Audit Committee Charter
FAR RESOURCES LTD.
CHARTER FOR THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The primary function of the audit committee (the “Audit Committee“) of the board of directors of the Company (the “Board“) is to assist the Board in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company’s systems of internal controls regarding finance and accounting, and the Company’s auditing, accounting and financial reporting processes.
The Audit Committee’s primary duties and responsibilities are to:
- monitor the integrity, adequacy and timeliness of the Company’s financial reporting and disclosure practices and compliance with legal and regulatory requirements related to financial reporting;
- provide an open avenue of communication between management, the Company’s independent auditor and the board of directors; and
- review and appraise the independence and performance of the Company’s independent auditor.
Composition of Audit Committee
The Audit Committee shall be comprised of three directors as determined by the board of directors, the majority of whom must not be officers or employees of the Company pursuant to the Business Corporations Act (British Columbia).
It is the Company’s goal that all members of the Audit Committee are financially literate and that at least one member shall have accounting or related financial management expertise. For the purposes of applicable securities legislation, “financially literate” means 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 presumably be expected to be raised by the Company’s financial statements.
It is the goal of the Company that the Audit Committee shall meet at least once each fiscal quarter, or more frequently as circumstances dictate. As part of its mandate to facilitate open communication, the Audit Committee will also seek to meet with management of the Company quarterly and the external auditors at least once each fiscal year.
Authority and Responsibilities
In performing its oversight responsibilities, the Audit Committee shall:
- Review and update the Audit Committee’s terms of reference on an annual basis and recommend any proposed changes to the Board.
- 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 independent auditor the adequacy and effectiveness of the Company’s accounting and financial controls and the adequacy and timeliness of its financial reporting processes.
- Review with management and the independent auditor the annual financial statements and related documents and review with management the unaudited quarterly financial statements and related documents, prior to filing or distribution, including matters required to be reviewed under applicable legal or regulatory requirements.
- Where appropriate and prior to release, review with management any news releases that disclose annual or interim financial results or contain other 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 for decisions made.
- Review the quality and appropriateness of the accounting policies and the clarity of financial information and disclosure practices adopted by the Company, including consideration of the independent auditor’s judgment about the quality and appropriateness of the Company’s accounting policies. This review may include discussions with the independent auditor without the presence of management.
- Review with management and the independent auditor significant related party transactions and potential conflicts of interest.
- Pre-approve all non-audit services to be provided to the Company by the independent auditor.
- Monitor the independence of the independent auditor by reviewing all relationships between the independent auditor and the Company and all non-audit work performed for the Company by the independent auditor.
- Establish and review the Company’s procedures for the:
- receipt, retention and treatment 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.
- Conduct or authorize investigations into any matters that the Audit Committee believes is within the scope of its responsibilities. The Audit Committee has the authority to retain independent counsel, accountants or other advisors to assist it, as it considers necessary, to carry out its duties, and to set and pay the compensation of such advisors at the expense of the Company.
- Review and approve hiring policies regarding current and former partners and employees of the independent auditor.