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Audit Committee Guidelines

Purpose and Objectives

1.1 Purpose:

  • The Audit Committee ("Committee") is established to assist the Board of Directors in fulfilling its oversight responsibilities relating to financial reporting, internal controls, risk management, and compliance.

1.2 Objectives:

  • Review the integrity of the company's financial statements and related disclosures.

  • Assess the effectiveness of the company's internal controls and risk management systems.

  • Oversee the independent audit process and the performance of the external auditors.

  • Promote compliance with applicable laws, regulations, and ethical standards.

  • Maintain open lines of communication between the Board, management, internal auditors, and external auditors.

Committee Composition and Meetings

2.1 Composition:

  • The Committee shall consist of at least two members, all of whom shall be independent directors with relevant financial expertise.

  • The Committee Chair shall be appointed by the Board and shall have a strong understanding of financial reporting and auditing.

2.2 Meetings:

  • The Committee shall meet at least twice annually, or more frequently as necessary.

  • Additional meetings may be called by the Committee Chair or upon request of any Committee member, management, internal auditors, or external auditors.

  • Adequate notice and supporting materials shall be provided for all meetings.

Responsibilities and Duties

3.1 Financial Reporting and Disclosures:

  • Review and discuss the company's financial statements and related disclosures with management and external auditors.

  • Assess the appropriateness and consistency of accounting policies and practices.

  • Monitor significant financial reporting issues and judgments, including any changes in accounting standards.

3.2 Internal Controls and Risk Management:

  • Evaluate the adequacy and effectiveness of the company's internal controls and risk management systems.

  • Review the findings and recommendations of internal auditors and ensure appropriate follow-up actions are taken.

  • Monitor the identification, assessment, and mitigation of significant risks.

3.3 External Audit Process:

  • Select, evaluate, and recommend the appointment or reappointment of the external auditors to the Board.

  • Approve the scope of the external audit, including any non-audit services provided by the auditors.

  • Review the performance and independence of the external auditors.

  • Discuss the audit plan, significant audit findings, and any disagreements with management or auditors.

3.4 Compliance and Legal Matters:

  • Oversee the company's compliance with legal and regulatory requirements.

  • Review the effectiveness of the company's compliance programs and ethics policies.

  • Monitor any legal or regulatory matters that may have a significant impact on the financial statements or operations.

3.5 Reporting and Communication:

  • Provide regular reports to the Board on the Committee's activities, significant findings, and recommendations.

  • Maintain open lines of communication with management, internal auditors, and external auditors.

  • Conduct private sessions with the internal auditors and external auditors, without the presence of management, as necessary.

Resources and Authority

4.1 Resources:

  • The Committee shall have the authority to engage independent advisors or consultants as necessary to fulfill its responsibilities.

  • The company shall provide adequate resources, budget, and support staff to assist the Committee in carrying out its duties.

4.2 Authority:

  • The Committee shall have the authority to access all company records, systems, and personnel necessary to perform its duties.

  • The Committee's recommendations and findings shall be presented to the Board for consideration and appropriate action.

These guidelines outline the roles, responsibilities, and duties of the Audit Committee of Killay Corp. It ensures transparency, accountability, and ethical conduct throughout the organization, promoting long-term value creation. It is subject to periodic review and updates to align with evolving governance best practices and legal requirements.

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