Internal audit system of Jiangsu Shentong Valve Co., Ltd.

Jiangsu Shentong Valve Co., Ltd.
internal audit system
(Revised at the third meeting of the sixth session of the Board of Directors)

Chapter I General Provisions
Article 1 In order to standardize and guarantee the internal audit supervision of Jiangsu Shentong Valve Co., Ltd. (hereinafter referred to as ("the company"), improve the quality of audit work, realize the regularization and institutionalization of internal audit, and give full play to the role of internal audit work in strengthening internal control management, promoting enterprise economic management and improving economic benefits, in accordance with the "the People's Republic of China Audit Law", "Regulations on Internal Audit Work", "China Internal Audit Standards", "Shenzhen Stock Exchange Listed Companies Self-Regulatory Guidelines No. 1-Main Board Listed Companies Standardized Operation" and other laws and regulations and relevant Regulations, combined with the actual situation of the Company, this system is formulated.
Article 2 The audited object referred to in this system refers specifically to the company's departments, divisions, wholly-owned or holding subsidiaries/other organizations and their directly affiliated branches, and the relevant responsible personnel of the above-mentioned institutions.
Article 3 The term "internal audit" as mentioned in this system includes supervising the operation of the internal control system of the audited object, checking the accounting accounts and related assets of the audited object and the operating conditions of the enterprise, supervising the implementation of the final accounts and financial income and expenditure of the audited object, and evaluating the benefits of major economic activities.
Article 4 The internal audit department shall maintain its independence and shall not be placed under the leadership of the financial department or co-located with the financial department.
Chapter II Internal Audit Institutions and Personnel
Article 5 The audit committee under the board of directors shall lead the audit department to inspect, supervise and evaluate the authenticity and integrity of the company's financial information, the effectiveness of internal control and risk management, and the efficiency and effectiveness of business activities.
The Company has established an internal audit department as the Company's internal audit body 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 company's internal institutions or functional departments, holding subsidiaries, and participating companies that have a significant impact on the company shall cooperate with the audit department in performing their duties in accordance with the law, and shall not hinder the work of the audit department.
Article 6 The Audit Committee shall perform the following main duties when supervising and evaluating the work of the internal audit department:
(I) direct and supervise the establishment and implementation of the internal audit system;
(II) review the company's annual internal audit work plan;
(III) supervise the implementation of the company's internal audit plan;
(IV) guide the effective operation of the Audit Department. The audit department of the company shall report to the audit committee on a regular basis, and the audit reports submitted by the audit department to the management, the rectification plan and the rectification of audit problems shall be submitted to the audit committee at the same time;
(V) report to the board of directors on the progress, quality and major problems found in internal audit work;
(VI) coordinate the relationship between the Audit Department and external audit units such as accounting firms and national audit institutions.
Article 7 Main Responsibilities of Internal Audit Department
The (I) examines and evaluates the integrity, reasonableness and effectiveness of its implementation of the internal control system of the Company's internal bodies, holding subsidiaries and participating companies with significant influence.
The (II) shall audit the accounting data and other relevant economic data of the company's internal institutions, holding subsidiaries and shareholding companies with significant influence, as well as the legality, compliance, authenticity and integrity of the financial revenues and expenditures and related economic activities reflected, including but not limited to financial reports, performance reports, voluntary disclosure of predictive financial information, etc.
(III) assist in the establishment of a sound anti-fraud mechanism, identify key areas, key links and main contents of anti-fraud, and reasonably pay attention to and check for possible fraud in the process of internal audit.
The (IV) shall report to the Audit Committee at least quarterly, including but not limited to the implementation of the internal audit plan and the problems found in the internal audit work.
Article 8 The Internal Audit Department shall be equipped with a number of full-time auditors (not less than 3), and shall have a full-time audit person in charge, who shall be nominated by the Audit Committee and appointed and removed by the Board of Directors. The head of audit is accountable to the Audit Committee and reports to the Audit Committee.
Article 9 Internal auditors shall have the relevant professional knowledge and business ability of audit, accounting, financial management, economy, tax laws and regulations, etc., which are appropriate to the audit work.
Article 10 The internal auditors shall exercise their functions and powers in accordance with the provisions of the company system, and the audited department (individual) shall provide the auditors with relevant information in a timely manner and shall not refuse, obstruct, destroy or retaliate.
Article 11 Internal auditors shall adhere to the principle of seeking truth from facts, be loyal to their duties, be objective and impartial, be honest and honest, and keep secrets; they shall not abuse their powers, engage in malpractices for personal gain or neglect their duties.
Article 12 If an internal auditor handles an audit matter and has an interest in the audited object or the audit matter, he shall withdraw.
Article 13 A company shall disclose 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.
Chapter III The work content and responsibilities of the internal audit institution.
Article 14 The company shall strengthen the internal audit of related transactions, external guarantees, use of raised funds, major investments, information disclosure and other activities.
Article 15 Unless otherwise provided, the Audit Committee shall supervise the Audit Department to inspect the following matters at least once a quarter, issue an inspection report and submit it to the Audit Committee. If the inspection finds that the company has violations of laws and regulations, irregularities in operation, etc., it shall promptly report to the Exchange:
(I) the implementation of major events such as the use of funds raised by the company, external guarantees, related transactions, securities investment and derivatives transactions, provision of financial assistance, purchase or sale of assets, and foreign investment;
(II) the company's large-scale capital transactions and capital transactions with directors, supervisors, senior managers, controlling shareholders, actual controllers and their associates.
Article 16 A company shall, in accordance with its own business characteristics and actual conditions, formulate a self-inspection system for internal control and an annual self-inspection plan for internal control.
The company shall require all internal institutions (including branches) and holding subsidiaries to actively cooperate with the inspection and supervision of the audit department, and may require them to conduct regular self-examination when necessary.
Article 17 The internal audit department shall organize and arrange the audit work according to the work priorities of the company at all stages and the deployment of the company's leaders. Mainly responsible for the company's financial management, internal control system establishment and implementation of supervision, the specific responsibilities are as follows:
1. Financial audit: including asset audit, cost audit, investment benefit audit, economic benefit audit, etc. Internal audit supervision of the implementation and final accounts of the company's financial plan, financial budget, credit plan, economic activities related to financial income and expenditure and the economic benefits of the company, and the implementation of the internal control system of financial management.
2. Internal control audit: including the implementation of the internal control system in the company's internal operation and management links such as funds, materials, procurement, production, marketing, etc. To conduct internal audit and supervision of the company's internal management control system and the implementation of national financial laws and regulations; to supervise the establishment and improvement of the company's internal control system, to promote the improvement and strengthening of the company's operation and management, and to ensure the company's sustained, healthy and rapid development.
3. Audit of new projects and technical reform projects: internal audit supervision of the budget and final accounts of new projects and technical reform projects, the implementation of project contracts, the use of funds and violations of regulations.
4. Contract audit: Implement a filing system for the company's bulk material purchase contracts, product sales contracts, contract lease contracts, etc., and conduct internal audit supervision on existing problems and violations of regulations.
5. Outgoing audit: If a person above the level of deputy manager in each office (subsidiary) of the company leaves or is transferred, he is responsible for internal audit supervision of the performance of his duties, economic activities and personal income during his tenure.
6. Responsibility audit: the responsibility audit of the management personnel with economic responsibility in each department of the company, in order to promote the strengthening of operation and management and improve the economic efficiency of the company.
7. Economic efficiency audit: internal audit supervision of foreign investment and income distribution.
8. Special audit: to conduct special audit investigation on specific matters related to the company's economic activities to the relevant units, departments or individuals of the company.
9. Other audit work assigned by the company's supervisory board or the audit committee of the board of directors, such as inspection of the use of raised funds.
Article 18 The main scope of work of the Internal Audit Department is:
1. Supervise and inspect the company's accounting work.
2. Supervise and inspect the integrity and safety of funds and property.
3. Audit and supervise the implementation of financial income and expenditure plans, financial budgets, credit plans and economic contracts and their economic benefits.
4. Audit and sign opinions on the authenticity, correctness and legality of accounting statements and financial accounts.
5. Supervise and inspect the soundness, effectiveness and implementation of the internal control system.
6. Supervise and audit the implementation of the resolutions of the general meeting of shareholders and the resolutions of the board of directors.
7. Conduct ad hoc audits of serious violations of laws and regulations and company rules and regulations or causing significant losses to the company.
8. Understand the relevant national policies and regulations, and cooperate with the national audit institutions and external audit institutions to conduct audits of the Company.
9. Handle other audit matters assigned by the Audit Committee of the Board of Directors.
Article 19 The audit evidence obtained by internal auditors shall be sufficient, relevant and reliable. Internal auditors shall clearly and completely record the name, source, content, time and other information of the audit evidence obtained in the working paper. The Audit Department shall establish a working paper system and, in accordance with the provisions of laws and regulations, establish a corresponding file management system to clarify the preservation time of internal audit work reports, working papers and related materials.
Article 20 The Audit Department shall report the internal audit work and the problems found to the board of directors or the audit committee at least once a quarter, and submit an internal audit report to it at least once a year.
The Audit Department shall urge the relevant responsible departments to formulate rectification measures and rectification time for internal control deficiencies found in the review process, and conduct follow-up reviews of internal control to supervise the implementation of rectification measures.
The Audit Department shall promptly report to the Board of Directors or the Audit Committee if it finds significant deficiencies or significant risks in internal control during the review process.
Article 21 The Internal Audit Department shall conduct a comprehensive audit of the company's financial income and expenditure and economic activities after the end of each quarter, and conduct irregular audits at ordinary times.
Chapter IV Powers of Internal Audit Institutions
Article 22 Within the jurisdiction of the Audit Committee of the Board of Directors, the main powers of the Internal Audit Department are:
1. Organizing meetings related to audit matters;
2. According to the needs of internal audit work, the relevant departments are required to submit plans, budgets, statements and relevant documents on time;
3. Audit accounting statements, books, vouchers, funds and their property, monitor financial accounting software, access to relevant documents and information;
4. Attend meetings of the President's Office and regular meetings of relevant departments as nonvoting delegates according to work needs;
5. Investigate the relevant matters in the audit from the relevant departments (personnel) and obtain supporting materials;
6. For ongoing serious violations of financial regulations, company rules and regulations, or serious dereliction of duty that may cause major economic losses, the right to make a stop decision and timely report to the audit committee of the board of directors;
7. For departments and personnel who obstruct or undermine the internal audit work and refuse to provide relevant information, the audit committee of the board of directors may take necessary temporary measures such as sealing up relevant information and freezing assets with the approval of the chairman of the board of directors, and put forward suggestions to investigate the responsibility of relevant personnel;
8. With the approval of the Audit Committee of the Board of Directors, issue an audit opinion, make recommendations to improve management and efficiency, and check the adoption of audit opinions and the implementation of audit decisions.
Article 23 Within the scope of audit jurisdiction, the main powers of the head of internal audit are:
1. According to the company's annual plan, the company's development needs and the deployment of the board of directors, determine the focus of the annual audit work, formulate the audit work plan, and formulate the audit plan after being approved by the audit committee of the board of directors.
2. Determine the audit object and audit method.
3. A written audit notice was issued to the auditee three days before the audit, and the project audit approved by the board of directors is not included.
4. The auditor shall conduct the audit by examining the accounting vouchers, account books, statements and consulting the documents, materials and objects related to the audit matters, and investigating the relevant departments or individuals, and obtain effective supporting materials and record the audit work paper.
5. The preparation of audit working papers shall be complete, true and focused, and truthfully reflect the company's business activities and financial revenue and expenditure. The audit working papers shall not be deleted or modified without authorization. The matters, time, place, parties, data, calculation methods and causality specified in the audit papers must be accurate and consistent.
6. The head of the audit department shall review and sign the audit working papers, and shall require the auditors to supplement and revise the audit working papers that need to be supplemented and revised.
7. For the problems found in the audit, suggestions for improvement shall be put forward to the auditees in a timely manner. After the audit is completed, a written audit report shall be issued and submitted to the Board of Directors and the Audit Committee, and the Audit Committee shall issue a written assessment of the effectiveness of the Company's internal control based on the internal audit report and related information submitted by the internal audit department.
8. Decisions made on major audit matters shall be submitted to the Board of Directors for approval.
9. If the auditee has any objection to the audit decision, he may submit a written appeal to the chairman of the board within one week from the date of receiving the decision, and the chairman shall, within 15 days after receiving the appeal, make a decision according to his authority or submit it to the board of directors for deliberation. For inappropriate handling decisions, the Internal Audit Department reviews and submits it to the Chairman or the Board of Directors for correction after confirmation by the Audit Committee. During the appeal period, the original audit decision will be implemented as usual. In special circumstances, the execution may be suspended after the approval of the chairman of the board of directors.
10. Follow-up audits are required according to the work.
Article 24 The Internal Audit Department shall, after the end of each audit project, establish an internal audit file, keep the audit files formed in the work on a regular or long-term basis, and send them to the company's archives office for filing within 6 months after the end of each year. The destruction of audit files must be approved by the Audit Committee and signed by the Chairman of the Board of Directors.
Article 25 The storage period of various audit files is stipulated as follows: the storage period of audit working papers is 5 years, the storage period of quarterly financial audit reports is 5 years, and the storage period of other audit work reports is 10 years. The internal audit work shall implement a regular assessment system. The person in charge of the audit department shall prepare a summary of the audit work of the previous year before the annual board of directors and make a debriefing report to the audit committee of the board of the board of the board of the board.
Chapter V Rewards and Punishments
Article 26 The Internal Audit Department may make recommendations to the Audit Committee of the Board of Directors and the President of the Board of Directors to reward departments and individuals that have exemplary compliance with the rules and regulations of the enterprise and have made remarkable achievements.
Article 27 The Internal Audit Department shall, according to the seriousness of the circumstances, propose to the board of directors to impose administrative sanctions and investigate economic responsibilities on departments and individuals that have committed one of the following acts:
1. Refusing or delaying the provision of documents, accounting information and other supporting materials related to the audit matters;
2. Obstructing auditors from exercising their functions and powers, resisting or undermining audit supervision and inspection;
3. Falsification and concealment of the truth;
4. Refusing to implement the audit decision;
5. retaliation against auditors and employees who truthfully report the true situation to the Internal Audit Department.
Article 28 If the circumstances of the above-mentioned acts are serious and constitute a crime, they shall be transferred to judicial organs for criminal responsibility in accordance with the law. If an internal auditor commits any of the following acts, the board of directors shall, according to the seriousness of the circumstances, impose administrative sanctions and pursue economic responsibility:
1. Taking advantage of power for personal gain;
2. Fraud or malpractice for personal gain;
3. Dereliction of duty, causing economic losses to the company;
4. divulging company secrets;
5. If the above-mentioned acts are serious and constitute a crime, they shall be transferred to the judicial organ for criminal responsibility according to law.
Chapter VI Supplementary Provisions
Article 29 Matters not covered in this system shall be implemented in accordance with relevant national laws, regulations, regulatory documents and relevant provisions of the company's articles of association. If this system is inconsistent with the relevant laws, regulations, normative documents and the relevant provisions of the company's articles of association, the relevant laws, regulations, normative documents and the company's articles of association shall prevail.
Article 30 The Board of Directors of the Company shall be responsible for the interpretation and revision of this system.
Article 31 This system shall be formally implemented from the date of approval by the board of directors of the company.

Board of Directors of Jiangsu Shentong Valve Co., Ltd.
October 26, 2022