Whistleblower Provisions

Audit committee responsibilities

Section 2.3 (7) of the CSA’s National Instrument 52-110, states the following:

“An audit committee must establish procedures for:

(a) the receipt, retention and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and

(b) the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.”

There are similar requirements set out for audit committees of reporting issuers who must comply with the Sarbanes-Oxley act and/or the NYSE listing standards.

The establishment of formal procedures for receiving and handling complaints should serve to facilitate disclosures, encourage proper individual conduct and alert the audit committee to potential problems before they have serious consequences.

Once the procedures are designed and adequately documented, they should be communicated to employees and to the public. The audit committee, legal counsel, and management should determine how often the audit committee expects to receive reports from the department that is responsible for investigation. They should also determine the qualitative and quantitative characteristics of complaints that warrant immediate notification of the audit committee. The audit committee should also agree on a regular reporting schedule to the board, as well as those types of events that warrant immediate notification. Finally, the audit committee should consult with legal counsel regarding the adequacy of all procedures.