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Clause No.Orignal Clause

Requirement

Levels of Non-

ConformanceAudit Findings

Corrective Action Plan (to be

completed by factory)

Implementation Steps and

Documentation Needs(to be

completed by factory)

Responsible Individual(to

be completed by factory)

Due Date(to be

completed by factory)Status

1

Description of Non Compliance: It was noted that management had not obtained the food

catering license for the employee canteen.

Legal Requirement: In accordance with Article 29 of the Law of the PRC on the Food Safety,

The state implements the permit system for producing and selling food. Enterprises engage in

food production, food circulation and catering service should obtain permits for food production,

food circulation and catering service as legally required.

Recommended Corrective Action: It is recommended that management adopt practices and

controls to ensure that a valid food catering license for the canteen is obtained.

5escrp on o on omp ance: ccor ng o e soca nsurance paymen recep prov e y

factory management, it was noted that only 14 out of 84 employees were provided with pension

and unemployment insurance, and only 25 out of 84 employees were provided with accident

and medical (including maternity) insurance in May 2013. The factory had obtained a waiver

dated May 6, 2013 from the local social insurance authority to prove that the current social

insurance scheme was in compliance with local requirements in terms of numbers of

participating employees and types of insurance. However, because not all the employees

required by law were provided with pension, maternity and unemployment insurance and the

, .Remarks: The factory provided commercial accident insurance to 32 employees with a valid

period from April 29, 2013 to April 28, 2014.

ega equremen: In accor ance w r ce o e a or aw o e eopes epu c o

China, employees shall, in accordance with the law, be entitled to social insurance benefits

under the following circumstances: (1) retirements; (2) illness or injury; (3) disability caused by

work-related injury or occupational disease; (4) unemployment; and (5) maternity. The

survivors of the insured laborers shall be entitled to subsidies for survivors in accordance with

the law. The conditions and standards for laborers to enjoy social insurance benefits shall be

stipulated by laws, rules and regulations. The social insurance amount that laborers and

, .

Recommended Corrective Action: It is recommended that factory management adopt practices

and controls to ensure that employees receive all of their statutory welfare entitlements.

6

Description of Non Compliance: It was noted that 20 out of 20 sample population employees

worked in excess of the statutory overtime hour limits.

A review of 20 sample population employees' time records (10 from the most recent pay month

March 2013, 5 from January 2013, and 5 from September 2012) yielded the following:

month (i.e. 82 hours) in March 2012, which was not in compliance with the legal requirement;

(i.e. 76 hours) in January 2013, which was not in compliance with the legal requirement;

(i.e. 80 hours) in September 2012, which was not in compliance with the legal requirement.

: I ,

consultation with the trade union and employees, the employer may extend working hours due

to its production or business needs, but the extended working hours shall not generally exceed

one hour a day; in special circumstances that require an extension of working hours, the

extended working hours shall not exceed 3 hours a day and 36 hours a month on condition that

.

Recommended Corrective Action: It is recommended that factory management adopt practices

and controls to ensure that employee overtime hours do not exceed the statutory limits.

7

Description of Non-Compliance: It was noted that bimanual handles devices were not installed

for 5 out of 5 stamping machines in the stamping workshop.

Clients Standard: Where appropriate machinery shall have operational safety devices.

Recommended Corrective Action: It is recommended that management adopt practices and

controls to ensure that all stamping machines are equipped with bimanual handles devices.

Description of Non Compliance: It was noted that the gap between stacks and walls was 0

meter in both raw material warehouse and finished good warehouse, which was less than the

legal requirement of 0.5 meter.

ega equremen : In accor ance w r ce o ues or are ouse re reven on

Safety Management: The goods in warehouse should be classified for storage. The area

occupied by any single stack should not be greater than 100 square meters. Space shall be at

least 1 meter between stacks; Space shall be at least 0.5 meter between stacks and the wall;

Space shall be at least 0.3 meter between stacks and beams or posts. The width of main

.

: I

controls to ensure that the width of gap between stacks and walls are in accordance with the

.

ompany: DONGGUAN J.D. LEATHER GOODS CO LTD

d dress: NO.2 XIWU STREET, XINAN ROAD ,HADI COMMUNITY SOUT HERN DIST RICT DONGGUAN GUANGDONG CHINA

V Reference: 10131150248

udit Date: 27-May-13

uditor(s): QUINCY MEI, KYLE LU

actory ID: F20179

upplier ID: 056262

olor Rating YELLOW

ext Audit Cycle 27-Nov-14

ompany Representative

cknowledgment:

Audit Standard: J C PENNEY SA SCORECARD V3 - 1 AUGUST2012

LAWS AND REGULATIONS

1. 5

All required

government licenses

and certificates related

to all areas of

operation are not

maintained on site (D)

Minor (YELLOW)

WAGES AND BENEFITS

5. 13

Failure to provide

legally mandated

benefits (I O D)

Minor (YELLOW)

HOURS OF WORK

6. 17Overtime in excess of

law or code (I D)Minor (YELLOW)

7. 1. 15No or missing

machine guards (O)Minor (YELLOW)

7. 1. 62 Other (I O D) Minor (YELLOW )

Corrective Action Plan Report

HEALTH AND SAFETY

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BUREAU VERITAS (CPS)

IMAGE RECORD

Image Record Rev. 1 (feb15th, 2006)

BV REPORT #: 10131150248 Client Name J. C. Penney PurchasingCorporation

Date of Audi t : May 27, 2013 Faci l i ty Name: Dongguan J. D. Leather GoodsCo., Ltd

Aud itor Name(s): Kyle Lu, Quincy Mei Any addi t iona lIn format ion

Nil

No bimanual handle deviceon stamping machines

Stacks against wall in finishedproduct warehouse