AUDIT COMMITTEE CHARTER
The Audit Committee (the “Committee”) is a committee appointed by the Board of Directors (the “Board”) of Jayden Resources Inc. (the “Company”). The Committee is established to fulfill applicable reporting issuer obligations respecting audit committees and to assist the Board in fulfilling its oversight responsibilities with respect to financial reporting including responsibility to:
- oversee the integrity of the Company’s financial statements and financial reporting process, including the audit process and the Company’s internal accounting controls and procedures and compliance with related legal and regulatory requirements;
- oversee the qualifications and independence of the external auditors;
- oversee the work of the Company's financial management and external auditors in these areas; and
- provide an open avenue of communication between the external auditors, the Board and senior officers (“Management”).
In addition, the Committee shall prepare, if required, an audit committee report for inclusion in the Company’s annual management proxy circular, in accordance with applicable rules and regulations.
The function of the Committee is oversight. It is not the duty or responsibility of the Committee or its members (i) to plan or conduct audits, (ii) to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles or (iii) to conduct other types of auditing or accounting reviews or similar procedures or investigations. The Committee and its Chair are members of the Board of the Company, appointed to the Committee to provide broad oversight of the financial, risk and control related activities of the Company, and are specifically not accountable or responsible for the day?to?day operations or performance of such activities.
Management is responsible for the preparation, presentation and integrity of the Company’s financial statements. Management is also responsible for maintaining appropriate accounting and financial reporting principles and policies and systems of risk assessment and internal controls and procedures designed to provide reasonable assurance that assets are safeguarded and transactions are properly authorized, recorded and reported and to assure the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with accounting standards and applicable laws and regulations.
The external auditors are responsible for planning and carrying out an audit of the Company’s annual financial statements in accordance with generally accepted auditing standards to provide reasonable assurance that, among other things, such financial statements are in accordance with International Financial Reporting Standards (“IFRS”).
COMPOSITION AND PROCEDURES
The Committee shall be comprised of at least three members. From and after the closing of the Company’s initial public offering, none of the members of the Committee shall be an officer or employee of the Company or any of its subsidiaries and each member of the Committee shall be an “independent” director (as such term is defined from time to time under the requirements or guidelines for audit committee service under applicable securities laws and the rules of any stock exchange on which the Company’s securities are listed for trading) and none of the members shall have participated in the preparation of the financial statements of the Company or any current subsidiaries of the Company at any time over the past three years.
All members of the Committee must be “financially literate” (as that term is defined from time to time under the requirements or guidelines for audit committee service under securities laws and the rules of any stock exchange on which the Company's securities are listed for trading or if it is not so defined as that term is interpreted by the Board in its business judgement) or must become financially literate within a reasonable period of time after their appointment to the Committee.
Service on Multiple Audit Committees
If a Committee member serves on the audit committees of more than five reporting issuers or public companies, including the Company, the Board must determine that such service would not impair the ability of the member to effectively serve on the Committee and disclose such determination in the annual proxy circular.
The Committee shall meet regularly at times necessary to perform the duties described herein in a timely manner, but not less than four times a year and at any time the Company proposes to issue a press release with its quarterly or annual earnings information. Meetings may be held in person or by telephone and at any time deemed appropriate by the Committee.
Separate Executive Meetings
The Committee shall meet periodically in separate executive sessions with Management (including the Chief Financial Officer), and the external auditor, and have such other direct and independent interaction with such persons from time to time as the members of the Committee deem appropriate. The Committee may request any officer or employee of the Company or the Company’s outside counsel or external auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. The external auditors will have direct access to the Committee at their own initiative.
The Committee may require the external auditors to perform such supplemental reviews or audits as the Committee may deem desirable. In addition, the Committee may retain such special legal, accounting, financial or other consultants as the Committee may determine to be necessary to carry out the Committee’s duties at the Company’s expense.
Absent actual knowledge to the contrary (which shall be promptly reported to the Board), each member of the Committee shall be entitled to rely on (i) the integrity of those persons or organizations within and outside the Company from which it receives information, (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations and (iii) representations made by Management and the external auditors as to any information technology, internal audit and other non-audit services provided by the external auditors to the Company and its subsidiaries.
Reporting to the Board
The Committee will report through the Committee Chair to the Board following meetings of the Committee on matters considered by the Committee, its activities and compliance with this Charter.
RESPONSIBILITIES OF THE COMMITTEE
Approval of Terms of Engagement of the External Auditor
The Committee shall make recommendations to the Board on the appointment or reappointment of the external auditors of the Company and shall have authority to terminate the appointment of the external auditors. The Committee shall approve in advance the terms of engagement and the compensation to be paid by the Company to the external auditors. The Committee shall approve in advance all non-audit services to be provided to the Company and its affiliates by the external auditor.
Review of Independence
The Committee shall review the independence of the external auditors and shall make recommendations to the Board on appropriate actions to be taken which the Committee deems necessary to protect and enhance the independence of the external auditors.
The Committee shall require the external auditors to provide to the Committee, and the Committee shall review and discuss with the external auditors, all reports which the external auditors are required to provide to the Committee or the Board under rules, policies or practices of professional or regulatory bodies applicable to the auditors, and any other reports which the Committee may require.
Hiring Former Employees of the Auditor
The Committee must review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors.
Oversight and Monitoring of Audits
The Committee shall review with the external auditors the audit function generally, the audit procedures to be used and the timing and estimated budgets of the audits. The Committee shall discuss with the external auditors any difficulties or disputes that arose with Management during the course of the audit and the adequacy of Management’s responses in correcting audit related deficiencies and the Committee shall take such other reasonable steps as it may deem necessary to satisfy itself that the audit was conducted in a manner consistent with all applicable legal requirements and auditing standards of applicable professional or regulatory bodies.
Oversight and Review of Accounting Principles and Practices
The Committee shall, as it deems necessary, oversee, review and discuss with Management and the external auditors:
- the quality, appropriateness and acceptability of the Company’s accounting principles and practices used in its financial reporting, changes in the Company’s accounting principles or practices and the application of particular accounting principles and disclosure practices by Management to new transactions or events;
- all significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including the effects of alternative methods within generally accepted accounting principles on the financial statements and any “second opinions” sought by Management from an independent auditor with respect to the accounting treatment of a particular item;
- any material change to the Company’s auditing and accounting principles and practices as recommended by Management, the external auditors or the internal auditors or which may result from proposed changes to applicable generally accepted accounting principles;
- the effect of regulatory and accounting initiatives on the Company’s financial statements and other financial disclosures;
- any reserves, accruals, provisions, estimates or Management programs and policies, including factors that affect asset and liability carrying values and the timing of revenue and expense recognition, that may have a material effect upon the financial statements of the Company;
- the use of special purpose entities and the business purpose and economic effect of off-balance sheet transactions, arrangements, obligations, guarantees and other relationships of the Company and their impact on the reported financial results of the Company;
- any legal matter, claim or contingency that could have a significant impact on the financial statements, the Company’s compliance policies and any material reports, inquiries or other correspondence received from regulators or governmental agencies and the manner in which any such legal matter, claim or contingency has been disclosed in the Company’s financial statements;
- the treatment for financial reporting purposes of any significant transactions which are not a normal part of the Company’s operations;
- the use of any “pro forma” or “adjusted” information not in accordance with generally accepted accounting principles; and
- Management’s determination of asset impairment, if any, as required by applicable accounting standards.
Disagreement Between Management and the External Auditors
The Committee shall review and resolve disagreements between Management and the external auditors regarding financial reporting or the application of any accounting principles or practices.
Oversight and Monitoring of Internal Controls
The Committee shall, as it deems necessary, exercise oversight of, review and discuss with Management and the external auditors:
- the adequacy and effectiveness of the Company’s internal accounting and financial controls and their recommendations for the improvement of accounting practices and internal controls;
- any material weaknesses in the internal control environment, including with respect to computerized information system controls and security; and
- Management’s compliance with the Company’s processes, procedures and internal controls.
Dealing With Accounting Complaints
The Committee shall establish and monitor procedures for the receipt and treatment of complaints received by the Company regarding accounting, internal accounting controls or audit matters and the submission, anonymously or otherwise, by employees of concerns regarding questionable accounting or auditing matters and shall review periodically with Management these procedures and any significant complaints received.
Oversight and Monitoring of the Company’s Financial Disclosures
The Committee shall:
- review with the auditors and Management, and recommend to the Board for approval, the audited financial statements and the notes and Managements’ Discussion and Analysis accompanying such financial statements, the Company’s annual report and any financial information of the Company contained in any prospectus or information circular of the Company;
- review with the auditors and Management, and recommend to the Board for approval, each set of interim financial statements and the notes and Management’s Discussion and Analysis accompanying such financial statements and any other disclosure documents or regulatory filings of the Company containing or accompanying financial information of the Company;
- prior to their distribution, discuss earnings press releases with Management on a quarterly basis, and discuss financial information from time to time provided to analysts and ratings agencies, it being understood that such discussions may be done generally (by discussing the types of information to be disclosed and the type of presentation to be made) and that the Committee need not discuss in advance each instance in which the Company gives financial information; and
- The Committee shall review the disclosure with respect to its pre-approval of audit and non-audit services provided by the external auditors.
Oversight of Risks
The Committee shall meet periodically with Management to review:
- the Company’s major financial risk exposures and the policy steps Management has taken to monitor and control such exposures, including the use of financial derivatives and hedging activities; and
- the process and systems in place for ensuring the reliability of public disclosure documents that contain audited and unaudited financial information and their effectiveness.
REVIEW OF THIS CHARTER AND PERFORMANCE OF THE COMMITTEE
The Committee shall review and reassess the adequacy of this Charter at least annually and otherwise as it deems appropriate and recommend changes to the Board.
The performance of the Committee shall be evaluated with reference to this Charter annually.