Mandate of the Audit Committee

Purpose

The Audit Committee ("Committee") is appointed by the Board of Directors (the "Board") of Carmanah Technologies Corporation (the "Company") to oversee the accounting and financial reporting process of the Company and the audits of the financial statements of the Company.

Specifically, the Committee undertakes the duties and responsibilities listed below as well as other duties as the Board may from time to time prescribe.

Membership and Organization

The Committee members are appointed by, and serve at the discretion of, the Board. The Committee consists of at least three members of the Board.

The members of the Committee must meet the following criteria:

• be an independent director;
• be able to read and understand fundamental financial statements;
• at least one member must have past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background, including a current or past position as a principal financial officer or other senior officer with financial oversight responsibilities.

The Committee meets at least four times annually. The Committee may meet separately with the Chief Executive Officer and /or with the Chief Financial Officer of the Company, at such times as it deems appropriate to review the financial affairs of the Company. The Committee also meets separately with the independent auditors of the Company, at such times as it deems appropriate, but not less than quarterly.

The Committee maintains written minutes of its meetings, and the minutes are filed with the minutes of the meetings of the Board of Directors.

Duties and Responsibilities

The Committee's primary duties and responsibilities are to:

• recommend to the Board the external auditor to be nominated for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Company;
  
• recommend to the Board the compensation of the external auditor;
  
• oversee the work of the external auditor engaged for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Company, including the resolution of disagreements between management and the external auditor regarding financial reporting;
  
• pre-approve all non-audit services to be provided to the Company or its subsidiaries by the Company's external auditor;
  
• review the Company's financial statements, MD&A and annual and interim earnings press releases before the Company publicly discloses this information;
  
• be satisfied that adequate procedures are in place for the review of all other public disclosure of financial information extracted or derived from the Company's financial statements, and to periodically assess the adequacy of those procedures;
  
• establish procedures for:
  
  • the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and
    
  • the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and
    
• review and approve the Company's hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Company.
  

Pre-Approval of Non-Audit Services

The Committee may delegate to one or more of its members the authority to pre-approve non-audit services to be provided to the Company by the Company's external auditor. The pre-approval of non-audit services must be presented to the Committee at its first scheduled meeting following such pre-approval.

The Committee may satisfy its duty to pre-approve non-audit services by:

• adopting specific policies and procedures for the engagement of the non-audit services;
• the Committee is informed of each non-audit service;
• the procedures do not include delegation of the Committee's responsibilities to management.

External Advisors

The Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it has direct access to the external auditors as well as anyone in the Company. The Committee has the ability to retain, at the Company's expense, special legal, accounting or other consultants or experts it deems necessary in the performance of its duties.

External Auditors

The external auditors are ultimately accountable to the Committee and the Board, who are the representatives of the shareholders. The external auditors report directly to the Committee. The Committee:

• reviews the independence and performance of the external auditors and annually recommend to the Board the nomination of the external auditors or approve any discharge of external auditors when circumstances warrant;
  
• approves the fees and other significant compensation to be paid to the external auditors;
  
• on an annual basis, reviews and discusses with the external auditors all significant relationships they have with the Company that could impair the external auditors' independence;
  
• reviews the external auditors' audit plan to see that it is sufficiently detailed and covers any significant areas of concern that the Committee may have;
  
• before or after the financial statements are issued, discusses certain matters required to be communicated to audit committees in accordance with the standards established by the Canadian Institute of Chartered Accountants;
  
• considers the external auditors' judgments about the quality and appropriateness of the Company's accounting principles as applied in the Company's financial reporting;
  
• resolves any disagreements between management and the external auditors regarding financial reporting;
  
• approves in advance all audit services and any non-prohibited non-audit services to be undertaken by the external auditors for the Company; and
  
• receives from the external auditors timely reports of:
  
  • all critical accounting policies and practises to be used;
    
  • all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the external auditors; and
    
  • other material written communications between the external auditors and management
    

Legal Compliance

On at least an annual basis, the Committee reviews with the Company's legal counsel any legal matters that could have a significant impact on the organization's financial statements, the Company's compliance with applicable laws and regulations and inquiries received from regulators or governmental agencies.

Complaints

The Company has established a Whistle Blower Policy for the submission, receipt and treatment of any complaints and concerns including any complaints or concerns regarding accounting, internal accounting controls or auditing matters. This Policy may be found on the Company's website.