to the Board for approval.
Publication of Charter
This policy may, at the digression of management and abiding with current and other Canadian regulatory bodies be made available on the Company’s website and the key features will be published in the annual report.