AUDIT AND FINANCE COMMITTEE OF THE BOARD OF DIRECTORS CHARTER
Organization
There shall be a committee of the board of directors (the “Board”) of Reg Technologies Inc. (“Reg”)
known as the Audit and Finance Committee (the “Committee”). This charter shall govern the
operations of the Committee.
Membership and Qualifications
The membership of the Committee shall be appointed by the Board and shall consist of at least three
directors, the majority of whom will be non-officers (the “Independent Directors”).
Each independent member of the Committee shall be, while at all times a member of the Committee,
free of any relationship that, in the opinion of the Board, would interfere with the member’s individual
exercise of independent judgment.
Each member of the Committee shall be, while at all times a member of the Committee, generally
knowledgeable in financial and auditing matters, specifically possessing the ability to read and
understand fundamental financial statements including Reg’s balance sheet, statement of operations
and statement of cash flows.
The Board shall appoint one member of the Committee as chair. The chair shall be responsible for
leadership of the Committee, including preparing the agenda, presiding over the meetings, making
committee assignments and reporting to the Board. The chair will also maintain regular liaison with
Reg’s Chief Executive Officer, Chief Financial Officer and lead independent audit partner.
Role
The Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity
of the accounting, auditing, reporting practices, systems of internal accounting and financial controls,
the annual independent audit of Reg’s financial statements, and the legal compliance and ethics
programs of Reg as established by management and the Board shall also perform any other related
duties as directed by the Board. In fulfilling this role, the Committee is expected to maintain free and
open communications with the independent auditor and management of Reg and shall meet at least
once each quarter.
While the Committee has the responsibilities and powers set forth below in this charter under the
headings “Authority” and “Responsibilities and Processes”, it is not the duty of the Committee to
conduct audits or to determine that Reg’s financial statements are fairly presented and are in
accordance with generally accepted accounting principles. Management is responsible for the
preparation of financial statements in accordance with generally accepted accounting principles. It is
the role of the independent auditor to audit the financial statements.
Authority
The Committee is granted the authority to investigate any matter brought to its attention, with full
access to all books, records, facilities and personnel of Reg. The Committee has the power to
engage and determine funding for outside counsel or other experts or advisors as the Committee
deems necessary for these purposes and as otherwise necessary or appropriate to carry out its
duties. Reg shall provide appropriate funding, as determined by the Committee, for payment of
compensation to any registered public accounting firm engaged for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services for Reg and for any advisors
employed by the Committee as well as for the payment of ordinary administrative expenses of the
Committee that are necessary or appropriate in carrying out it duties.
Responsibilities and Processes
The Committee’s primary responsibilities include:
• overseeing Reg’s financial reporting process on behalf of the Board and reporting the results or
findings of its oversight activities to the Board;
• having sole authority to appoint, retain and oversee the work of Reg’s independent auditor and
establishing the compensation to be paid to the independent auditor. Reg’s independent
auditor shall report directly to the Committee;
• establishing procedures for the receipt, retention and treatment of complaints regarding
accounting, internal accounting controls and/or auditing matters for the confidential,
anonymous submission by Reg’s employees of concerns regarding questionable accounting or
auditing matters;
• pre-approving all audit services and permissible non-audit services as may be amended from
time to time; and
• overseeing Reg’s system to monitor and manage risk, and legal and ethical compliance
programs, including the establishment and administration (including the grant of any waiver
from) a written code of ethics applicable to each of Reg’s principal executive officer, principal
financial officer, principal accounting officer or controller or persons performing similar
functions.
The Committee, in carrying out its responsibilities, believes its policies and procedures should remain
flexible in order to react more effectively to changing conditions and circumstances. The Committee
shall take the appropriate actions to set the overall corporate “tone” for quality financial reporting,
sound business risk practices and ethical behaviour.
The following shall be the principal recurring processes of the Committee relating to its oversight
responsibilities. These processes are set forth as a guide, with the understanding that the Committee
may supplement them as appropriate and is not intended be a comprehensive list of all the actions
that the Committee will take in discharging its duties. These processes are:
• discussing with the independent auditor the objectivity and independence of the auditor and
any relationships that may impact the auditor’s objectivity or independence and receiving from
the independent auditor disclosures regarding its independence and written affirmation that the
independent auditor is in fact independent, and taking any action, or recommending that the
Board take appropriate action to oversee the independence of the independent auditor;
• overseeing the independent auditor relationship by discussing with the auditor the nature and
scope of the audit process, receiving and reviewing audit reports, and providing the auditor full
access to the Committee to report on any and all appropriate matters. The Committee has the sole
authority to resolve disagreements, if any, between management and the independent auditor;
• discussing with the independent auditor and Reg’s financial and accounting personnel,
together and in separate sessions, the adequacy and effectiveness of the accounting and
financial controls of Reg and eliciting recommendations for the improvement of such internal
control procedures or particular areas where new or more detailed controls or procedures may
be desirable;
• providing sufficient opportunity for the independent auditor to meet with the members of the
Committee without members of management present. Among the items to be discussed in
these meetings are the independent auditor’s evaluation of Reg’s financial and accounting
personnel and the cooperation that the independent auditor received during the course of the
audit;
• discussing with management their review of the adequacy of Reg’s disclosure controls and
procedures, the effectiveness of such controls and procedures and any findings following such
review;
• reviewing Reg’s system to monitor, assess and manage risk and legal and ethical compliance
program; and
• reviewing and discussing with management and the independent auditor prior to the filing of
Reg’s annual report:
i.
Reg’s annual financial statements and related footnotes and other financial
information, including the information in the “Management’s Discussion and
Analysis;
ii.
the selection, application and effects of Reg’s critical accounting policies, practices
and the reasonableness of significant judgements and estimates made by
management;
iii.
alternative and preferred treatment of financial information under generally
accepted accounting principles;
iv.
all material arrangements, off-balance sheet transactions and relationship with any
unconsolidated entities or any other persons which may have a material, current or
future, effect on the financial condition of Reg;
v.
any material written communications between the independent auditor and
management;
vi.
the independent auditor’s audit of the financial statements and its report thereon;
vii.
any significant finding and recommendations of the independent auditor and
management’s responses thereto;
viii.
any significant changes in the independent auditor’s audit plan;
ix.
any serious difficulties or disputes with management encountered during the course
of the audit;
x.
any related significant findings and recommendations of the independent auditor
together with management’s responses thereto; and
xi.
other matters related to the conduct of the audit, which are to be communicated to
the Committee under generally accepted auditing standards.
• preparing a report to be included in Reg’s Information Circular that states the Committee has:
i.
analyzed and discussed the audited financial statements with management;
ii.
discussed with the independent auditor the auditor’s independence;
iii.
considered the audit and non-audit services provided by the independent auditor,
and the fees paid for such services; and
iv.
the Committee shall review in advance all announcements of interim and annual
financial results, as well as any periodic guidance to be publicly released by Reg
and discuss such announcements with management and the independent auditors.
• reviewing and discussing with management and the independent auditor prior to the filing of
Reg’s Quarterly Report:
i.
CFO’s interim financial statements and related footnotes and other financial
information, including the information in the “Management’s Discussion and
Analysis”;
ii.
the selection, application and effects of Reg’s critical accounting policies, practices
and the reasonableness of significant judgments and estimates made by
management;
iii.
alternative and preferred treatment of financial information under generally
accepted accounting principles; and
iv.
all material arrangements, off-balance sheet transactions and relationship with any
unconsolidated entities or any other persons which may have a material current or
future effect on the financial condition of Reg.
• reviewing and either approving or disapproving all related party transactions;
• submitting the minutes of all meetings of the Committee to, or discussing the matters
discussed at each committee meeting with, the Board;
• reviewing and assessing the adequacy of this charter annually and recommend any proposed
changes to the Board for its approval; and
the Chairman of the Committee, or another Committee member designated by the Chairman, is
authorized to act on behalf of the Committee with respect to required Committee responsibilities which
arise between regularly scheduled Committee meetings, with the independent auditors and
management, as well as the pre-approval of non-audit services provided by the independent auditors,
as necessary, as contemplated by the Committee’s policies. Any such pre-filing discussions and
pre-approvals shall be reported to the Committee at a subsequent meeting.
Approved by the Reg Technologies Inc. Board of Directors on January 18, 2010.
“John Robertson”
“Suzanne Robertson”
JOHN ROBERTSON
SUSANNE ROBERTSON
“Jennifer Lorette”
“James Vandeberg”
JENNIFER LORETTE
JAMES VANDEBERG
_____”Robert Grisar”____________
ROBERT GRISAR