New Hope Dairy Co., Ltd.
Internal Audit Management System (Draft)
(Applicable After H Share Offering and Listing)
Chapter 1 General Provisions
Article 1 To standardize audit supervision work and improve its efficiency, in accordance with the "Audit Law of the People's Republic of China," "Basic Norms for Enterprise Internal Control," "Regulations on Internal Audit Work by the National Audit Office," "Shenzhen Stock Exchange Listing Company Self-Regulatory Guidance No. 1 - Standardized Operation of Main Board Listed Companies," and the "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited" (hereinafter referred to as the "Hong Kong Stock Exchange Listing Rules"), and combined with the actual situation of New Hope Dairy Co., Ltd. (hereinafter referred to as the "Company"), this system is formulated.
Article 2 This system applies to the Company and its wholly-owned and controlled subsidiaries, as well as other subsidiaries with significant influence.
Chapter 2 Audit Institution
Article 3 Organizational Structure of Audit Supervision
The Company shall establish an audit department with full-time auditors. The Company shall formulate an annual budget for special audit expenses to ensure the smooth progress of audit supervision work. The special audit expenses shall not be less than RMB 1 million in principle, and the expenses shall be approved by the Audit Committee for audit matters determined by the Audit Committee.
The audit department shall maintain independence, and its internal audit work shall not be interfered with by business departments. The audit department shall not be placed under the leadership of the finance department or share office space with the finance department. The audit department shall supervise and inspect the Company's business activities, risk management, internal control, financial information, and other matters. The Company and its wholly-owned and controlled subsidiaries, as well as other subsidiaries with significant influence, shall cooperate with the internal audit institution in performing its duties according to law and shall not hinder the work of the internal audit institution.
The audit department is responsible to the Board of Directors and reports its work to the Audit Committee of the Board of Directors. In the process of inspecting and supervising the Company's business activities, risk management, internal control, financial information, and other situations, the audit department shall accept the supervision and guidance of the Audit Committee.
The Audit Committee participates in the performance appraisal of the head of the audit department.
Chapter 3 Responsibilities and Powers
Article 4 Responsibilities of Audit Supervision
The audit department shall supervise the management of all aspects of the business operations of the Company and its wholly-owned and controlled subsidiaries, as well as other subsidiaries with significant influence, based on risk assessment. Its main responsibilities include:
(I) To implement the relevant laws, regulations, and policies of the state regarding audit work.
(II) In accordance with the relevant laws, regulations, and policies of the state regarding audit work, and combined with the Company's production and operation characteristics, to formulate the Company's internal audit management system and internal audit job responsibilities, and to improve relevant internal work standards and operating procedures.
(III) To audit the financial and other relevant economic data of the Company and its wholly-owned and controlled subsidiaries, as well as other subsidiaries with significant influence, and the legality, compliance, truthfulness, and effectiveness of the financial revenues and expenditures and related economic activities reflected therein, including but not limited to financial reports, earnings forecasts, earnings announcements, and voluntarily disclosed predictive financial information.
(IV) To inspect and evaluate the completeness, reasonableness, and effectiveness of the internal control system of the Company and its wholly-owned and controlled subsidiaries, as well as other subsidiaries with significant influence.