FINANCE & AUDIT COMMITTEE

Transcription

1 FINANCE & AUDIT COMMITTEE Page 1 f 8

2 CHARTER f the Finance & Audit Cmmittee f the Bard Of Directrs f Spectral Medical Inc. Purpse The primary functin f the Finance & Audit Cmmittee (the Cmmittee ) f the Bard f Directrs (the Bard ) f Spectral Medical Inc. (the Crpratin ) is t assist the Bard f Directrs in fulfilling its versight respnsibilities fr the financial reprting prcess, the system f internal cntrl ver financial reprts, the audit prcess and the prcesses fr identifying, evaluating and managing the cmpany s principal risks impacting financial reprting. Cnsistent with this functin, the Cmmittee shuld encurage cntinuus imprvement f, and shuld fster adherence t, the Crpratin s plicies, prcedures and practices. Apprval f Charter This Cmmittee charter requires apprval by the Bard. Future changes f this charter require apprval by the Bard based n the recmmendatin f the Cmmittee. Structure and Cmpsitin The Cmmittee shall cnsist f n fewer than three members frm amng the Bard. Each member f the Cmmittee shall: (i) be free frm any relatinship that, in the pinin f the Bard, wuld interfere with the exercise f his r her independent judgment as a member f the Cmmittee; (ii) meet the independence and experience requirements f all applicable crprate, exchange and securities statutes, rules and regulatins in Canada and the United States (the regulatins ) All members f the Cmmittee shall have a wrking familiarity with basic finance and accunting practices and shall be able t read and understand financial statements. The members f the Cmmittee shall be appinted by the Bard annually n the recmmendatins f the Nminatin & Gvernance Cmmittee r until successrs are duly appinted. The Bard shall nrmally designate the Chair f the Cmmittee. In the event that a Bard designatin is nt made the member f the Cmmittee shall elect a Chair by majrity vte f the full Cmmittee. In the event that the Chair f the Cmmittee des nt attend a meeting f the Cmmittee, the members f the Cmmittee shall elect a temprary Chair fr such meeting by majrity vte f the members in attendance at the meeting. Page 2 f 8

3 Once appinted, Cmmittee members shall cease t be a member f the Cmmittee nly upn: (i) resignatin frm the Bard; (ii) death; (iii) disability, as determined by an independent physician retained by the Bard; r (iv) nt being re-appinted pursuant t the annual appintment prcess described abve. Except as therwise determined by the Bard in any particular circumstance, members f the Cmmittee shall nt simultaneusly serve n the Cmmittees f mre than three public cmpanies. Meetings The Cmmittee shall meet at least quarterly and mre frequently as circumstances dictate. A majrity f Cmmittee members is required fr meeting qurum. The Cmmittee shall meet separately n a regular basis with management and the independent auditr in separate cmmittee sessins. The Cmmittee may request any fficer r emplyee f the Crpratin r the Crpratin s utside cunsel r independent auditr t attend a meeting f the Cmmittee r t meet r prvide cnsultatins t the Cmmittee r any member theref. The CEO, Executive Vice-President, CFO and Crprate Secretary f the Crpratin shall attend meetings f the Cmmittee at the request f the Chairman. Representatives f the independent auditrs shall attend meetings f the Cmmittee upn request by the Chair. Ntice f all meetings f the Cmmittee shall be sent t the Auditrs as well as Cmmittee members. Reslutins Reslutins f the Cmmittee shall require apprval by a single majrity f members vting n such reslutin. Respnsibilities and Duties (i) Minutes and Reprting t the Bard The Cmmittee shall prepare written minutes f all f its meetings. In additin, the Chair f the Cmmittee r designate shall reprt t the Bard f Directrs after each meeting the significant matters addressed by the Cmmittee at such meeting and a cpy f the Minutes shall be made available t all members f the Bard. (ii) Independent Auditr With respect t the Crpratin s independent auditr, the Cmmittee shall: have the sle authrity t recmmend t the Bard the appintment r replacement f the independent auditr (subject, if applicable, t sharehlder apprval) Page 3 f 8

4 be directly respnsible fr establishing the cmpensatin f the independent auditr have the independent auditr reprt directly t the Cmmittee determine the extent f invlvement f the independent auditr in reviewing unaudited quarterly financial results meet with the independent auditr prir t the annual audit t discuss the planning, scpe and staffing f the audit apprve the selectin f the senir audit partners having primary respnsibility fr the audit prvide fr the peridic rtatin f the senir audit partners having primary respnsibility fr the audit and the audit partner respnsibility fr reviewing the audit as required by law at least n an annual basis, evaluate the qualificatins, perfrmance and independence f the independent auditr and the senir audit partners having primary respnsibility fr the audit btain and review a reprt frm the independent auditr at least annually regarding: (i) the independent auditr s internal quality cntrl prcedures, (ii) any material issued raised by the mst recent internal quality cntrl review, r peer review, f the firm, r raised by any inquiry r investigatin by gvernmental r prfessinal authrities within the preceding five years respecting ne r mre independent audits carried ut by the firm, (iii) any steps taken t deal with any issues, and (iv) all relatinships between the independent auditr and the Crpratin btain cnfirmatin frm management that the Crpratin has nt hired emplyees r frmers emplyees f the independent auditr wh have participated in any capacity in the audit f the Crpratin fr the immediately previus 12-mnth perid pre-apprve all auditing services and permitted nn-audit services (including fees and terms theref) t be perfrmed fr the Crpratin by its independent auditr. (iii) Reprting t Bard The Cmmittee shall make regular reprts t the Bard, but nt less frequently than quarterly. (iv) Financial Reprting With respect t the Crpratin s reprting f unaudited financial results, the Cmmittee shall: prir t the public release and filing with securities regulatry agencies, review and discuss with management the: press release cnslidated financial statements and ntes theref management s discussin & analysis results f any independent auditr s review requested/apprved by the Cmmittee Page 4 f 8

5 review the Crpratin s unaudited quarterly financial results including: any significant judgments (eg. estimates and reserves) made in the preparatin f financial statement the extent t which changes r imprvements in financial r accunting practices, as apprved by the Cmmittee, have been implemented significant financial reprting issues and judgments made in cnnectin with the preparatin f the Crpratin s financial statements, including any significant changes in the Crpratin s selectin r applicatin f accunting principles, any majr issues as t the adequacy if the Crpratin s internal cntrls and any special steps adpted in light f material cntrl deficiencies the Crpratin s use f pr frma r adjusted nn GAAP infrmatin the Crpratin s use f frward lking financial guidance critical accunting plicies and practices review f alternative treatments f financial infrmatin in all cases, ramificatins f the use f such alternative disclsures and treatments, and the treatment preferred by the independent auditr any written cmmunicatins between the independent auditr and management the effect f regulatry and accunting initiatives as well as ff balance sheet structures n the Crpratin s financial statements management certificatins f reprts filed by the Crpratin pursuant t the Regulatins integrity f the Crpratin s financial reprting prcesses any crrespndence with regulatrs r gvernmental agencies and any published reprts which raise material issues regarding the Crpratin s financial statements r accunting plicies apprve the unaudited quarterly financial statements f the Crpratin (v) Year End Audit With respect t the Crpratin s annual audit, the Cmmittee shall: prir t the public release and filing with securities regulatry agencies, review and discuss with management and the independent auditr the: financial statements and ntes theret fr cnslidated and separate entities management s discussin and analysis results f the independent auditr s audit Page 5 f 8

6 the review f the Crpratin s audited financial results, shall include: all matters described abve with respect t unaudited quarterly financial results results f the independent auditr s audit discussins with the independent auditrs n the matters required t be discussed by Statement n Auditing Standards N. 61, including significant adjustments, management judgments and accunting estimates, significant new accunting plicies, any difficulties encuntered in the curse f the audit wrk, any restrictins n the scpe f activities r access t requested infrmatin, and any significant disagreements with management a verbal and/r written reprt, as apprpriate, frm the independent auditrs describing (i) all critical accunting plicies and practices t be used, (ii) all alternative treatments f financial infrmatin within generally accepted accunting principles that have been discussed with management, ramificatins f the use f such alternative disclsures and treatments, and the treatment preferred by the independent auditrs and (iii) ther material cmmunicatins between the independent auditrs and management, such as the annual management letter r schedule f unadjusted differences recmmend t the Bard whether the audited cnslidated financial statements f the Crpratin shuld be apprved by the Bard (vi) Annual Prxy Statement and Regulatry Filings The Cmmittee shall: issue any reprts required f the Audit Cmmittee t be included in the Crpratin s annual prxy statement review and recmmend t the Bard the apprval f all material dcuments filed with securities regulatry agencies including: Cnslidated Year End Financial Statements Annual Infrmatin Frm Prspectus (vii) Related Party Transactins and Off-Balance Sheet Structure The Cmmittee shall: review all related-party transactins including thse between the Crpratin and its fficers r directrs and, if deemed apprpriate, recmmend apprval f any particular transactin t the Bard review all material ff-balance sheet structures which the Crpratin is a party t Page 6 f 8

7 (viii) Internal Cntrls, Risk Management and Legal Matters The Cmmittee shall: cnsider the effectiveness f the Crpratin s internal cntrls ver financial reprting and related infrmatin technlgy security and cntrl including the prcess t cmmunicate such cntrls and rles and respnsibilities discuss with management the Crpratin s majr financial risk expsures and the steps management has taken t mnitr and cntrl such expsures, including the Crpratin s risk assessment and risk management plicies including the use f derivative financial instruments Areas t be cnsidered in this respect include: Insurance Cverage Freign Currency Expsure Interest Rate Expsure review with management, and if necessary, the Crpratin s cunsel, any legal matter which culd reasnably be expected t have a material impact n the Crpratin s financial statements r accunting plicies (ix) Capital Structure, Investment and Cash Management Plicies, Disclsure Plicy The Cmmittee shall: review and apprve and changes t the Crpratin s capital structure review and apprve the Crpratin s investment and cash management plicy review and apprve the Crpratin s disclsure plicy (x) Whistle Blwer and Related Prcedures The Cmmittee shall establish prcedures fr the receipt, retentin and treatment f cmplaints received by the Crpratin regarding accunting, internal accunting cntrls r auditing matters and fr the cnfidential and/r annymus submissin by emplyees f the Crpratin f cncerns regarding questinable accunting r auditing matters. The identity f any persn making a submissin n a cnfidential basis shall be revealed, at a minimum, t the Chair f the Cmmittee. The identity f any such persn, hwever, will therwise be treated as cnfidential. The Cmmittee shall als be prvided with such evidence as it requests t cnfirm that n disciplinary actin has been taken against such persn. Management shall reprt t the Cmmittee n a timely basis, all discvered incidents f fraud within the Crpratin, regardless f mnetary value. Page 7 f 8

8 (xi) Review f Charter and Self-Assessment The Cmmittee shall: review and reassess annually the adequacy f this Charter review annually the Cmmittee s wn perfrmance (xii) Crprate Knwledge and Other Activities The Cmmittee shall: strive t expand cntinually its knwledge f the Crpratin s activities carry ut such ther activities cnsistent with this Charter, the Crpratin s bylaws and gverning law, that the Cmmittee r the Bard deem necessary r apprpriate Other advisrs The Cmmittee shall have the authrity t retain independent legal, accunting r ther advisrs including cnsulting with the natinal ffice f the independent auditr. The Crpratin shall prvide fr apprpriate funding, as determined by the Cmmittee, fr payment f cmpensatin t the independent auditr fr the purpse f rendering r issuing an audit reprt and t any advisrs emplyed by the Cmmittee. Limitatins n Cmmittee s Duties While the Cmmittee has the respnsibilities and pwer set frth in this Charter, it is nt the duty f this Cmmittee t plan r cnduct audits r t determine that the Crpratin s financial statements and disclsures are cmplete and accurate and are in accrdance with generally accepted accunting principles and applicable rules and regulatins. These are the respnsibilities f either management and/r the independent auditr. In discharging its duties, each member f the Cmmittee shall be bliged nly t exercise the care, diligence and skill that a reasnably prudent persn wuld exercise in cmparable circumstances. Nthing in this Charter, including designating any member f the Cmmittee as an audit cmmittee financial expert is intended, r shuld be determined t impse n any member f the Cmmittee a standard f care r diligence that is any way mre nerus r extensive than the standard t which all members f the Bard are subject. The essence f the Cmmittee s respnsibilities is t mnitr and review the activities described in this Charter t gain reasnable assurance (but nt t ensure) that such activities are being cnducted prperly and effectively by the Crpratin. Page 8 f 8