Financial Integrity Program
1. Statement of Policy
The results of operation and the financial position of Torvec must be recorded in accordance with the requirements of law and generally accepted accounting principles. It is company policy, as well as a requirement of law, to maintain books, records and accounts that in reasonable detail accurately and fairly reflect the business transactions and disposition of assets of the company.
The integrity of Torvec's accounting and financial records is based on the accuracy and completeness of the basic information supporting entries to Torvec's books of accounts. All employees involved in creating, processing and recording such information are held responsible for its integrity. Every accounting or financial entry should reflect exactly what is described by the supporting information. There must be no concealment of information from (or by) management, or from the company's internal or independent auditors.
No payment on behalf of the company shall be approved or made with the intention or understanding that any part of such payment is to be used for any purpose other than that described by the documents supporting the payment.
No false or misleading entries may be made in any books or records of the company for any reason and no fund, asset or account of the company may be established, acquired or maintained for any purpose unless such fund, asset or account is properly reflected in the books and records of the company. No corporate asset or assets should be used for any unlawful or improper purpose.
In addition, managers, controllers and other persons responsible for the preparation of financial information should ensure that Torvec's corporate financial policies are followed. Revenue and expenses should be properly recognized on a timely basis. Assets and liabilities should be properly recorded and appropriately valued. Company assets, facilities or services should be used only for lawful, proper and authorized purposes. Obviously, the theft of money, property or services is strictly prohibited. Torvec's equipment, systems, facilities, corporate credit cards and supplies must be used only for conducting Torvec business or for purposes authorized by management. Each employee is personally responsible, not only for protecting Torvec property entrusted to that employee but also for helping to protect Torvec's assets in general. Each employee should be alert to any situations or incidents that could lead to the loss, misuse or theft of company property.
Only directors and senior officers have authority to make commitments affecting Torvec's assets. No employee should make commitments affecting company assets unless properly authorized.
2. Obligation to Report
If any employee becomes aware of a possible omission, falsification or inaccuracy in accounting and financial entries, or basic data supporting such entries, that employee must report promptly such information to the chief financial officer of the subsidiary and/or division with respect to which the omission, falsification or inaccuracy occurred. Similarly, each employee who is alerted to any situations or incidents that could lead to the loss, misuse or theft of company property must report all such situations to the chief financial officer of the subsidiary and/or division with respect to which such situation occurred. Finally, if an employee needs to clarify his or her or another employee's authority to commit the company's assets, such employee should contact the chief financial officer of the relevant subsidiary or division.
No employee will be disciplined or otherwise treated adversely for raising compliance concerns about others, questions or suggestions in good faith. Anyone who retaliates against an employee who has raised such a question in good faith will be subject to disciplinary action. Similarly, any employee who intentionally makes false or misleading allegations may be subject to disciplinary action.
The confidentiality of reports of compliance concerns is important and will be maintained to the extent possible. However, limited disclosure may be required in order to investigate and adequately respond to the concern. Anonymous reports are acceptable although an individual should understand that if he remains anonymous, it might be extremely difficult to ensure that the individual's concerns are addressed.
In order to indicate a concern or state a complaint the complainant shall either: submit a written report, on forms made available by the company for such purpose, to the chief financial officer of the relevant division and/or subsidiary, setting forth the date and time of the matter complained of, a brief description of the item that is giving rise to the concern or complaint and any documentary or other evidence to support the allegation made; or, together with such chief financial officer, complete such a written report. A copy of such report shall be furnished by the complainant to Torvec's chief financial officer, as follows:
Robert W. Fishback
Chief Financial Officer
1999 Mt. Read Blvd., Bldg. 3
Rochester, New York 14615
There may be instances where an employee feels that a concern has not been adequately addressed by the personnel named above. There may also be instances where an employee has raised a compliance concern in good faith and feels that the normal reporting channels are not available or that an adequate response has not been obtained.
If an employee in good faith believes this to be the case, he may furnish the written report of his concern or his complaint directly to the company's chief financial officer or to the audit committee of the board of directors of Torvec as follows:
Thomas F. Bonadio
Audit Committee Chairperson
1999 Mt. Read Blvd., Bldg. 3
Rochester, New York 14615
Each written report shall be signed by the complainant or if he or she prefers, may be submitted anonymously. Each written report shall be placed in an envelope to the attention of the proper recipient and labeled "Personal and Confidential".
3. Financial Integrity and Compliance Network
The chief financial officer of each subsidiary and/or division is obligated to receive, retain, actively address and use his best efforts to resolve each written report submitted to him by any employee pursuant to the Financial Integrity and Compliance Program. He shall:
- · furnish an acknowledgement to the complainant within two business days of receipt;
- · endeavor to discuss the matter with the complainant or otherwise address the subject matter of the complaint within five business days of receipt;
- · if necessary and or appropriate, depending on such factors as the nature of the allegation, significance of the subject matter to the given subsidiary and/or division or its significance with respect to Torvec as a whole, discuss the subject matter of the complaint with Torvec's chief financial officer;
- · if required by Torvec's Integrity and Compliance Program, generally accepted accounting principles and/or by law, correct or take other remedial action with respect to the subject matter of the complaint within ten business days of receipt;
- · immediately furnish the complainant with a written response which shall include information, as appropriate, delineating the corrective measures taken with respect to the subject matter of the complaint;
- · ensure that proper procedures are implemented to avoid a repetition of the circumstances that lead to the occurrence of the subject matter of the complaint; and
- · maintain and retain a file containing all of the documentation regarding the complaint, which documents shall be made available to Torvec's chief financial officer, members of its audit committee and the registered public accounting firm engaged by the company for the purpose of auditing its financial statements.
The company's chief financial officer shall:
- · communicate directly with the chief financial officer of the relevant subsidiary and/or division within two business days after receipt by him of a copy of any written report furnished to him under the Torvec Financial Integrity and Compliance Program;
- · discuss the subject matter of the written report with such chief financial officer;
- · assist in the resolution of the matter complained of;
- · undertake to monitor any corrective action to be taken with respect to such subject matter;
- · ensure that proper procedures are implemented at the relevant subsidiary and/or division to avoid a repetition of the circumstances that lead to the occurrence of the subject matter of the complaint, and, if he deems appropriate, institute such procedures on a company-wide basis;
- · furnish the audit committee with a copy of the written report and inform the committee as to any corrective action taken with respect to such subject matter within two business days after the matter has been resolved.
The audit committee has designated Daniel R. Bickel as the person to whom written complaints may be furnished directly by an employee who believes he is unable to utilize the normal channels available to him to submit concerns and/or complaints under the Torvec Financial Integrity and Compliance Program. In such case he shall, on behalf of the committee:
- · acknowledge receipt of the written report furnished to him;
- · endeavor to discuss the subject matter of the complaint with the complainant and, as necessary or appropriate, with the company's chief financial officer and/or the chief financial officer of the relevant subsidiary and/or division;
- · furnish the written report to the other members of the audit committee and, as necessary and/or appropriate, endeavor with the other members of the committee to address and resolve the issues presented in the written report;
- · furnish the company's chief financial officer, the chief financial officer of the relevant subsidiary and/or division and the complainant with a written response which shall include information as appropriate delineating the corrective measures taken with respect to the subject matter of the complaint which response, as appropriate, shall set forth the proper procedures necessary and appropriate that need to be implemented to avoid repetition of the circumstances that lead to the subject matter of the complaint;
- · under his direction the audit committee shall investigate with due consideration for the persons involved, the circumstances and reasons why the complainant believed that he was unable to utilize the normal channels set forth herein to resolve the subject matter of his written report.
The audit committee shall take such corrective action as it deems necessary as a result of such investigation, including but not limited to, furnishing the board of directors with recommendations for action by the board to correct any deficiencies revealed by such investigation.