1. The Audit and Finance Committee is a sub-committee of the Board and is directly responsible for overseeing the work of the external auditors engaged for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services, including the resolution of disagreements between management and the external auditors regarding financial reporting.

2. The Committee will consist of at least three Directors, all of whom are independent and financially literate as defined in the Ontario Securities Commission Investor Confidence Rules Multilateral Instrument 52-110 Audit Committees. The members' terms of appointment should coincide with the terms of appointment of other Board Committees and provide for continuity of membership while, at the same time, allowing fresh perspectives to be added. Senior management should normally attend meetings.

3. The Committee will meet at least four times per year. Special meetings should be authorized at the request of any member of the Committee or at the request of the external auditors or management. The external auditors should normally attend all meetings of the Committee. At each meeting, provision should be made to meet privately with management and separately with the external auditors if they are in attendance.

4. The Committee will review and approve the Corporation's hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Corporation.

5. The full Board will be kept informed of the Committee's activities by a report following each Committee meeting.

6. The Committee is authorized to engage independent counsel and other advisors as it determines necessary to carry out its duties; to set and pay the compensation for any advisors so employed; and, to communicate at any time with the Corporation's external and internal auditors.

7. The Committee will review financial statements to be published which require approval by the Board of Directors. These would include the MD&A, related party transactions and year-end audited statements, quarterly unaudited statements, statements in prospectuses, financial press releases and other offering memoranda and statements required by regulatory authorities and appropriate compliance certificates issued by Corporate officers. In addition, any unusual or contentious matters should be approved by the Committee prior to the publication of unaudited quarterly results and the audited annual report.

8. The Committee will satisfy itself that adequate procedures are in place for the review of the public disclosure of financial information extracted or derived from the Corporation's financial statements, other than the public disclosure referred to in point (7) above, and will periodically assess the adequacy of those procedures.

9. The Committee will review the external audit plan and the results of external audits and any changes in accounting practices or policies and the financial statement impact thereof. In addition, the Committee should review any accruals, provisions or estimates that have a significant effect upon the financial statements as well as other sensitive matters such as disclosure of related party transactions, off balance sheet assets, obligations, commitments and transactions and off income statement transactions.

10. The Committee will set guidelines for determination of conflicts of interest and related party transactions, and review the observance thereof as well as such situations where there has been a breach of the guidelines.

11. The Committee will review with management, the external auditors and, if necessary, with legal counsel, any litigation, claim or other contingency, including tax assessments, that could have a material effect upon the financial position or operating results of the Corporation, and the manner in which these matters have been disclosed in the financial statements.

12. The Committee will establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters; and the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.

13. The Committee will review the minutes of any Audit and Finance Committee meeting of subsidiaries and any significant issues and auditors' recommendations.

14. The Committee will review the internal audit plan and any reports issued as a result and meet at least semi-annually on a private basis with the Internal Auditor.

15. The Committee will review the reports from the pension administration committee as they relate to the Corporation's financial statements and consider among other matters, the adequacy of funding for all pension plans in accordance with the Company's approved Statement of Investment Policies and Procedures.

16. The Committee will consider any other matter which, in its judgement, should be taken into account in reaching its recommendation to the Board of Directors concerning the approval of the financial statements.

17. The Committee will consider whether the external auditors should be reappointed and recommend accordingly to the Board of Directors.

18. If a change in external auditors is proposed, the Committee will enquire as to the reasons for the change, including the response of the incumbent auditors, and should enquire as to the qualifications of the newly-proposed auditors before making its recommendation to the Board of Directors.

19. The Committee will recommend the compensation of the external auditors to the Board of Directors and will review the audit fees and other fees paid to the external auditors.

20. Annually, the Committee will review a letter from management regarding compliance with laws and regulations in each of the jurisdictions in which it operates.

21. On a periodic basis the Committee will review the Corporation's electronic data processing procedures, internal controls and specific security programs to protect against computer fraud or misuse.

22. Annually, the Committee will review a summary management letter received from the external auditors as well as management's response to any suggestions contained therein.

23. On a periodic basis, the Committee will review the Corporation's disaster recovery and contingency plans.

24. Annually, the Committee will review the Corporation's insurance coverage.

25. The Committee will review the Corporation's accounting policies and practices, and any proposed changes to them, in light of the company and securities laws and generally accepted accounting principles. The Committee will specifically consider whether revenues, expenses or reserves were used in any fashion to artifically manage the Company's financial results.

26. The Committee should report both as necessary and annually to the Board, summarizing the activities of the Committee during the previous financial year.

27. The external auditors are ultimately accountable to the Board of Directors and the Audit and Finance Committee and are representatives of the shareholders.

28. The Committee will review management's exercise of options to ensure accounting and disclosure are in accordance with generally accepted accounting principles and other statutory or securities commission guidelines.

29. The Committee will review the Company's involvement as an issuer or participant in derivative transactions.

30. The Committee will address the approval of any non-audit mandates of the external auditor and determine which non-audit services the external auditor is prohibited from providing. The Committee has determined that the external auditor is prohibited from providing the following non-audit services as defined by the CICA's Rules of Professional Conduct:
    • Fairness opinions (including appraisal or valuation services for financial reporting purposes);
    • Management or human resources functions;
    • Investment dealer, advisor or investment banking services;
    • Legal services and expert services unrelated to the audit;
    • Bookkeeping services;
    • Design and implementation of financial information systems;
    • Actuarial services; and
    • Internal audits.

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