Audit Committee Charter
The audit committee (“Audit Committee”) is a committee established by the board of directors (the “Board”) of Northern Gold Mining Inc. (the “Company”). Its primary function shall be to assist the Board in fulfilling its oversight responsibilities with respect to financial reporting and disclosure requirements, the overall maintenance of the systems of internal controls that management have established, and the overall responsibility for the Company’s external and internal audit processes.
This charter (“Charter”) shall set out the powers and authority of the Audit Committee to conduct or authorize investigations into any matter within the scope of this Charter. It may request any officer or employee of the Company, its outside legal counsel, or outside auditor to attend a meeting of the Audit Committee or to meet with any member(s) of the Audit Committee.
The Audit Committee shall be accountable to the Board. In the course of fulfilling its specific responsibilities hereunder, the Audit Committee shall maintain an open communication between the Company’s outside auditor and the Board.
The responsibilities of a member of the Audit Committee shall be in addition to such member’s duties as a member of the Board.
The Audit Committee has the duty to determine whether the Company’s financial disclosures are complete, accurate, in accordance with IFRS, and fairly present the financial position and risks of the organization. The Audit Committee should, where it deems appropriate, resolve disagreements, if any, between management and the outside auditor and review compliance with laws and regulations and the Company’s own policies.
The Audit Committee will provide the Board with such recommendations and reports with respect to the financial disclosures of the Company as it deems advisable.
The Audit Committee shall consist of at least three directors to serve on behalf of the Board, of whom at least two shall be independent. The members shall be appointed annually by the Board and shall meet the independence, financial literacy, and experience requirements of the Toronto Stock Exchange (including Multilateral Statement 52-110) and other regulatory agencies as required.
A majority of members will constitute a quorum for a meeting of the Audit Committee.
The Board will appoint one member to act as the chairman of the Audit Committee (“Chairman”). In his absence, the Audit Committee may appoint another person provided a quorum is present. The Chairman will appoint a recording secretary (“Secretary”) of the meeting, who need not be a member of the Audit Committee and who will maintain the minutes of the meeting.
At the request of the external auditor, the chief executive officer, the chief financial officer, or any member of the Audit Committee, the Chairman will convene a meeting of the Audit Committee. In advance of every meeting of the Audit Committee, the Chairman, with the assistance of the Secretary, will ensure that the agenda and meeting materials are distributed in a timely manner.
The Audit Committee shall meet no less than four times per year or more frequently if circumstances or the obligations require.
Duties and Responsibilities
The duties and responsibilities of the Audit Committee shall be as follows:
- Financial Reporting and Disclosure
- Review and discuss with management and the outside auditor at the completion of the annual examination:
- the Company’s audited financial statements and related notes;
- the outside auditor’s audit of the financial statements and their report thereon;
- any significant changes required in the outside auditor’s audit plan;
- any serious difficulties or disputes with management encountered during the course of the audit; and
- other matters related to the conduct of the audit, which are to be communicated to the Audit Committee under generally accepted auditing standards.
- Review and discuss with management and the outside auditor, at the completion of any review engagement or other examination, the Company’s interim (quarterly) financial statements.
- Review and discuss with management the annual reports, the interim (quarterly) reports, the management discussion and analysis, annual information form, prospectus, and other disclosures and, if thought advisable, recommend the acceptance of such documents to the Board for approval.
- Review and discuss with management any guidance being provided to shareholders on the expected future results and financial performance of the Company and provide their recommendations on such documents to the Board.
- Inquire of the auditors the quality and acceptability of the Company’s accounting principles, including the clarity of financial disclosure and the degree of conservatism or aggressiveness of the accounting policies and estimates.
- Meet with the outside auditor and management in separate executive sessions, as necessary or appropriate, to discuss any matters that the Committee or any of these groups believe should be discussed privately with the Audit Committee.
- External Auditor
- Consider, in consultation with the outside auditor, the audit scope and plan of the outside auditor.
- Recommend to the Board the outside auditor to be nominated and review the performance of the auditor, including the lead partner of the external auditor.
- Confirm with the outside auditor and receive written confirmation at least once per year as to the outside auditor’s internal processes and quality control and disclosure of any investigations or government enquiries, reviews, or investigations of the outside auditor.
- Take reasonable steps to confirm the independence of the outside auditor, which shall include:
- ensuring receipt from the outside auditor of a formal written statement delineating all relationships between the outside auditor and the Company, consistent with Generally Accepted Auditing Standards (GAAS);
- considering and discussing with the outside auditor any disclosed relationships or services, including non audit services, that may impact the objectivity and independence of the outside auditor; and
- approving in advance any non-audit related services provided by the auditor to the Company with a view to ensuring independence of the auditor, and in accordance with any applicable regulatory requirements, including the requirements of the Toronto Stock Exchange with respect to approval of non audit related serviced performed by the auditor.
- Internal Controls and Audit
- Review and assess the adequacy and effectiveness of the Corporation’s systems of internal controls and management information systems through discussion with management and the external auditor to ensure that the Company maintains appropriate systems, is able to assess the pertinent risks of the Company, and that the risk of a material misstatement in the financial disclosures can be detected.
- Assess the requirement for the appointment of an internal auditor for the Company.
- Inquire of management and the outside auditor about the systems of internal controls that management and the Board of Directors have established and the effectiveness of those systems. In addition, inquire of management and the outside auditor about significant financial risks or exposures and the steps management has taken to minimize such risks to the Company.
The Audit Committee shall receive, investigate and act on complaints and expressions of concern ("Reports") by employees regarding:
- Accounting, internal accounting controls and auditing matters, including those regarding the circumvention or attempted circumvention of internal accounting controls or that would otherwise constitute a violation of the Corporation's accounting policies (an "Accounting Allegation");
- Compliance with legal and regulatory requirements (a "Legal Allegation"); and
- Retaliation against employees who make Accounting Allegations or Legal Allegations (a "Retaliatory Act").
Responsibilities of the Audit Committee created by these procedures may, at the discretion of the Audit Committee, be delegated to any member of the Audit Committee.
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Corporation’s financial statements are complete and accurate or are in accordance with IFRS and applicable rules and regulations. These are the responsibilities of management and the external auditors. The Audit Committee, the Chairman, and any members identified as having accounting or related financial expertise are members of the Board appointed to the Audit Committee to provide broad oversight of the financial, risk, and control related activities of the Corporation, and are specifically not accountable or responsible for the day to day operation or performance of such activities. Although the designation of a Member as having accounting or related financial expertise for disclosure purposes is based on that individual’s education and experience, which that individual will bring to bear in carrying out his or her duties on the Audit Committee, such designation does not impose on such person any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed on such person as a member of the Audit Committee and Board in the absence of such designation. Rather, the role of a member who is identified as having accounting or related financial expertise, like the role of all members, is to oversee the process, not to certify or guarantee the internal or external audit of the Corporation’s financial information or public disclosure.
The Audit Committee will annually review and reassess the adequacy of this charter and any applicable policies and submit any recommended changes to the Board for approval.
Approved by the Board (August 2011).
Amended and re-approved by the Board (May 2012).