EXHIBIT 99.2
ENHANCE BIOTECH, INC.
AUDIT COMMITTEE CHARTER
ROLE
The Audit Committee of the Board of Directors assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing, and reporting practices of the Company, and such other
duties as directed by the Board. The Committee's purpose is to oversee the
accounting and financial reporting processes of the Company, the audits of the
Company's financial statements, the qualifications of the public accounting firm
engaged as the Company's independent auditor to prepare or issue an audit report
on the financial statements of the Company, and the performance of the Company's
internal and independent auditors. The Committee's role includes a particular
focus on the qualitative aspects of financial reporting to shareholders, the
Company's processes to manage business and financial risk, and compliance with
significant applicable legal, ethical, and regulatory requirements. The
Committee is directly responsible for the appointment, compensation, retention
and oversight of the independent auditor.
MEMBERSHIP
The membership of the Committee shall consist of at least three directors, all
of whom shall meet the independence requirements established by the Board and
applicable laws, regulations and listing requirements provided, that to the
extent that the Board so determines and applicable laws, regulations and listing
requirements permit (as, for instance, with regard to companies which are "Small
Business Issuers" within the meaning of the applicable rules and regulations
promulgated by the Securities and Exchange Commission (the "SEC") , the
membership of the Committee may consist of at least two directors or, if the
membership of the Committee consists of at least three directors, one need not
meet the aforesaid independence requirements. Each member shall in the judgment
of the Board have the ability to read and understand fundamental financial
statements. At least one member of the Committee shall in the judgment of the
Board be an "audit committee financial expert" as defined by the rules and
regulations promulgated by the SEC (the "SEC Rules"), and at least one member
(who may also serve as the audit committee financial expert) shall in the
judgment of the Board meet the applicable financial sophistication standard as
defined by the requirements of the market or exchange on which the Company's
securities may from time to time be listed or qualified for trading. The Board
appoints the members of the Committee and the chairperson. The Board may remove
any member from the Committee at any time with or without cause.
OPERATIONS
The Committee shall meet at least six times a year. Additional meetings may
occur as the Committee or its chair deems advisable. The Committee will cause to
be kept adequate minutes of all its proceedings, and will report on its actions
and activities at the next quarterly meeting of the Board. Committee members
will be furnished with copies of the minutes of each meeting and any action
taken by unanimous consent. The Committee is governed by the same rules
regarding meetings (including meetings by conference telephone or similar
communications equipment), action without meetings, notice, waiver of notice,
and quorum and voting requirements as are applicable to the Board. The Committee
is authorized and empowered to adopt its own rules of procedure not inconsistent
with (a) any provision of this Charter, (b) any provision of the Bylaws of the
Company, or (c) the laws of the state of Delaware.
COMMUNICATIONS
The independent auditor reports directly to the Committee. The Committee is
expected to maintain free and open communication with the independent auditor,
the internal auditors, and management. This communication will include periodic
private executive sessions with each of these parties.
EDUCATION
The Company is responsible for providing new members with appropriate
orientation briefings and educational opportunities, and the full Committee with
educational resources related to accounting principles and procedures, current
accounting topics pertinent to the Company and other material as may be
requested by the Committee. The Company will assist the Committee in maintaining
appropriate financial literacy.
AUTHORITY
The Committee will have the resources and authority necessary to discharge its
duties and responsibilities. The Committee has sole authority to retain and
terminate outside financial experts or similar consultants, as it deems
appropriate, including sole authority to approve the firms' fees and other
retention terms. The Committee will be provided with appropriate funding by the
Company, as the Committee determines, for the payment of compensation to the
Company's independent auditor and other advisors as it deems appropriate, and
ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties. In discharging its oversight role, the
Committee is empowered to investigate any matter brought to its attention. Any
communications between the Committee and legal counsel in the course of
obtaining legal advice will be considered privileged communications of the
Company, and the Committee will take all necessary steps to preserve the
privileged nature of those communications. The Committee may form and delegate
authority to subcommittees and may delegate authority to one or more designated
members of the Committee.
RESPONSIBILITIES
The Committee's specific responsibilities in carrying out its oversight role are
delineated in the Audit Committee Responsibilities Calendar. The
Responsibilities Calendar will be updated annually to reflect changes in
regulatory requirements, authoritative guidance, and evolving oversight
practices. As the compendium of Committee responsibilities, the most recently
updated Responsibilities Calendar will be considered to be an addendum to this
Charter.
he Committee relies on the expertise and knowledge of management, the internal
auditors and the independent auditor in arrying out its oversight
responsibilities. Management of the Company is responsible for determining the
Company's Tinancial statements are complete, accurate and in accordance with
generally accepted accounting principles. The independent cuditor is responsible
for auditing the Company's financial statements. It is not the duty of the
Committee to plan or fonduct audits, to determine that the financial statements
are complete and accurate and in accordance with generally accepted accounting
principles, to conduct investigations, or to assure compliance with laws and
regulations or the company's standards of business conduct, codes of ethics,
internal policies, procedures and controls. a C
ENHANCE BIOTECH, INC. AUDIT COMMITTEE RESPONSIBILITIES CALENDAR
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RESPONSIBILITY WHEN PERFORMED
Audit Committee Meetings
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As
Q1 Q2 Q3 Q4 Needed
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1. The agenda for Committee meetings will be prepared in consultation X X X X X
between the Committee chair (with input from the Committee members),
Finance management, and the independent auditor.
2. Review and update the Audit Committee Charter and Responsibilities X
Calendar annually.
3. Complete an annual evaluation of the Committee's performance. X
4. Provide a report in the annual proxy that includes the Committee's X
review and discussion of matters with management and the independent
auditor.
5. Include a copy of the Committee charter as an appendix to the proxy X
statement at least once every three years.
6. Appoint or replace the independent auditor and approve the terms on X
which the independent auditor is engaged for the ensuing fiscal year.
7. At least annually, evaluate the independent auditor's qualifications, X X
performance, and independence, including that of the lead partner. The
evaluation will include obtaining a written report from the independent
auditor describing: the firm's internal quality control procedures; any
material issues raised by the most recent internal quality control
review, or peer review, of the firm or by any inquiry or investigation
by governmental or professional authorities within the past five years,
concerning an independent audit or audits carried out by the firm, and
any steps taken to deal with those issues; and all relationships between
the independent auditor and the Company.
8. Resolve any disagreements between management and the independent auditor X
about financial reporting.
9. Establish and oversee a policy designating permissible services that X X X X X
the independent auditor may perform for the Company, providing for
pre-approval of those services by the Committee subject to the de
minimis exceptions permitted under applicable rules, and quarterly
review of any services approved by the designated member under the
policy and the firm's non-audit services and related fees.
10. Review the responsibilities, functions and performance of the Company's X
internal audit department.
11. Ensure receipt from the independent auditor of a formal written X
statement delineating all relationships between the auditor and the
company, consistent with Independence Standards Board Standard No. 1,
and actively engage in a dialogue with the auditor about any disclosed
relationships or services that may impact the objectivity and
independence of the auditor, and take appropriate action to oversee the
independence of the independent auditor.
12. Advise the Board about the Committee's determination whether the X
Committee consists of three or more members all of whom are financially
literate, including at least one member who has financial sophistication
and is a financial expert.
13. Inquire of Finance management and the independent auditor about X X
significant risks or exposures, review the Company's policies for risk
assessment and risk management, and assess the steps management has
taken to control such risk to the Company.
14. Review with the independent auditor and Finance management the audit X X X
scope and plan, and coordination of audit efforts to ensure completeness
of coverage, reduction of redundant efforts, the effective use of audit
resources, and the use of independent public accountants other than the
appointed auditors of the Company.
15. Consider and review with Finance management and the independent auditor:
a. The Company's annual assessment of the effectiveness of its X
internal controls and the independent auditor's attestation and
report about the Company's assessment.
b. The adequacy of the Company's internal controls including X
computerized information system controls and security.
c. Any related significant findings and recommendations of the X
independent auditor and internal audit together with management's
responses.
16. Review with Finance management any significant changes to GAAP and/or X X X X
MAP policies or standards.
17. Review with Finance management and the independent auditor at the
completion of the annual audit:
a. The Company's annual financial statements and related footnotes. X X
b. The independent auditor's audit of the financial statements and X X
its report thereon.
c. Any significant changes required in the independent auditor's X X
audit plan.
d. Any serious difficulties or disputes with management encountered X X
during the course of the audit and management's response.
e. Other matters related to the conduct of the audit which are to be X X
communicated to the Committee under generally accepted auditing
standards.
18. Review with Finance management and the independent auditor at least X X
annually the Company's critical accounting policies.
19. Review policies and procedures with respect to transactions between the X X
Company and officers and directors, or affiliates of officers or
directors, or transactions that are not a normal part of the Company's
business, and review and approve those related-party transactions that
would be disclosed pursuant to SEC Regulation S-K, Item 404.
20. Consider and review with Finance management:
a. Significant findings during the year and management's responses. X X X X X
b. Any difficulties encountered in the course of their audits, X X X X X
including any restrictions on the scope of their work or access to
required information.
c. Any changes required in planned scope of their audit plan. X X X X X
21. Participate in a telephonic meeting among Finance management and the X X X X
independent auditor before each earnings release to discuss the earnings
release, financial information and earnings guidance.
22. Review and discuss with Finance management and the independent auditor X X X X
the Company's quarterly financial statements.
23. Review the periodic reports of the Company with Finance management and X X X X
the independent auditor prior to filing of the reports with the SEC,
including the disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
24. In connection with each periodic report of the Company, review:
a. Management's disclosure to the Committee and the independent X X X X
auditor under Section 302 of the Sarbanes-Oxley Act, including
identified changes in internal control over financial reporting.
b. The contents of the Chief Executive Officer and the Chief X X X X
Financial Officer certificates to be filed under Sections 302 and
906 of the Sarbanes-Oxley Act.
25. Monitor the appropriate standards adopted as a code of conduct for the X X
Company.
26. Review with the applicable officer of the Company legal and regulatory X X X X
matters that may have a material impact on the financial statements,
related Company compliance policies, and programs and reports received
from regulators.
27. Develop, review and oversee procedures for (i) receipt, retention and X X
treatment of complaints received by the Company regarding accounting,
internal accounting controls and auditing matters, and (ii) the
confidential, anonymous submission of employee concerns regarding
accounting or auditing matters.
28. Meet with the independent auditor in executive session to discuss any X X X X
matters the Committee or the independent auditor believes should be
discussed privately with the Audit Committee.
29. Meet with Finance management in executive sessions to discuss any X
matters the Committee or Finance management believes should be discussed
privately with the Audit Committee.
30. Set clear hiring policies for the Company's hiring of employees or former X
employees of the independent auditor who were engaged in the Company's
account, and ensure the policies comply with any regulations applicable
to the Company.
Last Revised: December 16, 2004 (9::00 am New York City time)