Railpower Technologies Corp. - Audit Committee

The Audit Committee consists of at least three directors, each of whom is required to be independent as well as financially literate. The members of the Audit Committee are appointed by the Board upon considering the recommendations of the Governance and Human Resources Committee. The Audit Committee is responsible for assisting the Board in discharging its responsibilities relating to the preparation, integrity and dissemination of financial and related information, including reviewing the Corporation's financial disclosures, financial reporting practices, internal controls and the performance of Corporation's external auditors. The Audit Committee is responsible for reviewing annual and interim financial statements and management's discussion and analysis prior to their approval by the full Board of Directors. The Audit Committee also has the responsibility of reviewing with management and the external auditors any significant financial risks or exposures faced by the Corporation and the steps management has taken to monitor, control and report such exposures. The Governance and Human Resources Committee and the Audit Committee itself will, at minimum on an annual basis, assess the effectiveness of the Audit Committee and the members of the Committee.

Members: Mark Wayne (Chair), William McSherry, Roland Gagnon

To submit a complaint regarding accounting, internal accounting controls or auditing matters please contact:

Mark Wayne
Chair of the Audit Committee
Address: 610, 301 8th Ave SW, Calgary, AB, T2P 1C5
Ph: 403-705-4968
Fax:403-705-4971
Email: mwayne@qgxgold.com


Railpower Technologies Corp. - Audit Committee Charter

ARTICLE 1 - PURPOSE AND MANDATE

1.1

This Charter sets out the authority and responsibilities of the Audit Committee (the "Committee") of the Board of Directors (the "Board") of Railpower Technologies Corp. (the "Company").

1.2

The mandate of the Committee is to:

  • assist the Board in discharging its responsibilities relating to oversight of the preparation, integrity and dissemination of the financial and related information of the Company, including corporate accounting, financial statements, financial reporting practices and systems of internal financial controls,
  • oversee the engagement of the external auditors of the Corporation,
  • be directly responsible for overseeing the work of the external auditors, who shall report directly to the Committee, and
  • oversee the Corporation’s compliance with legal and regulatory requirements relating to the foregoing, all in a manner which is in the best interests of the Corporation and its shareholders and consistent with the Corporation’s long term goals and objectives.

ARTICLE 2 - APPOINTMENT, REMOVAL AND QUALIFICATIONS OF COMMITTEE MEMBERS

2.1 Membership

The Committee shall consist of not fewer than three directors and each member of the Committee shall at all times satisfy the criteria for unrelated, outside and independent as well as financially literate directors under applicable legal, regulatory and stock exchange requirements.

2.2 Vacancies

Members of the Committee will be appointed by the Board, after considering the recommendation of the Governance & Human Resources Committee, and serve at the pleasure of the Board. The Board has power to appoint, at any time and from time to time, additional members of the Committee, or to remove any person from membership on the Committee. Vacancies on the Committee resulting in the Committee consisting of fewer than three directors shall be filled by the Board as soon as practicable.

2.3 Remuneration

Members of the Committee will be entitled to receive such remuneration for acting as Committee members (and, in the case of the Committee Chairman, for acting as Chairman of the Committee) as the Board may from time to time determine. Members of the Committee may not receive any compensation from the Company, except for Board or Committee service. The members of the Committee will be reimbursed for their reasonable expenses in connection with attendance at or participation in meetings of the Committee.

ARTICLE 3 - COMMITTEE STRUCTURE, OPERATIONS AND REPORTING

3.1 Meetings

The Committee shall meet as often as it considers necessary, and subject to the terms hereof, otherwise govern itself as it sees fit in order to carry out its responsibilities.

3.2 Chairman

Unless the Board after considering the recommendation of the Governance and Human Resources Committee appoints a Chairman of the Committee, the members of the Committee shall select a member of the Committee to act as Chairman of the Committee. Should the Chairman not attend any meeting, the members then in attendance should designate another person among them to act as chairman of that meeting. The chairman at each meeting of the Committee should designate a secretary (who need not be a director) to record the proceedings at every meeting.

3.3 Other Attendees

Any person may, with the permission of the Committee, attend meetings of the Committee. The external auditors of the Company shall be entitled to attend all meetings of the Committee, except those meetings dealing with the appointment or removal of the external auditors.

3.4 Calling Meetings

Meetings of the Committee may be called by or on behalf of the Chairman or any other member of the Committee or by the Secretary of the Company at the request of the Chief Executive Officer (the "Chief Executive Officer") or Chief Financial Officer of the Company (the "Chief Financial Officer") or the external auditors of the Company. Meetings will be held at such place and time and on such day as the person calling the meeting, or the Secretary of the Company, upon request of the person calling the meeting, may determine. The person calling any meeting of the Committee shall determine the nature and extent of information that should be provided to Committee members before the meeting.

3.5 Notice of Meetings

Notice of meetings of the Committee shall be given to each member of the Committee not less than 24 hours before the time the meeting is to be held. Notice may be given orally, personally or by telephone, or in writing, delivered personally or by prepaid first-class post, telecopy, facsimile, e-mail or any other method of transmitting writing, or any other means of communication which the member has consented to use. Where the Committee has established a fixed time and place for the holding of its meetings, no notice of meeting to be held at such fixed time and place need be given to any Committee member.

3.6 Quorum

A majority of the members of the Committee present in person or participating by means of a telephonic, electronic or other communications facility that permits all participants to communicate adequately with each other during the meeting shall constitute a quorum (provided that in no event shall a quorum be less than two members) and, notwithstanding any vacancy on the Committee, a quorum of the Committee may exercise all of the powers of the Committee.

3.7 Majority Vote Governs

Any decisions of the Committee should be decided by a majority vote of the Committee members, where each member attending or participating is entitled to one vote. In the event of an equality of votes, the Chairman, or acting Chairman, will have a second or casting vote. The Committee may also act by resolution in writing, signed by all of the members entitled to vote on such matter.

3.8 Minutes

The Committee shall keep or cause to be kept minutes of its meetings in which shall be recorded all actions and decisions taken by the Committee. The Committee Chairman will report to the Board regarding the Committee's activities as the Committee sees fit or at the request of the Board.

3.9 Access and Inspection of Records

The members of the Committee shall have the right, for the purposes of discharging the powers and responsibilities of the Committee, to inspect any relevant records of the Company and its subsidiaries. The Company and its officers, employees and advisors shall be directed to provide the members of the Committee and their authorized legal, financial and other advisors with full and free access to any information required by any member of the Committee, or their advisors, for the purposes of the Committee discharging its powers and responsibilities.

3.10 Delegation

The Committee may from time to time delegate to a subcommittee of its members such of its authority and responsibilities as the Committee may from time to time determine provided that the Committee shall not delegate to a subcommittee any power or authority required by any law, regulation or stock exchange rule, policy or requirement to be exercised by the Committee as a whole.

3.11 Execution of Instruments

The Committee may from time to time authorize any member of the Committee, or any officer or other director of the Company, to certify, or execute and deliver, all such statements, forms, instruments, certificates, notices, acknowledgements and other documents, and to do all such acts and things as the Committee may consider necessary or desirable in connection with the discharge of the powers and responsibilities of the Committee.

ARTICLE 4 - AUTHORITY, GOALS AND RESPONSIBILITIES OF THE COMMITTEE

4.1 Authority

The Committee shall:

  1. General Authority - Have the direct authority to discharge the Board's responsibilities in relation to the selection, appointment, oversight, direction, evaluation, remuneration and, where appropriate, the replacement or removal of the external auditors of the Company, including:
    1. recommending the external auditors to be proposed for appointment or reappointment at annual meetings of shareholders;
    2. reviewing and approving the replacement or removal of (or recommend that the shareholders of the Company remove) the external auditors and overseeing steps for an orderly transition;
    3. in the event of the resignation or removal of the external auditors between annual meetings of shareholders, approving and recommending to the Board the appointment of the external auditors of the Company to hold office until the next annual meeting of shareholders;
    4. reviewing the experience and qualifications of the external auditors and the control procedures adopted by the external auditors;
    5. reviewing at least annually all relationships between the external auditors and their affiliates and the Company and its affiliates in order to establish and determine the independence of the external auditors, including:
      1. requesting, receiving and reviewing, on a periodic basis, a written statement from the external auditors delineating all relationships which could, or could reasonably be perceived to, effect the independence of the external auditors;
      2. discussing with the external auditors any disclosed relationships or services, that may affect the objectivity or independence of the external auditors; and
      3. taking, or recommending that the Board or management take, appropriate action to address the external auditors' independence and as otherwise may be necessary or desirable to oversee such independence;
    6. overseeing and evaluating the services performed by the external auditors and reviewing these with the Chief Executive Officer, the Chief Financial Officer and principal financial and accounting personnel of the Company, as appropriate;
    7. as appropriate, implementing direct communication channels and procedures between the external auditors and the Committee and with the Board;
    8. meeting with the external auditors on a regular basis in the absence of management and, as may be requested by the Board, arrange for the external auditors to be available to meet with the full Board;
    9. reviewing with the external auditors (I) the scope of their audit and its conformity with generally accepted auditing standards; (II) the results of the audit and related comments, findings or recommendations; (III) the accounting and financial reporting implications of significant new transactions or events and the appropriateness of the accounting practices adopted by management; (IV) changes in the scope of the audit as a result of such assessments; (V) any proposed changes in accounting methods or practices; (VI) the external auditors' evaluation of the Company's financial, accounting and internal accounting personnel and the adequacy and effectiveness of the accounting and financial controls of the Company; (VII) any significant changes required in the scope of the external auditors' audit plan; (VIII) any restrictions or limitations placed upon the external auditors by Company personnel; and (IX) any other issues or topics that the Committee or the external auditors believe may influence the quality of the financial statements or the Company's financial reporting and any other matters relating to the conduct of the audit;
    10. discussing with the management and the external auditors their qualitative judgments about the quality and appropriateness of the Company's accounting principles and financial disclosure practices, including critical accounting policies and practices, any alternative treatments of financial information that have been discussed between management and the external auditors, and any other material communications between management and the external auditors;
    11. considering and overseeing resolution of disagreements between management and the external auditors regarding financial reporting and disclosure of financial and other information;
    12. approving in advance the audit services provided by external auditors, including the scope of the audit;
    13. determining the non-audit services which the external auditor is prohibited from providing to the Company in accordance with applicable legal, regulatory and stock exchange requirements or guidelines;
    14. approving in advance the provision by the external auditors of any non-audit mandates or services which the external auditor may wish to provide to the Company and compliance with applicable legal, regulatory and stock exchange requirements or guidelines;
    15. reviewing and approving the basis and amount of the fees, compensation and remuneration of the external auditors for audit services and non-audit mandates and services;
  2. Review of Financial Statement and Reports - Review and discuss with management and the external auditors all financial statements and financial disclosure that require approval by the Committee or the Board, such review to include:
    1. reviewing the Company's annual and interim financial statements, including the notes thereto and management's discussion and analysis, with the Chief Executive Officer and the Chief Financial Officer, other principal financial and accounting personnel of the Company and with the Board and, if requested or required, with external auditors;
    2. reviewing any report or opinion to be rendered in connection with the financial statements described above and any certification, report, opinion or review rendered by the external auditors in connection therewith;
    3. reviewing all financial statements or other reports or summaries to be contained in any document or report issued or proposed to be issued to holders of securities of the Company or filed with any securities regulatory authority or otherwise published, including any annual report, prospectus, registration statement, annual information form, investor relations document or the like;
    4. reviewing with management and the external auditors all significant variations between comparative reporting periods in the financial statements of the Company;
    5. reviewing with the Chief Financial Officer any earnings guidance to be issued by the Company and press releases containing information taken from the Company's financial statements;
    6. reviewing with management and, if required, the external auditors, the financial implications of any significant transaction including non-arms length transaction or those not in the normal course of the Company's business;
    7. reviewing management's process for formulating accounting estimates and the reasonableness of the estimates;
    8. reviewing the Company's financial reporting accounting standards and principles and any proposed material changes to them or their application;
    9. reviewing management's plans regarding any changes in accounting practices or policies and the financial impact thereof;
    10. reviewing all significant adjustments proposed by the external auditors; and
    11. satisfying itself that there are no unresolved issues between management and the external auditors that could reasonably be expected to materially affect the financial statements;
  3. Other Public Disclosure of Financial Information - The Committee must periodically review and satisfy itself that adequate procedures are in place for the review of the Corporation’s public disclosure of any financial information extracted or derived from the Corporation’s financial statements (other than such statements or disclosure which the Committee must review, as referred to in paragraph 4.1(b)(i) above) and must periodically assess the adequacy of those procedures.
  4. Internal Staffing - Oversee the Company's staffing of its internal financial and accounting functions, including:
    1. reviewing the purpose, authority and organizational reporting lines and the appointment and compensation (in conjunction with the Governance and Human Resources Committee of the Board) of the principal financial and accounting personnel of the Company;
    2. discussing with the external auditors their perception of the Company's financial and accounting personnel and any recommendations that the external auditors may have in relation thereto; and
    3. reviewing, with the Chief Financial Officer, the Chief Executive Officer and the principal financial and accounting personnel of the Company, as appropriate, the Company's internal system of audit controls and results of internal audits;
  5. Internal Controls - Review with senior management and, as necessary, outside legal or other advisors, and the Company's internal and external auditors the effectiveness of the Company's internal controls and the Company's financial reporting procedures and policies and processes for complying with applicable legal, regulatory and stock exchange requirements relating to the completeness, accuracy and timeliness of filings of financial statements or financial reports and to investigate any material deficiency or non-compliance with such controls, procedures and policies;
  6. Liaison with Advisors - Meeting with outside legal or other advisors regarding significant legal, compliance or regulatory matters that may have a material effect on the Company's financial statements and financial reporting;
  7. Risk Management - Review and discuss with management and the external auditors the significant financial risks or exposures faced by the Company and the steps management has taken or may take to monitor, control and report such exposures and oversee and monitor the Company's policies and procedures for identifying and managing the principal risks of its business, and other matters considered necessary or appropriate by the Committee or as may be determined by the Board from time to time;
  8. Claims and Assessments - Review with management, the external auditors and, as necessary, external legal or other advisors, any matter, event or transaction that could have a material effect upon the financial position of the Company, and the manner in which these matters may be, or have been, disclosed in the financial statements including any litigation, claim or contingency, including tax assessments, treasury activities, off-balance sheet transactions, derivative transactions, foreign currency operations, insurance or such other matters as the Committee or the Board may consider advisable;
  9. Expense Policies - Review and monitor policies and procedures with respect to review of officers' expenses, disbursements and perquisites, including use of corporate assets or opportunities, sponsorships, donations, gifts and political contributions, and authorize the CFO to approve the CEO's expense claims (including direct access to the Chairman of the Board of Directors in the event of a dispute);
  10. Illegal Acts - Review incidents or alleged incidents of fraud, illegal acts and conflicts of interest;
  11. Code of Conduct - Review the Company's Code of Conduct if any and inquire of management as to policies and practices in place to ensure compliance;
  12. Complaints - Establish procedures for the receipt, retention and handling and treatment of complaints or concerns received by the Company regarding financial, accounting or auditing matters and processes whereby persons, whether they are employees of the Company, or the external auditors or otherwise, can express any concerns about the accuracy, fairness or appropriateness of any financial report, accounting policy, public disclosure or any other matter that falls within the mandate and responsibility of the Committee, including procedures for the confidential, anonymous submission of concerns regarding accounting or auditing matters and protection of persons reporting concerns from any reprisals with respect thereto;
  13. Regulatory Responses - As appropriate discuss with management and the external auditors any correspondence from or with regulators or governmental agencies, any employee complaints or any published reports that raise material issues regarding the Company's financial statements or accounting policies;
  14. Audit Committee Reports - If required by any applicable legal, regulatory or stock exchange requirement, prepare such reports or other disclosure from the Committee to shareholders or others as may be required concerning the scope of the Committee's duties and responsibilities and the work of the Committee in the discharge of its responsibilities;
  15. Financial Statement Certification - Review the process for the Chief Executive Officer and Chief Financial Officer certifications, if required, with respect to the financial statements and the Company's disclosure and internal controls, including any material deficiencies or changes in those controls;
  16. Related Party Transactions - Unless delegated to another committee of the Board, review and approve related party transactions between the Company or any affiliate and any director or officer of the Company or any affiliate thereof;
  17. Internal Accounting Staff - Approve in advance the hiring of any employees to any senior financial position within the Company in particular, with respect to any partner or employee of the external auditors or reviewing tax professional or other person that has provided audit assurance to the external auditors; and
  18. General - Consider and review such other matters and issues that the Committee feels are important to its mandate or that the Board chooses to delegate to it.

4.2 Relationship between the Committee, the Board and Management

Notwithstanding the above, the Board acknowledges and confirms that management of the Company is responsible for the preparation, presentation and integrity of the interim and annual financial statements of the Company and the design and maintenance of effective systems of internal control and maintain appropriate accounting and financial reporting principles, policies and procedures to provide reasonable assurance that assets are safeguarded and that transactions are authorized, executed, recorded and reported properly and provide for compliance with accounting standards and applicable laws and regulations. Management and the external auditors are expected to provide to the Board and the Committee a timely analysis of significant current financial reporting issues and practices. The Committee's role is to oversee the roles and responsibilities of management, the other principal financial and accounting personnel responsible for the Company's internal accounting functions, and the external auditors, without being or being considered to have assumed responsibilities for such roles or responsibilities.

Even though the Committee has a specific mandate and its members may have financial experience, the Committee does not have the obligation to act as auditors or to perform auditing, or to determine that the Company's financial statements are complete and accurate or are in accordance with generally accepted accounting principles, which is the responsibility of management and the external auditors.

The Board and the Committee acknowledge that the external auditors are accountable to the Board and the Committee, as representatives of shareholders.

ARTICLE 5 - PROCESS FOR HANDLING COMPLAINTS AND CONCERNS

5.1 Procedures

The Committee has established the following procedures for the receipt, retention and treatment of complaints and concerns received by the Company regarding financial, accounting, internal accounting controls or auditing matters:

  1. the Company will publish on its website, contact information, including telephone number and address of the Chair of the Committee for receiving complaints regarding accounting, internal accounting controls or auditing matters;
  2. copies or records regarding complaints received will be sent to the other members of the Committee by the Chairman;
  3. as directed by the Committee, complaints will be investigated by the Company's finance, internal legal staff or outside legal counsel or other advisors. The Committee shall have the power and authority to engage, at the Company's expense, outside advisors to investigate or assist with any complaint; and
  4. the status of each complaint will be reported on a regular basis to the Committee and, if the Committee so directs, to the Board.

The Board acknowledges that every director, officer or employee of the Company is prohibited from retaliating or taking any adverse action against anyone for raising or assisting in the resolution of a complaint.

ARTICLE 6 - HIRING GUIDELINES FOR INDEPENDENT AUDITOR EMPLOYEES

6.1 Guidelines

The Committee has adopted the following guidelines regarding the hiring of any partner, employee, reviewing tax professional or other person providing audit assurance to the external auditor of the Company on any aspect of its certification of the Company's financial statements:

  1. no member of the audit team that is auditing a business of the Company can be hired into that business or into a position to which that business reports for a period of 6 months after the audit;
  2. no former partner or employee of the external auditor may be made an officer of the Company or any of its subsidiaries for 1 year following association with the external auditor;
  3. the Chief Financial Officer must approve all hires from the external auditor; and
  4. the Chief Financial Officer must report immediately to the Committee on any proposed hires within these guidelines.

ARTICLE 7 - RESOURCES AND OUTSIDE ADVISORS

7.1 General

The Committee shall have the resources and authority required to discharge its responsibilities hereunder.

7.2 Advisors

The Committee may conduct or authorize investigations into or studies of matters within the scope of the authority and responsibilities of the Committee. The Committee may request any director, officer or employee of the Company, the external auditors, the Company's outside legal counsel, or any other persons whose advice or counsel is sought by the Committee, to attend any meeting of the Committee or to meet with any members of, or advisors to, the Committee to provide such advice or information as the Committee may request. The Committee shall have the authority in their absolute discretion, to retain and terminate such consultants, legal counsel and other advisors, at the Company's expense, as the Committee may consider necessary to assist the Committee in carrying out its responsibilities. Any such consultant, counsel or advisor retained by the Committee may be any of the firms or persons which presently or in the past have represented the Company or may be any other independent person or firm qualified to advise the Committee with respect to the matters to be addressed. The Company shall pay all fees and disbursements of any person or firm retained by the Committee.

ARTICLE 8 - EVALUATION

8.1 Committee Review

The Governance and Human Resources Committee of the Board and the Committee itself shall, not less frequently than annually, assess the effectiveness of the Committee, and the members of the Committee, under this Charter. In such evaluation, the Governance and Human Resources Committee shall consider such factors that it considers relevant.

8.2 Review of Charter

The Committee shall review and assess the adequacy of this Charter on a regular basis and consider whether this Charter appropriately addresses the matters that are or should be within its scope. The Committee shall report to the Governance and Human Resources Committee regarding such review and assessment and, where appropriate, make recommendations to the Board or the Governance and Human Resources Committee for the alteration, modification or amendment of this Charter.

8.3 Amendments of Charter

This Charter may, at any time, and from time to time, be altered, modified or amended in such manner as may be approved by the Board.