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Husky Energy Inc. Audit Committee Charter

The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Husky Energy Inc. (the “Company”) will have the oversight responsibility, authority and specific duties as described below.

Composition
The Committee will be comprised of three or more directors as determined by the Board, each of whom shall satisfy the independence and financial literacy requirements of applicable securities regulatory requirements.  In addition, one of the members of the Committee will be an audit committee financial expert as defined in applicable securities regulatory requirements.  The members of the Committee will be elected annually at the organizational meeting of the full Board on the recommendation of the Corporate Governance Committee to the Co-Chairmen and will be listed in the annual report to shareholders.  One of the members of the Committee will be elected Committee Chair by the Board.

Responsibility
The Committee is a part of the Board.  Its primary function is to assist the Board in fulfilling its oversight responsibilities with respect to:

  1. the quarterly and annual financial statements and quarterly and annual MD&A be provided to shareholders and the appropriate regulatory agencies;

  2. earnings press releases before the Company publicly discloses this information;

  3. the system of internal controls that management has established;

  4. the internal and external audit process;

  5. the appointment of qualified reserves evaluators or auditors; and

  6. the filing of statements and reports with respect to the Company’s oil and gas reserves.


In addition, the Committee provides an avenue for communication between the Board and each of internal audit, the external auditors, financial management, external qualified reserves evaluators or auditors and internal qualified reserves evaluators.  The Committee should have a clear understanding with the external auditors and the external reserve evaluators or auditors that an open and transparent relationship must be maintained with the Committee.

The Committee will make regular reports to the Board concerning its activities.

While the Audit Committee has the responsibilities and powers set forth in this Charter, the role of the Audit committee is oversight.  The members of the Committee are not full time employees of the Company and may or may not be accountants or auditors by profession or experts in the fields of accounting or auditing and, in any event, do not serve in such capacity.  Consequently, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles.  This is the responsibility of management and the external auditors and, as to reserves, the external reserve evaluators or auditors. Management and the external auditors shall also have the responsibility to conduct investigations and to assure compliance with laws and regulations and the Company’s business conduct guidelines.

Authority
Subject to the prior approval of the Board, the Committee is granted the authority to investigate any matter or activity involving financial accounting and financial reporting, the internal controls of the Company and the reporting of the Company’s reserves and oil and gas activities.

The Committee has the authority to engage independent counsel and other advisors as it determines necessary to carry out its duties and to set and pay the compensation for any advisors employed by the Committee.

In recognition of the fact that the independent auditors are ultimately accountable to the Committee, the Committee shall have the authority and responsibility to nominate for shareholder approval, evaluate and, where appropriate, replace the independent auditors and shall approve all audit engagement fees and terms and all non-audit engagements with the independent auditors.  The Committee shall consult with management and the internal audit group but shall not delegate these responsibilities.

Meetings
The Committee is to meet at least four times annually and as many additional times as the Committee deems necessary.  Committee members will strive to be present at all meetings either in person or by telephone.  As necessary or desirable, but in any case at least quarterly, the Committee shall meet with members of management and representatives of the external auditors and internal audit in separate executive sessions to discuss any matters that the Committee or any of these groups believes should be discussed privately.  Likewise, as necessary or desirable, but in any case at least annually, the Committee shall meet the management and representatives of the external reserve evaluators or auditors and internal reserves evaluators in separate executive sessions to discuss matters that the Committee or any of these groups believes should be discussed privately.

Specific Duities
In carrying out its oversight responsibilities, the Committee will:

  1. Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
  2.   
    1. Review with the Company’s management, internal audit and external auditors and recommend to the Board for approval the Company’s annual financial statements and annual MD&A which is to be provided to shareholders and the appropriate regulatory agencies, including any financial statement contained in a prospectus, information circular, registration statement or other similar document.
    2. Review with the Company’s management, internal audit and external auditors and approve the Company’s quarterly financial statements and quarterly MD&A which is to be provided to shareholders and the appropriate regulatory agencies.
  3. Review with the Company’s management and approve earnings press releases before the Company publicly discloses this information.
  4. Recommend to the Board the external auditors to be nominated for the purpose of preparing or issuing an audit report or performing other audit, review or attest services and the compensation to be paid to the external auditors.  The external auditors shall report directly to the Committee. 
  5. Be directly responsible for the oversight of the work of the external auditors, including the resolution of disagreements between management of the Company and the external auditors regarding financial reporting.
  6. Review with the Company’s management, internal audit and external auditors the Company’s accounting and financial reporting controls. Obtain annually in writing from the external auditors their observations, if any, on significant weaknesses in internal controls as noted during the course of their work.
  7. Review with the Company’s management, internal audit and external auditor’s significant accounting and reporting principles, practices and procedures applied by the Company in preparing its financial statements. Discuss with the external auditors their judgements about the quality, not just the acceptability, of the Company’s accounting principles used in financial reporting.
  8. Review the scope of internal audit’s work plan for the year and receive a summary report of major findings by internal auditors and how management is addressing the conditions reported.
  9. Review the scope and general extent of the external auditors’ annual audit.  The Committee’s review should include an explanation from the external auditors of the factors considered in determining the audit scope, including the major risk factors.  The external auditors should confirm to the Committee whether or not any limitations have been placed on the scope or nature of their audit procedures.
  10. Inquire as to the independence of the external auditors and obtain from the external auditors, at least annually, a formal written statement delineating all relationships between the external auditors and the Company as contemplated by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees.
  11. Have a predetermined arrangement with the external auditors that they will advise the Committee, through its Chair and management of the Company, of any matters identified through procedures followed for the review of interim quarterly financial statements of the Company, and that such notification is to be made prior to the related press release. Also receive a written confirmation provided by the external auditors at the end of each of the first three quarters of the year that they have nothing to report to the Committee, if that is the case, or the written enumeration of required reporting issues.
  12. At the completion of the annual audit, review with management, internal audit and the external auditors the following:
    • The annual financial statements and related footnotes and financial information to be included in the Company’s annual report to shareholders.
    • Results of the audit of the financial statements and the related report thereon and, if applicable, a report on changes during the year in accounting principles and their application.
    • Significant changes to the audit plan, if any, and any serious disputes or difficulties with management encountered during the audit. Inquire about the cooperation received by the external auditors during their audit, including access to all requested records, data and information.
    • Inquire of the external auditors whether there have been any material disagreements with management, which, if not satisfactorily resolved, would have caused them to issue a non-standard report on the Company’s financial statements.
  13. Discuss with the external auditors, without management being present,
    1. the quality of the Company’s financial and accounting personnel, and
    2. the completeness and accuracy of the Company’s financial statements.  Also, elicit the comments of management regarding the responsiveness of the external auditors to the Company’s needs.
  14. Meet with management, to discuss any relevant significant recommendations that the external auditors may have, particularly those characterized as ‘material’ or ‘serious’.  Typically, such recommendations will be presented by the external auditors in the form of a Letter of Comments and Recommendations to the Committee. The Committee should review responses of management to the Letter of Comments and Recommendations from the external auditors and receive follow-up reports on action taken concerning the aforementioned recommendations.
  15. Have the sole authority to review in advance, and grant any appropriate pre-approvals, of all non-audit services to be provided by the independent auditors and, in connection therewith, to approve all fees and other terms of engagement.  The Committee shall also review and approve disclosures required to be included in periodic reports filed with Canadian securities regulators and the Securities and Exchange Commission with respect to non-audit services performed by external auditors.
  16. Be satisfied that adequate procedures are in place for the review of the Company’s disclosure of financial information extracted or derived from the Company’s financial statements, and periodically assess the adequacy of those procedures.
  17. Establish procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matter, and (b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
  18. Review and approve the Companys’ hiring policies regarding partners, employees and former partners and employees of the present and former external auditors.
  19. Review the appointment and replacement of the senior internal audit executive.
  20. Review with management, internal audit and the external auditors the methods used to establish and monitor the Company’s policies with respect to unethical or illegal activities by Company employees that may have a material impact on the financial statements.
  21. Generally as part of the review of the annual financial statements, receive a report(s), at least annually, from the Company’s general counsel concerning legal, regulatory and compliance matters that may have a material impact on the financial statements.
  22. Review, with reasonable frequency, the Company’s procedures relating to the disclosure of information with respect to the Company’s oil and gas reserves, including the Company’s procedures for complying with the disclosure requirements and restrictions of applicable regulations.
  23. Review with management the appointment of external qualified reserves evaluators or auditors, and in the case of any proposed change in such appointment, determine the reasons for the change and whether there have been disputes between the appointed external qualified reserves evaluators or auditors, and management.
  24. Review, with reasonable frequency, the Company’s procedures for providing information to the external qualified reserves evaluators or auditors who report on reserves and data for the purposes of compliance with applicable securities laws.
  25. Before the approval and the release of the Company’s reserves data and the report of the qualified reserve evaluators or auditors thereon, meet with management, the external qualified reserves evaluators or auditors and the internal qualified reserves evaluators to determine whether any restrictions affect their ability to report on reserves data without reservation and to review the reserves data and the report of the qualified reserves evaluators.
  26. Recommend to the Board for approval the content and filing of required statements and reports relating to the Company’s disclosure of reserve data as prescribed by applicable regulations.
  27. Review and approve (a) any change or waiver in the Company’s Code of Business Conduct for the chief executive officer and senior financial officers and (b) any public disclosure made regarding such change or waiver.

February 2005

Duties and Responsibilites of the Chair of the Audit Committee

  1. The Chair of the Audit Committee shall manage the Audit Committee with the following specific duties and responsibilities:
    1. be responsible for the management, the development and effective performance of the Audit Committee and provide leadership to the Board of Directors for all aspects of the Audit Committee’s work;
    2. act as the chair, unless absent, at all meetings of the Audit Committee;
    3. act in an advisory capacity to the Co-Chairs, and the President and Chief Executive Officer in all matters relating to the Audit Committee;
    4. act as the spokesperson for the Audit Committee;
    5. plan and organize all of the activities of the Audit Committee;
    6. set the agenda for each meeting of the Audit Committee;
    7. assist the Audit Committee in the discharge of its mandate and responsibilities;
    8. ensure the effectiveness of the Audit Committee by holding regular in-camera sessions with members and conducting annual surveys of its members; and
    9. ensure the timely distribution of adequate information to the Board of Directors.
  2. The Chair shall be independent of management.
  3. Such other duties and responsibilities as set by the Board of Directors.

Downloads

Board Terms of Reference Arrow

Corporate Communications & Disclosure Policy Arrow

Audit Committee Charter Arrow

Compensation Committee Charter Arrow

Corporate Governance Committee Charter Arrow

Health Safety & Environment Committee Charter Arrow