Wondfo Biologics: Internal Audit System
Guangzhou Wondfo Biotechnology Co., Ltd.
internal audit system
Chapter 1 General Provisions
Article 1 In order to give full play to the positive role of internal audit supervision in the company's operation and management, standardize enterprise operation and management behaviors, and prevent and resolve enterprise operation risks, this system is formulated in accordance with relevant national laws and regulations and in conjunction with the actual situation of the company.
Article 2 This system applies to Guangzhou Wondfo Biotechnology Co., Ltd. (hereinafter referred to as the "Company") and its holding subsidiaries and joint-stock companies with significant influence. The so-called audit objects include the company's departments, overseas offices, branches, wholly-owned or holding subsidiaries, and relevant responsible personnel of the above-mentioned institutions.
Article 3 The internal audit referred to in this system includes the implementation of supervision of the operation of the internal control system of the auditee, inspection of the financial accounting accounts of the auditee, supervision and inspection of the production and operation of the auditee and its financial status, and performance evaluation of the major economic activities of the auditee.
Chapter 2 Internal Audit Organization and Internal Audit Personnel
Article 4 The Audit and Supervision Department is the company’s internal audit institution, which supervises and inspects the company’s business activities, risk management, internal control, financial information and other matters. The internal audit institution shall maintain independence and be equipped with full-time auditors. It shall not be placed under the leadership of the financial department, or work together with the financial department.
The internal audit organization is responsible to the board of directors and reports to the audit committee of the board of directors. The internal audit institution shall accept the supervision and guidance of the audit committee during the inspection and supervision of the company's business activities, risk management, internal control, financial information, etc.
The Audit Committee participates in the evaluation of the person in charge of internal audit.
Article 5 The internal audit institution should be equipped with appropriate full-time internal audit personnel, establish an effective corporate management quality monitoring and supervision system, and understand and actively participate in the development and construction of the company's internal control system. Internal audit staff should have relevant professional knowledge and business capabilities in auditing, accounting, economic management and law that are suitable for internal audit work.
Article 6 The company shall have one person in charge of the audit, who shall be fully responsible for the internal audit work. The person in charge of the audit shall be nominated by the Audit Committee and appointed or removed by the Board of Directors.
Article 7 Internal auditors must maintain due professional prudence, and when handling internal audit affairs, they must abide by professional ethics and be independent, objective, fair and diligent.
Article 8 When internal auditors perform their work responsibilities, the auditees shall actively cooperate and shall not hinder or obstruct the development of internal audit work, let alone retaliate against internal auditors.
The company's internal agencies or functional departments, holding subsidiaries, and joint-stock companies that have significant influence on the company shall cooperate with the internal audit institution in performing their duties in accordance with the law and shall not hinder the work of the internal audit institution.
Chapter 3 Authority of the Internal Audit Institution
Article 9 When an internal audit institution conducts an internal audit, the auditee shall be obliged to assist according to the audit requirements and provide relevant information truthfully.
Article 10 The internal audit institution has the right to require relevant units to submit various plans, statements, contracts and other documents related to operation and management on time. When the relevant departments of the company and its holding subsidiaries prepare plans and implementation results for scientific research, production, sales, finance, human resources, etc., they shall send copies to the internal audit institution.
Article 11 The internal audit institution has the right to participate in the company's major production and operation decision-making meetings, the negotiation and signing of important contracts and agreements by the company and its holding subsidiaries, and the bidding and evaluation of large-scale procurement, contracting projects and other matters. The internal audit institution should be invited to participate.
Article 12 The internal audit institution has the right to inspect the company's monetary funds, bank deposits and other physical assets, inspect the company's relevant computer systems and its electronic database information, and has the right to conduct audit investigations on the audited objects, question relevant parties and collect evidence.
Article 13 The internal audit institution has the right to temporarily seal relevant accounting vouchers, accounting books, accounting statements and other financial accounting materials.
Chapter 4 Work Content and Responsibilities of Internal Audit Institutions
Article 14 Internal audit work is divided into two types: regular audit and special audit. Regular audit is mainly conducted on the company’s daily production and operation, financial status and implementation of the internal control system. The scope of special audits includes audits of the conclusion and implementation of important contracts, audits of budgets and final accounts of major investment projects and major scientific research projects, audits of the formulation and implementation of marketing plans, audits of the resignation of persons in charge of positions with important responsibilities, etc.
Article 15 The internal audit department shall perform the following main responsibilities:
(1) Inspect and evaluate the integrity, rationality and effectiveness of the internal control systems of the company’s internal institutions, holding subsidiaries and joint-stock companies that have a significant impact on the company;
(2) Audit the accounting data and other relevant economic data of the company’s internal institutions, holding subsidiaries and joint-stock companies that have a significant impact on the company, as well as the legality, compliance, authenticity and completeness of the reflected financial revenues and expenditures and related economic activities, including but not limited to financial reports, performance forecasts, performance bulletins, voluntary disclosure of predictive financial information, etc.;
(3) Assist in establishing and improving the anti-fraud mechanism, determine the key areas, key links and main contents of anti-fraud, and pay attention to and inspect possible fraud during the internal audit process. If any major issues or clues related to the company are discovered, they should immediately report directly to the audit committee;
(4) Report to the board of directors or the audit committee at least once every quarter, including but not limited to the implementation of the internal audit plan and problems discovered during the internal audit work;
(5) Actively cooperate with the Audit Committee in communicating with accounting firms, national audit institutions and other external audit units, and provide necessary support and collaboration.
Article 16 The internal audit department shall establish a working paper system, establish a corresponding file management system in accordance with relevant laws and regulations, and clarify the retention time of internal audit work reports, working papers and related materials.
Article 17 The internal audit department shall submit an internal audit report to the board of directors or the audit committee at least once a year.
Article 18: For internal control deficiencies discovered during the review process, the internal audit department shall urge the relevant responsible departments to formulate rectification measures and rectification time, conduct follow-up reviews of internal controls, and supervise the implementation of rectification measures. If the internal audit department discovers major deficiencies or major risks in internal control during the review process, it shall promptly report to the board of directors or audit committee.
Article 19 The audit committee shall supervise the internal audit department to inspect the following matters at least once every six months, issue an inspection report and submit it to the audit committee:
(1) The implementation of major events such as the use of funds raised by the company, provision of guarantees, related transactions, high-risk investments such as securities investments and derivatives transactions, provision of financial assistance, purchase or sale of assets, external investments, etc.;
(2) The company's large capital transactions and capital transactions with directors, senior managers, controlling shareholders, actual controllers and their related parties.
If the inspection specified in the preceding paragraph finds that the company has violated laws, regulations, irregular operations, etc., the audit committee shall report to the Shenzhen Stock Exchange in a timely manner.
The audit committee shall issue written evaluation opinions on the effectiveness of the company's internal controls based on the internal audit report and relevant materials submitted by the internal audit institution, and report to the board of directors.
If the board of directors or the audit committee believes that there are major flaws or major risks in the company's internal control, or if the sponsor, independent financial consultant, or accounting firm points out that there are major flaws in the effectiveness of the company's internal control, the board of directors shall report to the Shenzhen Stock Exchange in a timely manner and disclose it. The company shall disclose in the announcement any major deficiencies or major risks in internal control, the consequences that have occurred or may result, and the measures that have been taken or planned to be taken.
Chapter 5 Internal Audit Work Procedures
Article 20 Routine audit procedures:
(1) Prepare annual audit work plan. The internal audit institution should determine the annual audit focus according to the requirements of the audit committee and the actual situation of the company, formulate an annual audit work plan, and submit it to the audit committee for approval before implementation;
(2) Determine the audit objects and members of the audit working group. Determine the audit objects, audit time, audit methods and audit team members according to the audit plan, and prepare an internal audit program list;
(3) Issue a written internal audit notice to the auditee. The audit notice shall specify the purpose of the audit, the method of audit, the list of members of the audit team, the start time of the audit, and the information that needs to be prepared and provided by the audited unit, etc.;
(4) Officially enter the site to conduct internal audit of the audited unit. The audit team should be composed of two or more auditors to jointly carry out internal audit investigation work. During the audit process, internal audit working papers should be prepared as required;
(5) For problems discovered during the audit process, rectification opinions should be provided to the auditee in a timely manner, and the audited unit should be urged to make rectifications as required. After the audit is completed, a written internal audit report should be prepared and submitted to the audit committee;
(6) Determine whether follow-up audits are needed based on the rectification status of the audited unit.
Article 21 Special audit work procedures:
The establishment of special internal audit projects shall be temporarily determined by the internal audit institution based on the actual situation, and the special audit plan shall be reported to the Audit Committee and implemented after approval. The implementation procedures of the special audit shall be carried out in accordance with the regular audit procedures.
Chapter 6 Rewards and Punishments
Article 22 The internal audit institution has the right to make recommendations to the company on commendations and rewards for departments and individuals who have modelly complied with laws, regulations, company articles of association, and various rules and regulations and made outstanding achievements during the year, creating good economic and social benefits for the company.
Article 23 For units and individuals that violate the provisions of this system and attempt to evade internal audit supervision, the internal audit institution has the right to recommend that the company take administrative sanctions against the parties involved. If it causes economic losses to the company, it shall be ordered to compensate for the losses. If it is suspected of illegal crimes, it shall be transferred to judicial authorities for handling according to law.
Chapter 7 Supplementary Provisions
Article 24 The right to interpret this system belongs to the board of directors.
Article 25 This system is formulated by the Audit Committee of the Board of Directors and will come into effect after approval by the Board of Directors.
Guangzhou Wondfo Biotechnology Co., Ltd.
October 2025