Chapter 1 General Principles
Article 1
To strengthen supervision and control over the company's management activities, ensure the effective execution of the internal control system and various regulations, improve management levels, timely prevent and resolve operational risks, and protect the legitimate rights and interests of the company, shareholders, creditors, and employees, this system is formulated in accordance with the "Audit Law of the People's Republic of China," "China Internal Audit Standards," "Shenzhen Stock Exchange Listing Rules," "Self-Regulatory Guidelines No. 1 for Listed Companies on the Main Board," and the "Articles of Association of Zhejiang Bofei Electric Co., Ltd." (hereinafter referred to as "the Articles of Association") as well as relevant national laws, regulations, and normative documents.
Article 2
The term "internal audit" in this system refers to the independent and objective supervision and evaluation conducted by the company's audit department based on relevant laws and regulations, combined with the actual management of the company, regarding the authenticity, legality, and effectiveness of the company's financial expenditures, operational performance, asset quality, and related economic activities, as well as the appropriateness, legality, and effectiveness of internal controls.
Article 3
Through its internal audit activities, the audit department promotes the continuous improvement of the internal control system, enhances management levels, work efficiency, and economic benefits, and facilitates the achievement of the company's overall objectives.
Article 4
This system applies to the company and its wholly-owned subsidiaries (hereinafter referred to as "the company's units").
Article 5
The audit department is accountable to the board of directors and reports to the audit committee. During the inspection and supervision of the company's business activities, risk management, internal controls, and financial information, it accepts supervision and guidance from the audit committee. All internal organizations or functional departments, wholly-owned subsidiaries, and significant equity investees of the company shall cooperate with the audit department in performing its duties and shall not obstruct its work.
Article 6
The audit department shall maintain independence, be staffed with dedicated auditors, and shall not be under the leadership of the finance department or share office space with it. The audit committee participates in the assessment of the head of the audit department. Internal audits shall not be interfered with by other organizations or individuals within the company. Other internal organizations may propose audit project suggestions to the audit department. All employees may report fraud, violations, etc., occurring within the company to the audit department either anonymously or by name (with encouragement for named reports), and the audit department will conduct special audits as necessary.
Chapter 2 Audit Department and Its Main Responsibilities and Authority
Article 7
The board of directors of the company establishes an audit committee and formulates rules for the committee's meetings.
Article 8
The company establishes a dedicated internal audit organization—the audit department. Under the direct leadership of the audit committee, the audit department conducts internal audit supervision of the company's and its departments', equity investees', and subsidiaries' business activities, risk management, internal controls, and financial information in accordance with national laws and regulations, independently exercising its audit authority.
Article 9
The audit department maintains relative independence from other functional departments and independently exercises its audit supervision rights without interference from other departments or individuals.