Internal audit system
Chapter I General Provisions
Article 1 in order to standardize the internal audit of Ciwen Media Co.Ltd(002343) (hereinafter referred to as “the company” or “the company”), improve the quality of internal audit, strengthen the company’s internal control, and prevent and control the company’s risks, In accordance with the Audit Law of the people’s Republic of China, the basic norms of enterprise internal control, the stock listing rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board, the provisions of the National Audit Office on internal audit and other laws, regulations and regulatory rules, and in combination with the actual situation of the company, This system is hereby formulated.
Article 2 the internal audit referred to in this system refers to the effectiveness of the internal control and risk management of the company and its wholly-owned and holding subsidiaries, and the authenticity and integrity of financial information by the company’s internal audit department and personnel in accordance with relevant national laws and regulations, financial accounting system and the company’s internal management regulations The efficiency and effect of business activities and the performance of economic responsibilities by internal managers, as well as the supervision and evaluation activities carried out.
Article 3 the internal audit of the company shall follow the principle of “law, independence, objectivity and impartiality”. The company shall ensure that its work is reasonable, legal and effective, so as to improve the internal restraint mechanism of the company, strengthen internal management and improve economic benefits.
Article 4 the system is applicable to the internal audit of the company and its wholly-owned and holding subsidiaries.
Chapter II Internal Audit institutions and auditors
Article 5 the board of directors of the company establishes an audit committee, which is mainly responsible for the communication, supervision and verification of the company’s internal audit, and reports the internal audit work to the board of directors.
Article 6 the company sets up a risk control and internal audit center, which is responsible for internal audit and performs its duties independently of other departments. In terms of job responsibilities and reporting relationship, the risk control and internal audit center, as the executive body of the audit committee of the board of directors (hereinafter referred to as the “Audit Committee”), is responsible to the audit committee. The risk control and Internal Audit Center shall supervise the financial management, use of raised funds, establishment and implementation of internal control system of the company and its wholly-owned and holding subsidiaries in accordance with national laws, regulations and policies and the rules and regulations of the company.
Article 7 according to the business scale, production and operation characteristics and relevant regulations, the company shall allocate professionals to engage in internal audit, including a person in charge of the risk control and internal audit center. The head of the risk control and internal audit center is nominated by the audit committee and appointed or removed by the board of directors, who is responsible for the overall management of the risk control and internal audit center.
Article 8 for audit projects with strong professionalism, the risk control and internal audit center can request the approval of the company’s leaders and transfer or hire relevant professionals to assist.
Article 9 the risk control and internal audit center of the company shall maintain independence and shall not be under the leadership of the financial department or work together with the financial department.
Article 10 auditors shall have good professional quality, consciously strengthen professional learning and constantly improve their professional level.
Article 11 auditors shall abide by the code of professional ethics and conduct audit business with due professional prudence.
Article 12 Auditors shall have basic interpersonal communication skills and be able to communicate effectively with others in an appropriate way.
Article 13 auditors shall always maintain the principles of independence and objectivity in the audit process.
Article 14 auditors must ensure the objectivity and impartiality of the audit results, and may not abuse their power, engage in malpractices for personal gain or neglect their duties.
Article 15 auditors shall not be interfered or obstructed by other departments or individuals of the company when carrying out internal audit. At the same time, auditors are protected by law when they independently exercise their audit functions and powers according to law. No department or individual shall retaliate against auditors who adhere to working principles in various ways. When auditors have an interest in the auditee or audit matters, they shall take the initiative to adopt the principle of avoidance.
Article 16 the company and its wholly-owned and holding subsidiaries shall cooperate with the risk control and internal audit center to perform their duties according to law and shall not hinder the work of the risk control and internal audit center.
Article 17 the funds required by the risk control and internal audit center to perform internal audit duties shall be included in the budget of the company and guaranteed.
Chapter III responsibilities of internal audit institutions
Article 18 the risk control and Internal Audit Center shall perform the following main responsibilities:
(I) propose the audit work plan for the next year one month before the end of each fiscal year and implement it after being approved by the Audit Committee;
(II) regularly submit various audit work reports of the current year to the Audit Committee;
(III) audit the accounting data and other relevant economic data of the company and its wholly-owned and holding subsidiaries, as well as the authenticity, legitimacy and effectiveness of the economic activities related to financial revenue and expenditure;
(IV) at least once a year, inspect, evaluate and give feedback on the soundness, rationality and effectiveness of the internal control system of the company and its wholly-owned and holding subsidiaries, put forward improvement suggestions for the establishment and improvement of internal control, and supervise the auditee to improve the internal control system;
(V) audit the economic responsibility of the company and its wholly-owned and holding subsidiaries, department heads, financial heads or other key personnel deemed necessary by the board of directors;
(VI) audit large amount of capital transactions and external guaranteed investment, and regularly (quarterly) audit the use of special raised funds and the internal control system of monetary funds;
(VII) carry out special audit on major investment projects such as fixed assets investment projects, film and television dramas and variety shows of the company and its wholly-owned and holding subsidiaries and major financial abnormalities, such as financial crisis, major operating losses, major economic events and serious and untrue asset quality;
(VIII) audit the business performance of the company and its wholly-owned and holding subsidiaries;
(IX) assist the board of directors of the company to supervise and urge the implementation of the rectification of the problems found in the audit;
(x) guide, supervise and manage the internal audit of the company and its wholly-owned and holding subsidiaries; （11） Handle other audit matters assigned by the board of directors or the audit committee in accordance with relevant national regulations.
When performing their duties, auditors shall not affect the normal production and operation of the company and its wholly-owned and holding subsidiaries. Article 19 the risk control and Internal Audit Center shall assist the company to establish and improve the anti fraud mechanism, determine the key areas, key links and main contents of anti fraud, and reasonably pay attention to and inspect possible fraud in the process of internal audit.
Article 20 the risk control and Internal Audit Center shall submit the implementation of the internal audit plan and the problems found in the internal audit to the audit committee every quarter, and submit the annual internal control self-assessment report to the audit committee every fiscal year.
Article 21 the risk control and Internal Audit Center shall be responsible for the connection and communication with external audit institutions, and coordinate the working relationship between national audit, social audit and company audit.
Chapter IV authority of internal audit institutions
Article 22 the risk control and internal audit center has the following authorities according to law:
(I) require the auditee to timely submit relevant materials (including relevant electronic data, the same below) such as development planning, strategic decision-making, major measures, internal control, risk management, financial revenue and expenditure, as well as necessary computer technical documents;
(II) participate in the meetings related to audit in the financial management and business decision-making of the company and its wholly-owned and holding subsidiaries, and organize and hold the meetings related to audit;
(III) participate in the study and formulation of relevant rules and regulations, and put forward suggestions on the formulation of internal audit rules and regulations;
(IV) check the data and documents related to financial revenue and expenditure, economic activities, internal control and risk management, as well as the physical objects of on-site investigation;
(V) check relevant computer systems and their electronic data and materials;
(VI) investigate and inquire from relevant units and individuals on Relevant Issues in audit matters and obtain relevant supporting materials;.
(VII) report the ongoing serious violations of laws and regulations, serious losses and waste to the audit committee of the company in time, and make a temporary stop decision with consent;
(VIII) have the right to temporarily seal up the accounting vouchers, accounting books, accounting statements and materials related to economic activities that may be transferred, concealed, tampered with or destroyed with the approval of the audit committee of the company;
(IX) for those who obstruct and hinder the audit work and refuse to provide relevant materials, necessary temporary measures can be taken with the approval of the company’s audit committee, and suggestions on investigating the responsibilities of relevant personnel can be put forward;
(x) circulate a notice of criticism or put forward suggestions on accountability for the audited units and personnel who violate laws and regulations and cause losses and waste;
（11） For auditees and individuals who strictly abide by financial and economic regulations, have remarkable economic benefits and outstanding contributions, they can put forward commendation suggestions to the audit committee of the company;
（12） Put forward opinions on correcting and dealing with violations of laws and regulations and suggestions on improving management and performance; （13） Supervise the auditee to strictly implement the audit decision;
（14） Report major matters in the audit work to the audit committee in a timely manner;
（15） Report the internal audit results and rectification within a certain range.
Article 23 the risk control and Internal Audit Center shall, in accordance with the requirements of full coverage of internal audit, conduct a comprehensive audit of the company and its wholly-owned and holding subsidiaries by means of economic responsibility audit or operation audit every five years.
Article 24 when formulating the audit work plan for the next year, the risk control and Internal Audit Center shall include in the internal audit work plan for the next year the units under its management that have not been comprehensively audited by internal audit institutions at any level for more than four years.
Article 25 except for confidential matters, all units may entrust intermediary institutions to carry out internal audit according to the actual needs of audit work, and be responsible for the audit results adopted.
Article 26 the risk control and internal audit center has the right to inspect all accounts and materials related to operation and management within the audit interval of the auditee, including:
（1） Accounting books, accounting vouchers and accounting statements;
（2） All business contracts, agreements and contracts;
（3） Bank statements of all deposit banks;
（4） Certificates of various assets and equity certificates of investment;
（5） Require the other party to provide the confirmation letter of various creditor’s rights;
（6） Important documents related to customers;
（7） Record of important operation and investment decision-making process;
（8） Other relevant information.
If necessary, it can be traced back or postponed from the audit interval, and the auditee and individual shall not refuse.
Chapter V project closing audit
Article 27 the risk control and Internal Audit Center shall conduct a final audit on the key film and television dramas and variety shows invested by the company and its wholly-owned and holding subsidiaries. For the film and television drama and variety projects invested by the company and its wholly-owned and holding subsidiaries but commissioned by a third party, it shall be clearly agreed in the contract that the risk control and internal audit center has the right to carry out project closing audit and extended audit after the project is completed, and the contractor must unconditionally cooperate to provide the required accounts and materials.
Article 28 in risk control and internal audit, the final audit of key film and television dramas and entertainment projects shall be carried out within one year after the end of the project, and an independent and objective evaluation shall be made on the budget implementation, total revenue and expenditure and project profitability of the project, and suggestions for improvement shall be put forward, so as to finally form an audit conclusion.
Article 29 in the final audit of key film and television dramas and entertainment projects, the project leader, project executors, relevant financial and other relevant personnel shall cooperate unconditionally, and shall not conceal, obstruct, interfere with or refuse the auditors to exercise their functions and powers.
Article 30 the audit results of the final audit will be used as an important basis for assessing, appointing, dismissing, rewarding and punishing cadres and relevant decisions.
Chapter VI specific implementation of internal audit
Article 31 the risk control and Internal Audit Center shall implement appropriate review procedures in accordance with relevant regulations, evaluate the effectiveness of the company’s internal control, and submit an internal control evaluation report to the board of directors at least once a year.
The evaluation report shall state the purpose, scope, conclusions and suggestions for improving internal control of the review and evaluation.
Article 32 the scope of internal control review and evaluation shall include the establishment and implementation of internal control systems related to financial reports and information disclosure.
The risk control and Internal Audit Center shall focus on the integrity, rationality and effectiveness of the internal control system related to large non operating capital transactions, foreign investment, purchase and sale of assets, foreign guarantee, related party transactions, use of raised funds, information disclosure and other matters.
Article 33 the risk control and Internal Audit Center shall urge the relevant responsible departments to formulate rectification measures and rectification time for the internal control defects found in the review process, conduct follow-up review of internal control, and supervise the implementation of rectification measures.
Article 34 If the risk control and Internal Audit Center finds major defects or risks in internal control during the review process, it shall report to the audit committee in time.
If the audit committee considers that there are major defects or risks in the company’s internal control, it shall report to the board of directors in a timely manner. The board of directors shall timely report to the Shenzhen Stock Exchange and disclose it. The company shall disclose in the announcement the major defects or risks existing in the internal control, the consequences that have been or may be caused, and the measures that have been taken or are to be taken.
Article 35 risk control and Internal Audit Center shall focus on
