Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd
Internal audit system
March, 2002
catalogue
Chapter I General Provisions Chapter II audit institutions and auditors Chapter III responsibilities and authorities of internal audit institutions Chapter IV main tasks of internal audit Chapter V working procedures and specific implementation of internal audit Chapter VI rewards and penalties 11 chapter VII Supplementary Provisions twelve
Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd
Internal audit system
Chapter I General Provisions
Article 1 in order to strengthen and standardize the internal audit work of Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. (hereinafter referred to as “the company”), protect the legitimate rights and interests of investors, improve the quality of audit work, and realize the standardization and standardization of the company’s internal audit work, according to the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board These Provisions are formulated in combination with the actual situation of the company, including the provisions of the National Audit Office on internal audit, the basic norms of enterprise internal control and other laws, regulations and normative documents, as well as the relevant provisions of the articles of association of Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. (hereinafter referred to as the “articles of association”). Article 2 internal audit is the act of independently supervising and evaluating the authenticity, legality and efficiency of the financial revenue and expenditure and economic activities of the company and its subsidiaries, so as to promote the strengthening of economic management and the realization of economic objectives. Internal audit refers to the independent and objective supervision and evaluation activities conducted by the internal audit department or personnel of the company on the effectiveness of internal control and risk management of the company, subsidiaries and joint-stock companies with significant influence, the authenticity and integrity of financial information and the efficiency and effect of business activities.
Article 3 the internal control mentioned in this system refers to the process implemented by the board of directors, the board of supervisors, the management and all employees of the company to achieve the control objectives.
The objective of internal control is to reasonably ensure the legal compliance of the company’s operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve the operation efficiency and effect, and promote the enterprise to realize the development strategy.
Article 4 the internal audit department shall, in accordance with national laws, regulations and rules and the articles of association, follow the principles of objectivity, policy and prevention, and conduct independent audit supervision on the business activities and internal control of the company, its wholly-owned and holding subsidiaries and joint-stock companies with significant influence.
Article 5 the board of directors of the company shall be responsible for the establishment, improvement and effective implementation of the internal control system. Important internal control systems shall be reviewed and approved by the board of directors.
The board of directors and all its members shall ensure the authenticity, accuracy and completeness of the information disclosure related to internal control.
Chapter II audit institutions and auditors
Article 6 the company shall establish an audit committee under the board of directors and formulate the rules of procedure of the audit committee of the board of directors. All members of the audit committee shall be composed of directors, of which independent directors shall account for more than half. The convener of the audit committee meeting shall be independent directors and accounting professionals. In principle, the members of the audit committee must be independent of the company’s daily operation and management.
Article 7 the company shall establish an internal audit system and an internal audit department to inspect and supervise the establishment and implementation of the company’s internal control system and the authenticity and integrity of the company’s financial information. The internal audit department is responsible to the audit committee and reports to the audit committee. The audit committee is responsible for guiding and supervising the establishment and implementation of the internal audit system, reviewing the company’s annual internal audit work plan, supervising the implementation of the company’s internal audit plan, and guiding the effective operation of the internal audit department.
The internal audit department shall maintain its independence and work under the leadership of the main person in charge or authority of the company; It shall not be placed under the leadership of the financial department or work together with the financial department.
Article 8 the company shall allocate full-time personnel to engage in internal audit according to the company’s scale, production and operation characteristics and relevant regulations.
Article 9 the company shall have at least two full-time internal auditors. The head of the internal audit department must be a full-time, appointed and removed by the board of directors. The company shall know the educational background, professional title, work experience of the person in charge of the internal audit department, and whether there is any relationship with the controlling shareholder and actual controller of the company.
Article 10 the company shall support and guarantee the implementation of post qualification and follow-up education system for internal auditors.
Article 11 the main person in charge or authority of the company shall protect the internal auditors from performing their duties according to law, and no department or individual shall retaliate. All internal institutions or functional departments of the company, wholly-owned and holding subsidiaries and joint-stock companies with significant influence shall cooperate with the internal audit department to perform their duties according to law and shall not hinder the work of the internal audit department.
Article 12 according to the needs of specific audit projects, the internal audit department of the company may temporarily appoint a certain number of part-time auditors, including experts and professionals outside the audit profession, as specially invited auditors to participate in the implementation of specific audit projects.
Article 13 auditors shall audit according to law, be loyal to their duties, be objective and fair, adhere to principles, perform their duties honestly and keep secrets. They shall not abuse their power, engage in malpractices for personal gain, disclose secrets or neglect their duties. Audit personnel should be cautious in the execution of audit work.
Article 14 internal auditors shall establish risk management awareness and improve their professional knowledge and ability to engage in audit work through regular or irregular business training.
Article 15 the funds necessary for the internal audit institution to perform its duties shall be included in the financial budget and guaranteed by the company.
Chapter III responsibilities and authorities of internal audit institutions
Article 16 when guiding and supervising the work of the internal audit department, the audit committee shall perform the following main duties:
(I) guide and supervise the establishment and implementation of internal audit system;
(II) hold a meeting at least once a quarter to review the work plan and report submitted by the internal audit department;
(III) report to the board of directors at least once a quarter, including but not limited to the progress and quality of internal audit and major problems found;
(IV) coordinate the relationship between the internal audit department and external audit units such as accounting firms and national audit institutions.
Article 17 the internal audit department shall perform the following main duties:
(I) audit the financial revenue and expenditure and relevant economic activities of the company, wholly-owned and holding subsidiaries and joint-stock companies with important influence;
(II) audit the management and use of budgetary and extrabudgetary funds of the company, wholly-owned and holding subsidiaries and joint-stock companies with important influence;
(III) audit the term economic responsibilities of the directors, supervisors and senior managers of the company’s internal institutions, wholly-owned and holding subsidiaries and joint-stock companies with important influence;
(IV) audit the fixed asset investment projects of the company, its wholly-owned and holding subsidiaries and joint-stock companies with important influence;
(V) inspect and review the soundness, rationality, effectiveness of implementation and risk management of the internal control system of the company, its wholly-owned and holding subsidiaries and joint-stock companies with important influence;
(VI) audit the economic management and benefits of the company, its wholly-owned and holding subsidiaries and joint-stock companies with important influence;
(VII) audit the accounting data and other relevant economic data of the company’s internal institutions, wholly-owned and holding subsidiaries and joint-stock companies with important influence, as well as the legality, compliance, authenticity and integrity of the reflected financial revenue and expenditure and relevant economic activities, including but not limited to financial reports;
(VIII) 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;
(IX) report to the audit committee at least once a quarter, including but not limited to the implementation of the internal audit plan and the problems found in the internal audit;
(x) other audit matters required by laws, regulations and the company’s main principals or the general meeting of shareholders.
Article 18 an internal audit institution may exercise the following functions and powers:
(I) require the auditee to submit production, operation, financial revenue and expenditure plans, budget implementation, final accounts, accounting statements and other relevant documents and materials on time;
(II) participate in relevant meetings of the company and hold meetings related to audit matters;
(III) participate in the study and formulation of relevant rules and regulations, put forward internal audit rules and regulations, and implement them after being approved and published by the company;
(IV) check the materials and documents related to production, operation and financial activities and the physical objects of on-site investigation;
(V) check relevant computer systems and their electronic data and materials;
(VI) investigate the problems related to audit matters to relevant units and individuals and obtain supporting materials;
(VII) make a temporary decision to stop the ongoing serious violations of laws and regulations, serious losses and waste; (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 main person in charge or authority of the company;
(IX) put forward opinions on correcting and dealing with violations of laws and regulations and suggestions on improving economic management and economic benefits;
(x) units and personnel who violate laws and regulations and cause losses and waste shall be criticized in a circular or put forward suggestions on accountability.
Chapter IV main tasks of internal audit
Article 19 the scope of internal audit includes financial audit, internal control audit, special audit, management audit, etc.
Article 20 financial audit is mainly to audit the authenticity of the company’s assets, liabilities, owner’s equity and other relevant contents.
Article 21 internal control audit is mainly to audit the soundness, rationality and effectiveness of the company’s overall internal control system (including internal management control system and internal accounting control system).
Article 22 special audit mainly refers to the audit of the company’s income, costs, expenses, accounts receivable and other items that have a significant impact on the company’s assets, liabilities and profits.
Article 23 management audit mainly refers to the audit that takes each management department of the company as the basic object and promotes the improvement of economic benefits of the enterprise through the economic responsibilities and performance of each management department of the company.
Article 24 the internal audit department shall carry out the audit work on the basis of business links, and evaluate the rationality of the design and effectiveness of the implementation of internal control related to financial reports and information disclosure according to the actual situation.
Article 25 internal audit shall cover all business links related to financial reports and information disclosure in the company’s business activities, including but not limited to sales and collection, procurement and payment, inventory management, fixed assets management, capital management, investment and financing management, human resources management, information system management and information disclosure management. The internal audit department can adjust the above business links according to the industry and production and operation characteristics of the company. The holding company and subsidiaries shall carry out strict planning / implementation in parallel with reference to regulatory laws and regulations. Article 26 the internal audit department shall inspect the following matters at least half a year, issue an internal audit report and submit it to the Audit Committee:
(I) the implementation of high-risk investments such as the use of raised funds, provision of guarantees, related party transactions, securities investment and derivatives transactions, provision of financial assistance, purchase or sale of assets, foreign investment and other major events;
(II) the company’s large amount of capital transactions and capital transactions with directors, supervisors, senior managers, controlling shareholders, actual controllers and their affiliates.
Article 27 the internal audit department shall inspect the internal control system of monetary funds at least once a year. When inspecting the internal control system of monetary funds, it shall focus on whether the authorization and approval procedures for large non operating Monetary Fund expenditures are sound, whether there is ultra vires examination and approval, and whether there are weak links in the internal control of monetary funds. If any abnormality is found, it shall be reported to the audit committee in time.
Article 28 when auditing foreign investment, attention shall be paid to the following contents:
(I) whether the examination and approval procedures for foreign investment are performed in accordance with relevant regulations;
(II) whether the contract is concluded according to the approved contents and whether the contract is normally performed;
(III) whether to assign special personnel or establish special institutions to study and evaluate the feasibility, investment risks and investment returns of major investment projects, and track and supervise the progress of major investment projects;
(IV) in case of entrusted financial management matters, pay attention to whether the company authorizes the approval power of entrusted financial management to the individual directors or management of the company, whether the trustee’s integrity record, operating status and financial status are good, and whether special personnel are assigned to track and supervise the progress of entrusted financial management;
(V) for matters involving securities investment and venture capital, pay attention to whether the company has established a special internal control system, whether the investment scale affects the normal operation of the company, whether the source of funds is its own funds, whether the investment risk is beyond the scope of the company, and whether there is a situation that securities investment and venture capital are not allowed according to relevant business rules, Whether independent directors express opinions.
Article 29 when auditing the purchase and sale of assets, attention shall be paid to the following contents:
(I) whether the purchase and sale of assets are subject to the approval procedures in accordance with relevant regulations;
(II) whether the contract is concluded according to the approved contents and whether the contract is normally performed;
(III) whether the operation status of the purchased assets is consistent with the expectation;
(IV) whether there is any guarantee, mortgage, pledge or other restricted transfer of the purchased assets, and whether it involves litigation, arbitration and other major disputes.
Article 30 when auditing external guarantees, we should focus on the following contents:
(I) whether the external guarantee has performed the examination and approval procedures in accordance with relevant regulations;
(II) whether the guarantee risk is beyond the company’s tolerance, and whether the guaranteed party’s integrity record, business status and financial status are good;
(III) whether the guaranteed party provides counter guarantee and whether the counter guarantee is enforceable;
(IV) whether the independent directors express their opinions;
(V) whether to assign special personnel to continuously pay attention to the operation and financial status of the guaranteed party.
Article 31 when auditing related party transactions, attention shall be paid to the following contents:
(I) whether the list of related parties is determined and updated in time;
(II) whether the related party transactions have gone through the examination and approval procedures in accordance with relevant regulations
