Audit Committee Terms of Reference - Co-op Connection

FEDERATED CO-OPERATIVES LIMITED
AUDIT COMMITTEE
TERMS OF REFERENCE
1. Purpose
The objectives of the Audit Committee (the “Committee”) shall be to:
1.1 Assist the Board in fulfilling its oversight responsibilities for:
2. Structure
(a) the integrity of the Federated Co-operatives Limited (FCL) (the “Co-operative”)
consolidated financial statements;
(b) FCL’s compliance with legal and regulatory requirements;
(c) the qualifications and independence of FCL’s external auditor; and
(d) the performance of FCL’s internal audit function and external auditor.
2.1 The Committee shall be comprised of a minimum of four members of the Board. The
President/Chair of the Board will sit as an ex-officio member of the Committee.
2.2 The Committee members shall be appointed by the Board. Each member shall continue
as a member until a successor is appointed, unless the member resigns, or is removed
by resolution of the Board or otherwise ceases to be a member of the Board.
2.3 Where a vacancy occurs at any time in the membership of the Committee, it may be
filled by the President until the next duly called Board meeting, and shall be filled by
the President if the membership of the Committee is less than four members as a result
of the vacancy.
2.4 The Board, or in the event of its failure to do so, the Committee, shall appoint a Chair
from among the Committee members. If the Chair of the Committee is not present at
any meeting of the Committee, the Chair of the meeting shall be chosen by the
Committee from among the members present.
2.5 The Chair presiding at any meeting of the Committee shall have a vote in all matters
considered by the Committee. In the event of a tie, the motion is defeated.
2.6 The Internal Auditor (or other staff member as designated by the Chief Executive
Officer) will serve as Secretary to the Committee. If the Secretary is not present at any
meeting of the Committee, the Committee may appoint an acting Secretary to perform
the functions of the Secretary at that meeting.
2.7 The Committee shall assist with deliberations required for the fulfilment of the Board’s
mandate and those specific responsibilities and duties assigned to the Committee;
however, unless specifically stated otherwise, the Committee shall act in advisory
capacity only, recommending decisions to the Board for approval.

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3. Responsibilities
The Committee shall have the following duties and responsibilities respecting the audit
function:
3.1 Oversee the hiring and performance of the external auditor.
3.2 Recommends annually to the Board and the annual general meeting on the appointment
of the external auditor.
3.3 Consults with FCL’s external auditor, reviews and endorses the extent and scope of the
auditing services provided, reviews the independence of the external auditor and
recommends to the Board approval of the auditor’s fee for such services.
3.4 Receives from the external auditor any queries, and investigates these and related
matters as deemed necessary by the Committee.
3.5 Oversees the Internal Audit function.
3.6 Review with management, the external auditor and internal audit the internal audit
charter, plans, activities, staffing and organizational structure of the internal audit
function.
3.7 Ensure there are no unjustified restrictions or limitations on the functioning of the
internal audit department.
3.8 Reviews the annual consolidated financial statements and recommends their approval
to the Board. This review includes consideration of:
3.9 Complex accounting estimates and judgements made by management.
3.10 New accounting principles or regulations.
3.11 The external auditor’s views on management’s selection of accounting principles,
accounting adjustments arising from their audits, disagreements or difficulties
encountered in working with management.
3.12 Consider the effectiveness of FCL’s internal control system. This includes:
3.13 Ensuring that management has developed and followed an adequate system of internal
control including controls over the safeguarding of assets and compliance with laws
and regulations.
3.14 Discussing with management, external and internal auditors the risk of fraud and how
the risk is mitigated.
3.15 Reviews with management FCL’s major policies with respect to risk assessment and
risk management.
3.16 Review its Terms of Reference on an annual basis and recommend any changes to the
Board.

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4. Meetings
4.1 The Committee shall meet a minimum of four times a year, preferably quarterly.
4.2 An extraordinary meeting of the Committee may be called by the Chair of the
Committee, the President/Chair of the Board or the Chief Executive Officer of the Cooperative.
4.3 A quorum for meetings shall be three Committee Directors present in person or by
telephone or other telecommunications device that permits all persons participating in
the meeting to speak and hear one another.
4.4 The agenda and associated material shall be sent to each member of the Committee
prior, preferably seven days, to the time for such meeting.
4.5 The Committee shall have the right to determine who shall and shall not be present at
any part of the meetings of the Committee, and may hold in-camera sessions.
5. Support to the Committee
5.1 The Committee shall identify, through the Senior Leadership Team staff support
appointed to the Committee, or designate, the kind and frequency of information
required by the Committee.
5.2 The Committee shall have access to any and all books and records of the Corporation
required for the execution of the Committee’s risk management obligations and, as
necessary, shall discuss with appropriate corporate officers and employees, coordinated
through the Senior Leadership Team staff support, such records and other
relevant matters.
5.3 The Committee shall have the authority to request of the Board the retention of external
advisors, experts or consultants, in order to properly discharge its duties and
responsibilities.
6. Confidentiality
6.1 All deliberations of the Committee, and all records, material and information pertaining
to the Co-operative obtained by a member of the Committee shall be considered
confidential. Committee members shall maintain the confidentiality of such
deliberations, and shall safeguard such records, material and information from improper
access.