King Solomon Mines

Audit Committee Charter

Audit Committee Charter

 

The Board of King Solomon Mines Limited (Company)  has established an Audit Committee (Committee). The purpose for which the Committee has been established and the powers of the Committee are set out in this document.

 

1.             Membership

 

The Committee shall be members of, and appointed by, the Board of directors and shall comprise at least three directors that have diverse, complementary backgrounds, and are independent of management and the Company.  It is the Board’s intention that the Committee comprise at least three directors and that all members be non-executive directors of the Company, with a majority of members classed as independent directors.  The Committee chair shall be an independent director and shall not be the Chairman of the Board of Directors.  Also, the Committee chair shall have leadership experience and a strong finance, accounting and/or business background or understanding.  All Committee members shall be financially literate, or become financially literate within a reasonable period of time after appointment. Furthermore, at least one member shall have accounting and/or related financial management expertise as determined by the Board of Directors.

 

Members of the Committee shall be considered independent so long as they do not have any relationship with the Company that may interfere with the exercise of independent judgment. This means they shall not accept any consulting, advisory, or other compensatory fee from the Company and are not an affiliated person of the Company or its related entities. They should also meet the definition of what constitutes an 'independent director' as set our in the Australian Stock Exchange Corporate Governance Council’s definition described in its publication “Principles of Good Corporate Governance and Best Practice Recommendations”.  The only compensation shall be directors' fees for services provided to the Committee.

 

2.             Meetings

 

The Committee shall meet at least two times each year.

 

The purpose of these meetings shall be to:

  • Review and approve audit plans;
  • Review and approve the half-year financial report;
  • Update the audit plans; and
  • Review and approve the annual financial report.

 

3.             Purpose

 

The Committee shall provide assistance to the Board of directors in fulfilling its corporate governance and oversight responsibilities in relation to the Company's financial reporting, internal control structure, risk management systems, and audit functions. In doing so, it is the responsibility of the Committee to maintain free and open communication between the Committee the auditors (if applicable), and management of the Company.  In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the authority to engage independent counsel and other advisers as it determines necessary to carry out its duties.

 

4.             Duties and Responsibilities

 

4.1          Understanding the business

 

The Committee shall ensure it understands the Company's structure, controls, and types of transactions in order to adequately assess the significant risks faced by the Company in the current environment.


 

4.2          Financial reporting

 

The primary responsibility of the Committee is to oversee the Company's financial reporting process on behalf of the Board and report the results of its activities to the Board.

 

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits.

 

The Board of directors is responsible for the Company's financial reports including the appropriateness of the accounting policies and principles that are used by the Company. The auditors are responsible for auditing the Company's financial reports and for reviewing the Company's unaudited interim financial reports.

 

The Committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The Committee will take appropriate actions to set the overall corporate 'tone' for quality financial reporting, sound business risk practices, and ethical behavior. The following shall be the principal duties and responsibilities of the Committee. These are set forth as a guide with the understanding that the Committee may supplement them as appropriate.

 

4.3          Assessment of accounting, financial and internal controls

 

The Committee shall discuss with management and the auditors, the adequacy and effectiveness of the accounting and financial controls, including the Company's policies and procedures to assess, monitor, and manage business risk, and legal and ethical compliance programs (including the Company's Code of Conduct). Any opinion obtained from the auditors on the Company's choice of accounting policies or methods should include an opinion on the appropriateness and not just the acceptability of that choice or method.

 

The Committee shall periodically meet separately with management and the auditors to discuss issues and concerns warranting Committee attention, including but not limited to its assessments of the effectiveness of internal controls and the process for improvement. The Committee shall provide sufficient opportunity for the auditors to meet privately with the members of the Committee. The Committee shall review with the auditor any audit problems or difficulties and management's response.

 

The Committee shall review all representation letters signed by management to ensure that the information provided is complete and appropriate. Also, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the auditors under generally accepted auditing standards.

 

The Committee shall review the declaration by the CEO and CFO required under the Corporations Act in relation to the accounts to ensure it is complete.

 

The Committee shall receive regular reports from the auditor on the critical policies and practices of the Company, and all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management.

 

4.4          Appointment of auditors

 

The Committee shall be directly responsible for making recommendations to the Board of directors on the appointment, reappointment or replacement (subject, if applicable, to shareholder ratification), remuneration, monitoring of the effectiveness, and independence of the auditors, including resolution of disagreements between management and the auditor regarding financial reporting. The Committee shall pre-approve all audit and non-audit services provided by the auditors and shall not engage the auditors to perform any non-audit/ assurance services that may impair or appear to impair the auditor's judgment or independence in respect of the Company. The Committee may delegate pre-approval authority to a member of the Committee. The decisions of any Committee member to whom pre-approval authority is delegated must be presented to the full Committee at its next scheduled meeting.

 

4.5          Assessment of the audit

 

The Committee, at least on an annual basis, shall obtain and review a report by the auditors describing (or meet, discuss and document the following with them):

 

  • The audit firm's internal quality control procedures;

 

  • Any material issues raised by the most recent internal quality control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues;

 

  • All relationships between the auditor and the Company (to assess the auditor's independence). In addition, the Committee shall set clear hiring policies for employees or former employees of the auditor in order to prevent the impairment or perceived impairment of the auditor's judgment or independence in respect of the Company.

 

4.6          Independence of the auditors

 

The Committee shall review and assess the independence of the auditor, including but not limited to any relationships with the Company or any other entity that may impair or appear to impair the auditor's judgment or independence in respect of the Company. Furthermore, the Committee shall draft an annual statement for inclusion in the Company's annual report of whether the Committee is satisfied the provision of non-audit services is compatible with auditor independence.

 

4.7          Scope of the audit

 

The Committee shall discuss with the auditors the overall scope of the audit, including identified risk areas and any additional agreed-upon procedures. In addition, the Committee shall also review the auditor's compensation to ensure that an effective, comprehensive and complete audit can be conducted for the agreed compensation level.

 

4.8          Communications with stakeholders

 

The Committee shall review the full year financial report and Appendix 4E, and half-year financial report and Appendix 4D, prior to the lodgement of these with ASX. Also, the Committee shall discuss the results of the half-year review and any other matters required to be communicated to the Committee by the auditors under generally accepted auditing standards. The chair of the Committee may represent the entire Committee for the purposes of this review.

 

The Committee shall establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

 

The Committee shall receive corporate legal reports of evidence of a material violation of the Corporations Act, the ASX Listing Rules or breaches of fiduciary duty.