AUDIT COMMITTEE CHARTER

(ACC)

Purpose

This charter governs the operations of the Audit Committee, hereinafter referred to as the "Committee", of the Board of Directors, hereinafter referred to as the “Board” of Northern Ethanol, Inc., hereinafter referred to as the “Company”.  The Committee shall review and reassess this charter at least annually and obtain the approval of the Board for any modifications.  The Members of the Committee shall be designated by the Board to serve at the pleasure of the Board and the Board shall have the power at any time to change the membership of the Committee and to fill vacancies.  The Committee shall be comprised of at least three directors, at least two of which shall be independent.  Members of the Committee shall be considered independent only if they do not receive any remuneration from the Company, except in their role as members of the Board, and they have no relationship that may interfere with the exercise of their independence from management and the Company.  All Committee members shall be financially literate.

Statement of Policy

The Committee shall provide assistance to the Board in fulfilling their oversight responsibility of the Company's financial statements, the financial reporting process, the systems of internal accounting and financial controls, disclosure controls, the annual independent audit of the Company's financial statements, and legal compliance and ethics programs as established by management and the Board.  The Committee shall maintain free and open communication regarding these issues with the independent auditors and management of the Company.  In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention within its purview.  The Committee shall have full access to all books, records, facilities, and personnel of the Company necessary to conduct the investigation.  The Committee is authorized to retain outside experts to assist in the investigation or to provide counsel, provided a majority of the Committee approves.
Section 1.

1. Committee Membership

i.  The Committee shall consist of no fewer than three members. The composition of the Committee shall satisfy the independence, experience and financial expertise requirements of the NASDAQ National Market and Section 10A of the Securities Exchange Act of 1934, as amended by the Sarbanes-Oxley Act of 2002, and the rules promulgated thereunder. The Board shall designate the members of the Committee annually, considering the recommendation of the Nominations and Corporate Governance Committee, and further considering the views of the Chairman of the Board and the Chief Executive Officer, as appropriate. The members of the Committee shall serve until their successors are appointed.
ii.  The Board shall have the power at any time to change the membership of the Committee and to fill vacancies in it, subject to such new member(s) satisfying the independence, experience and financial expertise requirements referred to above. Except as expressly provided in this Charter or the by-laws of the Company, or as otherwise provided by law or the rules of the stock exchanges to which the Company is subject, the Committee shall fix its own rules of procedure.

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Section 2.
2.0  Committee Authority and Responsibilities

i.  Review and discuss with management and the Company’s independent auditor, annual and quarterly financial statements and related disclosures, including disclosure under ``Management’s Discussion and Analysis of Financial Condition and Results of Operations`` and the results of the independent auditor’s audit or review, as the case may be.

ii.  Review the Company’s financial reporting processes and internal control over financial reporting systems and the performance, generally, of the Company’s  internal audit function.

iii.  Oversee the audit and other services of the Company’s independent registered accounting firm and be directly responsible for the appointment, independence, qualifications, compensation and oversight of the independent registered accounting firm, who reports directly to the Committee.  The Committee shall have the sole authority to appoint or replace the Company’s independent public accountant firm.

iv.  Provide an open means of communication among the Company’s registered public accounting firm, management, the Company’s internal auditing function and the Board of Directors.

v.  Review any disagreements between the Company management and the independent registered public accounting firm regarding the Company’s registered independent accounting firm regarding the Company’s financial reporting.

vi.  Prepare the Audit Committee report for inclusion in the Company’s proxy statement for the Company’s annual stockholders meeting.

vii.  Establish procedures for complaints received regarding the Company’s accounting, internal accounting, and auditing matters.

viii.  Approve all audit and permissible non-audit services conducted by the Company’s independent registered public accounting firm.

ix.  Request any officer or employee of the Company or the Company's outside counsel or independent registered public accountants to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
x.  Discuss with management the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company's risk assessment and risk management policies.
xi.  Obtain and review a report from the Company's independent registered public accountants at least annually regarding (a) the registered public accountants' internal quality-control procedures, (b) any material issues raised by the most recent quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the public accountants and the Company.  Evaluate the qualifications, performance and independence of the public accountants, including a review and evaluation of the lead partner of the registered public accountant and taking into account the opinions of management.
xii.  Ensure that the lead audit partner of the public accountants and the audit partner responsible for reviewing the audit are rotated at least every five years as required by the Sarbanes-Oxley Act of 2002.

xiii.  The Committee shall produce the following and provide them to the Board: 1) any report or other disclosure, including any recommendation of the Committee, required by the rules of the SEC to be included in the Company's annual proxy statement; 2) an annual performance evaluation of the Committee, which evaluation must compare the performance of the Committee with the requirements of this charter and set forth the goals and objectives of the Committee for the upcoming year.  The performance evaluation should also recommend to the Board any improvements to this charter deemed necessary or desirable by the Committee.  The performance evaluation by the Committee shall be conducted in such manner, as the Committee deems appropriate; and 3) minutes for each committee meeting.

xiv. The Committee shall review and approve the Company's quarterly earnings press release prior to its release, and it shall review and approve the Quarterly Report on Form 10-QSB, including the interim financial statements with management prior to their filing with the SEC.  Also, the Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards.

xv.  The Committee shall review and approve with management and the independent auditors the Company's annual earnings press releases prior to their release.  The Committee shall also review and approve with management and the independent auditors the Company's Annual Report on Form 10-KSB (or the annual report to shareholders if distributed prior to the filing of Form 10-KSB), including their judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements.  Also, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards.

xvi.  The Committee will review and evaluate this Charter annually, and it will make recommendations to the Board on any proposed changes.  Each fiscal year, the Committee shall discuss with management and the independent auditors the overall scope and plans for their respective audits, including the adequacy of staffing and the amount of compensation.  Also, the Committee shall discuss with management and the independent auditors the adequacy and effectiveness of the internal accounting and financial controls, including the Company's system to monitor and manage business risks, and legal and ethical compliance programs.   Further, the Committee shall meet separately with the independent auditors, with and without management present, to discuss the results of their examinations.

Section 3

3.0  Company's Relationship with Independent Auditors 

The Committee, the Board and Management understand that the independent auditor for the Company is ultimately accountable to the Board and the Committee, as representatives of the shareholders.  Accordingly, the Committee shall have the ultimate authority and responsibility to evaluate and, where appropriate, replace the independent auditors.  Moreover, the Committee is directly responsible for the compensation and oversight of the Company's independent auditors.  The Committee shall discuss with the auditors their independence from management and the Company, and the matters included in required written disclosures.  The Committee must expressly approve any use of the independent auditors for non-audit related services.  Annually, the Committee shall review the independent auditor's performance, and advise the Board regarding the selection of the Company's independent auditors, subject to shareholders' approval.
Section 4.

1.  Limitations of Audit Committee's Roles

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