Diversinet Corp.
Audit Committee Charter

Purpose
The purpose of the Audit Committee is to represent and assist the Board of Directors in fulfilling its oversight responsibilities for (i) the financial reporting process, the system of internal control over financial reporting, the audit process; (ii) the independence, qualifications and performance of the Company's external auditor; and (iii) the company’s process of monitoring compliance with laws and regulations.

(Management is responsible for the preparation, presentation and integrity of the Corporation’s financial statements and for the appropriateness of the accounting principles and reporting policies that are used by the Corporation.  The independent auditors are responsible for auditing the Corporation’s annual financial statements and for reviewing the Corporation’s interim financial statements.)

Composition
The Audit Committee shall consist of at least three members of the Board who, when feasible, satisfy the independence requirements under the rules of the Company’s regulatory body or stock exchange, as such requirements are interpreted by the Board in its business judgment.  The Committee shall, when feasible, ensure that the majority of the members for the Committee are resident Canadians.  The Board shall designate one member as Chairman or delegate authority to designate a Chairman to the Audit Committee.  Each member of the Audit Committee shall be financially literate and at least one member of the Audit Committee shall be a financial expert [or expertise in financial reporting].

Procedures, Powers and Duties
The Committee will meet at least four times a year, with authority to convene additional meetings, as circumstances require.  All committee members are expected to attend each meeting.  Any director of the Company may attend meetings of the Committee at the Audit Chairman’s invitation, but may not vote and may not be included for purposes of quorum requirements.  The Committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary; however, the Committee shall also regularly meet without management or third parties present.  Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials.

No business shall be transacted by the Committee except at a meeting where a majority of the members are present, either in person or by tele or video conference.

The Committee may engage outside legal, audit or other counsel at the Company’s expense, without the prior approval of the Board.

The Committee may seek any information it requires from employees or external parties, all of whom are directed to cooperate with the committee’s request.

The Committee’s business will be recorded in minutes of the Committee, which may, at the request of the Board, be submitted to the Board.

The Committee will carry out the following responsibilities:

Financial Statements

• Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements;
• Receive regular reports from the independent auditors on critical accounting policies and practices of the Corporation, including all alternative treatment of financial information within generally accepted accounting principles which have been discussed with management.  Where alternative treatment exists, the independent auditors shall be invited to express their opinion as to whether the Corporation is using ‘best practices’.  Where there is a disagreement between management and the independent auditors, the Committee shall inform the Board as to the issues and the resolution;
• Review the interim and annual financial statements and disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations with management and with the independent auditors prior to release or inclusion in any reports to shareholders and/or legal, regulatory or stock exchange requirements;
• Review the annual financial statements and consider whether they are complete, consistent with the information known to the committee members, and reflect appropriate accounting principles.

Internal Control

• Discuss with management the effectiveness of the company’s internal control over annual and interim financial reporting (in conducting meetings with management and auditors, questions relating to controls and their effectiveness over information technology and security, as well as disaster planning, shall be considered);
• Obtain external auditors’ (and internal auditors’, where applicable) reports on significant findings and recommendations, together with management’s responses.

External Audit

• Discuss with the external auditors the overall scope and plans for their audit, including the adequacy of staff.  The Committee will discuss with management and the independent auditors the adequacy and effectiveness of the accounting and financial controls;
• Review the appointment and termination (subject to Board and shareholder ratification), compensation and oversight of the work of the independent auditors, including resolution of disagreements between management and the independent auditors regarding financial reporting;
• Ensure that at all times there are direct communication channels between the external auditors of the Corporation to discuss and review specific issues, as appropriate;
• Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the company, including non-audit services, and discussing the relationships with the auditors;
• Meet separately, on a regular basis, with management and the independent auditors to discuss any issues or concerns warranting Committee attention.  As part of this process, the Committee shall provide sufficient opportunity for the independent auditors to meet privately with the Committee;
• The Committee shall, at least annually, obtain and review a report by the independent auditors:
• describing their internal quality control procedures;
• any material issues raised by the most recent internal quality control review, or peer review, or any inquiry or investigation by government or professional institute or society, within the preceding five years, respecting any independent audit carried out by the independent auditors, and any steps taken to deal with any such issues; and
• all relationships between the independent auditor and the Corporation in order to assess auditor’s independence.

Compliance

• Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up (including disciplinary action of any instances of noncompliance);
• Review the findings of any examination by regulatory agencies, and any auditor observations;
• Receive reports, if any, from management and corporate legal counsel of evidence of material violation of securities laws or breaches of fiduciary duty.

Reporting Responsibilities

• Regularly report to the Board about Committee activities, issues and related recommendations;
• Report annually to the shareholders, describing the Committee’s composition, responsibilities and how they are discharged, and any other information required by rule;
• Review, discuss and recommend to the Board the earnings press releases, as well as information contained therein.

Other Responsibilities

• Perform any other related activities as requested by the Board;
• The oversight and evaluation of the performance of the Chief Financial Officer;
• Institute and oversee special investigations as needed.

Mandate Reviews
The Committee shall annually review its performance relative to this Mandate.  The Committee shall regularly review the adequacy of this Mandate and recommend changes to the Board.