Audit & Risk Management Committee Charter

Audit & Risk Management Committee Charter

Aguia Resources Ltd
ABN: 94 128 256 888

As amended on June 20, 2017

1. Committee Members

1.1 The Board has established an Audit and Risk Management Committee (Committee) subject to the terms of this Audit and Risk Management Committee Charter (Charter).

The Committee is to consist of:

  1. entirely Independent Directors (as defined in the Board Charter); and
  2. three members.

Where there are not three or more Independent Directors of the Company, the Board may appoint non-Independent Directors to the Committee.

1.2 Each member of the Committee is to be financially literate. Between them, the members of the Committee are to have accounting or related financial expertise, technical knowledge and a sufficient understanding of the industry in which the Group operates to be able to discharge the Committee’s mandate effectively.

1.3 The Company Secretary and representatives of the Group’s external auditors may be invited to attend meetings of the Committee from time to time.

1.4 From time to time, the Board shall appoint a chairman of the Committee (Chairman) from the Committee’s members who is an Independent Director as the chairperson who is not the Chairperson of the Board.

2. Purpose

2.1 This Charter sets out the role, responsibilities, composition, authority and membership requirements of the Committee.

2.2 This Charter will be made available on the Company’s website

3. Definition and Objectives of the Committee

3.1 The Committee is a committee of the Board.

3.2 The Committee’s primary function is to assist the Board in discharging its responsibility to exercise due care, diligence and skill in relation to the Company by:

Audit related

  1. recommending to the Board the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Group;
  2. recommending to the Board the compensation of the external auditor;
  3. ensuring that the quality of financial controls is appropriate for the business of the Group;
  4. reviewing the scope and results of external and internal audits;
  5. directly overseeing the work of external auditors and resolving disagreements between management and the external auditors regarding financial reporting;
  6. monitoring corporate conduct and business ethics, including auditor independence and ongoing compliance with laws and regulations;
  7. maintaining open lines of communication between the Board, Management and the external auditors, thus enabling information and points of view to be freely exchanged;
  8. reviewing matters of significance affecting the financial welfare of the Group;
  9. ensuring that systems of accounting and reporting of financial information to shareholders, regulators and the general public are adequate;
  10. reviewing the Company’s financial statements, MD&A and annual and interim profit and loss press releases before the Company publicly discloses the information;
  11. considering whether the Company’s financial statements reflect the understanding of the Committee members of, and otherwise provide a true and fair view of, the financial position and performance of the Company;
  12. considering the appropriateness of the accounting judgements or choices exercised by management in preparing the Company’s financial statements;
  13. reviewing the Group’s internal financial control system;
  14. considering the appointment or removal of the external auditor, the rotation of the external audit partner and approving the remuneration and terms of engagement of the external auditor;
  15. developing, reviewing and maintaining a policy on hiring partners and employees, and former partners and employees, of present and former auditors in compliance with the requirements of Canadian National Instrument 52-110 “Audit Committees”;
  16. monitoring and reviewing the external auditor’s independence, objectivity and performance, taking into consideration relevant professional and regulatory requirements and the performance of the external auditor;
  17. developing and implementing policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provisions of non-audit services by the external audit firm and making recommendations on any proposal by the external auditor to provide non-audit services ;
  18. pre-approving all non-audit services provided by the external auditor; and
  19. where the Company has an internal audit function, reviewing and making recommendations regarding:
    1. the appointment or removal of the head of internal audit;
    2. the scope and adequacy of the internal audit work plan; and
    3. the objectivity and performance of the internal audit function.

Risk related

  1. ensuring the development of an appropriate risk management policy framework that will provide guidance to Management in implementing appropriate risk management practices throughout the Group’s operations, practices and systems and overseeing this framework;
  2. developing, and periodically assessing whether, adequate procedures are in place for the review of the Company’s public disclosure of financial information;
  3. defining and periodically reviewing risk management as it applies to the Group and clearly identify all stakeholders;
  4. ensuring the Committee clearly communicates the Company’s risk appetite (as set by the Board), policies and strategies to Management, employees, contractors and appropriate stakeholders;
  5. ensuring that Directors and Management establish a risk aware culture which reflects the Company’s risk policies and appetite;
  6. reviewing methods of identifying broad areas of risk and setting parameters or guidelines for business risk reviews;
  7. making informed decisions regarding business risk management, internal control systems, business policies and practices and disclosures;
  8. considering the processes the Company will employ for evaluating and continually improving the effectiveness of its risk management and internal control processes;
  9. considering capital raising, treasury and market trading activities with particular emphasis on risk treatment strategies, products and levels of authorities;
  10. considering whether the Group has any material exposure to economic, environmental and social sustainability risks and if it does, how the Company manages those risks
  11. reviewing any incident involving fraud or other breakdown of the Group’s internal controls;
  12. reviewing the Group’s insurance program, having regard to the Group’s business and the insurable risks associated with its business; and
  13. establishing and maintaining procedures for the receipt, retentions and treatment of complaints received by the Group regarding accounting, internal accounting controls, or auditing matters and maintaining the confidentiality of anonymous submissions by employees of the Group which concern questionable accounting or auditing matters
  14. (a) Membership of the Committee will be disclosed in the Corporate Governance Statement, the Annual Report or the Company’s website, together with details of the relevant experience and qualifications of members of the Committee.

4. Reporting

4.1 Proceedings of all meetings are minuted and signed by the Chairman.

4.2 The Committee, through its Chairman, is to report to the Board at the earliest possible Board meeting after each Committee meeting. Minutes of all Committee meetings are to be circulated to the Board. The report should include but is not limited to:

  1. the minutes of the Committee and any formal resolutions;
  2. information about the audit process including the results of internal and external audits;
  3. an assessment of:
    1. whether external reporting is consistent with Committee members’ information and knowledge and is adequate for shareholder needs; and
    2. the management processes supporting external reporting;
  4. procedures for the selection and appointment of the external auditor and for the rotation of external audit partners;
  5. recommendations for the appointment or removal of an auditor;
  6. any determination by the Committee relating to the performance and independence of the external auditor and whether the Committee is satisfied that independence of this function has been maintained having regard to the provision of non-audit services;
  7. assessment of the performance and objectivity of the internal audit function;
  8. results of its review of risk management and internal compliance and control systems;
  9. information about its assessment of any material exposure of the Company to economic, environmental and social sustainability risks (if any) and suggestions or recommendations on how these risks may be managed; and
  10. any matters that in the opinion of the Committee should be brought to the attention of the Board and any recommendations requiring Board approval or action.

4.3 At least annually, the Committee should prepare for the Board a report which documents for the record.

  1. a review of the formal written Charter and its continuing adequacy and an evaluation of the extent to which the Committee has met the requirements of the Charter;
  2. an assessment of whether external reporting is consistent with Board members’ information and knowledge and is adequate for shareholder needs;
  3. the adequacy of the Group’s internal controls;
  4. an assessment of the accuracy and integrity of the Company’s annual and interim financial statements;
  5. an assessment of the Company’s processes supporting external reporting;
  6. a review of the procedures for selecting and appointing the external auditor and for the rotation of the external audit engagement partners;
  7. recommendations for the appointment, or if necessary, the removal, of the external auditor;
  8. an assessment of the performance and the independence of the external auditors; and
  9. the results of a review of risk management policies and internal control systems, including considerations of whether the Group has a material exposure to any particular risk.

5. Risk management policies

The Committee will ensure that the necessary controls are in place for risk management policies to be maintained by:

  1. devising a means of analysing the effectiveness of risk management and internal compliance and control system and of the effectiveness of their implementation; and
  2. reviewing, at least annually, the effectiveness of the Group’s risk management system to satisfy the Committee that it continues to be sound

6. Attendance at meetings

6.1 The Committee will meet at least quarterly, at such times and places as determined by the Committee. The Committee is governed by the same rules regarding meetings (including the procedure used to call meetings, and conducting meetings electronically, in person or by telephone), notice of meetings and waiver of notice by committee members, written resolutions in lieu of a meeting, and voting at meetings that apply to the Board.

6.2 From time to time, non-Board members may be invited to attend Board meetings when audit matters are being discussed, if it is considered appropriate by the Committee. However, no Director is entitled to attend that part of a meeting at which an act or omission of that Director or a contract, arrangement or undertaking involving or potentially involving that Director or a related party of that Director is being investigated or discussed.

6.3 Notwithstanding subclause 6.2, if in the opinion of the Committee, their investigation or discussion will be assisted by hearing from the interested Director, the Committee may invite that Director to address the Committee. The Committee will give fair consideration to that address. The Director will not, however, be invited to take part in the deliberations following that address.

7. Access

7.1 The Committee shall have unlimited access to the external and internal auditors, and to senior management of the Group. The Committee shall also have the ability and authority to seek any information it requires to carry out its duties from any officer of employee of the Group and such officers or employees shall be instructed by the Board to co-operate fully in provision of such information.

7.2 The Committee has the authority to consult with, and set the pay of, independent counsel, advisors and experts where they consider it necessary to carry out their duties. Any costs incurred as a result of the Committee consulting independent counsel, advisors or experts will be borne by the Company.

7.3 The Committee may conduct or authorize investigations as it deems necessary.

7.4 The Committee also has the authority to communicate directly with internal and external auditors.

7.5 The Committee will pre-approve all non-audit services to be provided to the Group by external auditors of the Group, unless such services, in the aggregate, meet the de minimis exception set out in Canadian National Instrument 52-110 “Audit Committees”.

7. Proceedings of the Committee

The provisions of the Company’s Constitution which govern proceedings of committee meetings are deemed to be incorporated into this Charter. Where there is a conflict between this Charter and the Constitution, the Constitution will prevail.