IV.       Accountability and Audit

A.  The Board is primarily accountable to the shareholders and Management is primarily accountable to the Board.  The Board should provide the shareholders with a balanced and understandable assessment of the corporation’s performance, position and prospects on a quarterly basis.  The Management should provide all members of the Board with a balanced and understandable account of the corporation’s performance, position and prospects on a monthly basis. This responsibility should extend to interim and other price sensitive public reports and reports to regulators (if required). It should be primarily responsible in making financial reporting and internal control in accordance with the following guidelines:

1.   Present a balanced and understandable assessment of the company’s position and prospects. The Board’s responsibility to present a balanced and understandable assessment should extend to interim and other price-sensitive public reports and reports to regulators as well as to information required to be presented by statutory requirements;

2.   Explain their responsibility for preparing the accounts, and there should be a statement by the auditors about their reporting responsibilities;

3.   Report that the business is a going concern, with supporting assumptions or qualifications, if necessary;

4.   Maintain a sound system of internal control to safeguard stakeholders’ investment and the company’s assets;

5.   Based on the approved audit plans, scope and frequency of audits, ensure that internal audit examinations cover, at least, the evaluation of adequacy and effectiveness of controls encompassing the organization’s governance, operations, information systems, to include reliability and integrity of financial and operational information, effectiveness and efficiency of operations, safeguarding of assets, and compliance with laws, rules,  regulations, and contracts. 

6.   Require the chief audit executive to render to the Audit Committee and senior management an annual report on the internal audit department’s activity, purpose, authority, responsibility and performance relative to the audit plans and strategies approved by the Audit Committee of the Board.  Such annual report should include significant risk exposures and control issues, corporate governance issues, and other matters needed or requested by the Board and senior management. The chief audit executive’s annual report shall likewise be made available to the stockholders of the company.  Internal auditors shall report that their activities are “conducted in accordance with the Standards for the Professional Practice of Internal Auditing”. Otherwise, the chief audit executive shall disclose to the Board and senior management that it has not yet achieved full compliance to the standards for the professional practice of internal auditing.

B.   Selection/Appointment, Resignation, Dismissal or Cessation of Service of an External Auditor

The Board, through the Audit Committee, shall recommend a duly accredited external auditor who shall undertake an independent audit and shall provide an objective assurance on the way in which financial statements shall have been prepared and presented.

The reason/s for the resignation, dismissal or cessation from service and the date thereof of an external auditor shall be reported in the company’s annual and current reports.  Said report shall include a discussion of any disagreement with said former external auditor on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of the former auditor, would have cause making reference to the subject matter of the disagreement in connection with its report.

If an external auditor believes that the statements made in an annual report, information statement or proxy statement filed during his engagement are incorrect or incomplete, he shall also present his views in said reports.

C.   Independence and Objectivity

The Board, through the Audit Committee, shall adopt measures to require its independent directors, members of the audit committee, external auditor, and the internal audit officers and staff members to accomplish and sign an annual confirmation or declaration of independence / objectivity.

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