EXHIBIT 15.1
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit Committee (the "Committee") of Sand Technology Inc. (the
"Corporation") is a committee of the Board of Directors which has responsibility
under the Corporation's governing legislation to review the financial
statements, accounting policies and reporting procedures of the Corporation.
The primary function of the Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing: the financial reports
and other financial information provided by the Corporation to any governmental
body or the public; the Corporation's systems of internal controls regarding
finance, accounting, and legal compliance that management and the Board have
established; and the Corporation's auditing, accounting and financial reporting
processes generally. Consistent with this function, the Committee should
encourage continuous improvement of, and should foster adherence to, the
Corporation's policies, procedures and practices at all levels.
The Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and the system of internal
controls.
o Monitor the independence and performance of the Corporation's external
auditors and internal auditing.
o Provide an open avenue of communication among the independent
auditors, financial and senior management and the Board of Directors.
The Committee will primarily fulfil these responsibilities by carrying out the
activities enumerated in Section IV of this Charter.
II. COMPOSITION
o The Committee shall be comprised of three or more directors, each of whom
shall be independent non-management directors, as determined by the Board
of Directors. The composition of the Committee shall adhere to all
applicable laws and all requirements of the stock exchanges on which shares
of the Corporation are listed. In particular, the composition of the
Committee shall be in accordance with (i) Section 10A(m)(3) of the U.S.
Exchange Act of 1934, as amended, and (ii) the Nasdaq listing standards
regarding the composition of the Committee (including Nasdaq's concept of
"independence") and the required qualifications and experience of the
members of the Committee, subject to any exemptions or other relief that
may be granted from time to time.
o All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee
shall be a "financial expert" in accordance with applicable laws and all
requirements of the stock exchanges on which shares of the Corporation are
listed.
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o Members of the Committee shall be elected by the Board at such times as
shall be determined by the Board and shall serve until their successors
shall be duly elected.
o Any member of the Committee may be removed or replaced at any time by the
Board of Directors and shall cease to be a member of the Committee as soon
as such member ceases to be a director.
o The members of the Committee shall be entitled to receive such remuneration
for acting as members of the Committee as the Board of Directors may from
time to time determine.
III. MEETINGS
o The Committee may appoint one of its members to act as Chairman of the
Committee. The Chairman will appoint a secretary who will keep minutes of
all meetings (the "Secretary"). The Secretary does not have to be a member
of the Committee or a director and can be changed by simple notice from the
Chairman.
o No business may be transacted by the Committee except at a meeting at which
a quorum of the Committee is present or by a resolution in writing signed
by all members of the Committee. A majority of the members of the Committee
shall constitute a quorum, provided that if the number of members of the
Committee is an even number, one half of the number of members plus one
shall constitute a quorum.
o The Committee will meet as many times as is necessary to carry out its
responsibilities but in no event will the Committee meet less than four
times a year. The Committee shall meet periodically, but at least once
annually with the independent auditors, with management not present. In
addition, the Committee shall meet with the independent auditors and
management at least quarterly to review the Corporation's financial
statements and the related press releases.
o The time at which, and the place where, the meetings of the Committee shall
be held, the calling of meetings and the procedure in all respects of such
meetings shall be determined by the Committee, unless otherwise provided
for in the by-laws of the Corporation or otherwise determined by resolution
of the Board of Directors.
o The Committee may invite to, or require the attendance at, any meeting of
the Committee such officers and employees of the Corporation, legal counsel
or other persons as it deems necessary in order to perform its duties and
responsibilities. The internal and external auditors should also be
requested or required to attend meetings of the Committee and make
presentations to the Committee as appropriate.
o Subject to the provisions of the Corporation's governing legislation and
applicable laws, regulations and stock exchange rules, if required for
expediency or to prevent loss to the Corporation, the Chairman of the
Committee may exercise the powers of the Committee in between meetings of
the Committee. In such event, the Chairman shall immediately report to the
members of the Committee and the actions or decisions taken in the name of
the Committee shall be recorded in the proceedings of the Committee.
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IV. RESPONSIBILITIES AND DUTIES
To fulfil its responsibilities and duties the Committee shall:
DOCUMENTS/ REPORTS REVIEW
o Review and recommend any revisions or updates to this Charter and put them
forward for approval by the Board. This should be done periodically, but at
least annually, as conditions dictate.
o Review the interim quarterly financial statements and the annual audited
financial statements (including the Corporation's disclosures under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"), and the related press releases of the Corporation with the
Corporation's management and independent auditors and report thereon to the
Board of Directors. As part of this review, the Committee shall review with
management the risk factors and any cautionary language set out in the
related filings and recommend any required or desired amendments thereto.
o Establish policies, procedures and guidelines, as appropriate, with respect
to providing financial information and earnings guidance to analysts.
Generally, the Committee will discuss with management any financial
information and earnings guidance provided to analysts. These discussions,
however, need not occur in advance of each provision of guidance.
o Satisfy itself, on behalf of the Board of Directors, that the Corporation's
quarterly and annual audited financial statements are fairly presented both
in accordance with generally accepted accounting principles and otherwise,
and recommend to the Board of Directors whether the quarterly and annual
financial statements should be approved.
o Satisfy itself, on behalf of the Board of Directors, that the information
contained in the Corporation's quarterly financial statements, Annual
Report to Shareholders and other financial publications, such as
Management's Discussion and Analysis of Financial Condition and Results of
Operations, the Annual Report on Form 20-F and similar documentation
required pursuant to applicable laws, rules and regulations does not
contain any untrue statement of any material fact or omit to state a
material fact that is required or necessary to make a statement not
misleading, in light of the circumstances under which it was made.
o Review any financial reports or other financial information of the
Corporation submitted to any governmental body or the public, including any
certification, report, opinion, or review rendered by the independent
auditors.
o Have the right, for the purpose of performing their duties: (i) to inspect
all the books and records of the Corporation and its subsidiaries; (ii) to
discuss such accounts and records and any matters relating to the financial
position of the Corporation with the officers and auditors of the
Corporation and its subsidiaries; (iii) to commission reports or
supplemental information relating thereto; (iv) to require the auditors to
attend any or every meeting of the Committee; and (v) to engage such
independent counsel and other advisors as are necessary in the Committee's
determination.
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o Permit the Board of Directors to refer to the Committee such matters and
questions relating to the financial position of the Corporation and its
affiliates or the reporting related thereto as the Board of Directors may
from time to time see fit.
INDEPENDENT AUDITORS
o Be directly responsible for the appointment, retention, termination,
compensation, evaluation and oversight of the work of the Corporation's
independent auditors, with such auditors being ultimately accountable to
the Board and the Committee.
o Act as the Corporation's independent auditors' channel of direct
communication to the Corporation. In this regard, the Committee shall,
among other things, receive and review all reports and recommendations from
the Corporation's independent auditors, including the independent auditor's
timely reports of:
1. all critical accounting policies and practices to be used;
2. all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with the
Corporation's management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
Corporation's independent auditor; and
3. other material written communications between the independent auditor
and the Corporation's management, such as any management letter or
schedule of unadjusted differences.
o Satisfy itself, on behalf of the Board of Directors, that the Corporation's
auditors are "independent" of management, within the meaning given to such
term in the rules and pronouncements of the applicable regulatory
authorities and professional governing bodies. In furtherance of the
foregoing, the Committee shall request that the independent auditors, at
least annually, provide a formal written statement delineating all
relationships between the independent auditors and the Corporation
consistent with Independence Standards Board (ISB) Standard No. 1., and
request information from the independent auditors and management to
determine the presence or absence of a conflict of interest. The Committee
shall actively engage the auditors in a dialogue with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the auditors. The Committee shall take, or recommend that
the full Board take, appropriate action to oversee the independence of the
auditors.
o Ensure that rotation of the independent auditors' audit partners satisfies
regulatory requirements, and set policies about hiring current or former
employees of the independent auditors.
o Be responsible for preapproving, at least annually, all audit and non-audit
services provided by the Corporation's independent auditors; provided,
however, that the Committee shall have the authority to delegate such
responsibility to one or more of its members to the extent permitted under
applicable law and stock exchange rules.
o Ensure that the Corporation's independent auditors do not perform any
non-audit services that are prohibited by law or regulation.
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o Annually review and evaluate the performance of the Corporation's auditors,
including a review and evaluation of the lead partner, taking into account
the opinions of management, and make recommendations to the Board of
Directors as to whether or not to continue to engage those auditors.
o Determine and review the remuneration of the Corporation's auditors and any
independent advisors (including independent counsel) to the Committee.
o Satisfy itself, on behalf of the Board of Directors, that the audit
function has been effectively carried out and that any matter which the
independent auditors wish to bring to the attention of the Board of
Directors (including any audit problems or difficulties encountered in the
course of the audit work, and management's responses) has been addressed
and that there are no "unresolved differences" with the auditors.
FINANCIAL REPORTING PROCESSES AND RISK MANAGEMENT
o Review the audit plan of the external auditors for the current year and
review advice from the external auditors relating to management and
internal controls and the Corporation's responses to the suggestions made
therein.
o Monitor the Corporation's internal accounting controls, informational
gathering systems and management reporting on internal control. In this
regard, the Committee will receive regular reports from management on the
Corporation's compliance with Section 404 of the Sarbanes Oxley Act and any
similar requirements under Canadian securities laws.
o Review with management and the auditors the relevance and appropriateness
of the Corporation's accounting policies and review and approve all
significant changes to such policies.
o Satisfy itself, on behalf of the Board of Directors, that the Corporation
has implemented appropriate systems of internal control over financial
reporting and the safeguarding of the Corporation's assets and other "risk
management" functions (including the identification of significant risks
and the establishment of appropriate procedures to manage those risks and
the monitoring of corporate performance in light of applicable risks)
affecting the Corporation's assets, management, financial and business
operations and the health and safety of its employees and that these are
operating effectively.
o Review and approve the Corporation's investment and treasury policies and
monitor compliance with such policies.
o Establish procedures for the receipt and treatment of (i) complaints
received by the Corporation regarding accounting, controls, or auditing
matters and (ii) confidential, anonymous submissions by the Corporation's
employees of concerns regarding questionable accounting or auditing.
LEGAL AND REGULATORY COMPLIANCE
o Satisfy itself, on behalf of the Board of Directors, that all material
statutory deductions have been withheld by the Corporation and remitted to
the appropriate authorities.
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o Review with principal external counsel any legal matter that could have a
significant impact on the Corporation's financial statements.
o Satisfy itself, on behalf of the Board of Directors, that all regulatory
compliance issues have been identified and addressed and identifying those
that require further work.
BUDGETS
o Assist the Board of Directors in the review and approval of operational,
capital and other budgets proposed by management.
GENERAL
o Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law and stock exchange rules, as the
Committee or the Board of Directors deems necessary or appropriate.
ADOPTED ON JUNE 14, 2005