HM factory audit procedures

HM factory audit procedures

Page 1 of 1 Hallmark Cards (HK) Ltd. - Compliance
Hallmark hopes that the factory will follow Hallmark's audit procedures during the audit of the factory's code of conduct to ensure that the audit can be carried out smoothly and orderly. All data viewed during the audit is only used to evaluate whether the factory's minimum wage, overtime pay, worker age, health and safety, etc. comply with local laws and regulations on labor, health and safety, and environmental protection.

1. Audit Procedure (1) First Meeting
a. Before the audit begins, the auditor of Hallmark or the auditor of the notary firm commissioned by Hallmark will hold an initial meeting with the factory management to explain the purpose of the audit, the requirements of Hallmark's Code of Conduct, the assistance required from the factory, possible questions, etc. We recommend that both parties reach a consensus before the audit.

(2) Visit the factory and review documents
a. When inspecting the factory, the factory management must assign a person who is familiar with the factory operation to accompany the auditor and explain the factory structure, where the auditor is, and what process is being carried out. The factory must allow the auditor to enter all areas of the factory, including workshops, dormitories, warehouses, offices, etc.
b. The supplier shall provide the auditor with the documents in the list of “Please prepare the following records for the auditor’s reference” and allow the auditor to take a copy of the documents back for reference.
c. When necessary, the auditor will review the information related to the employees' work to verify whether the factory's operations comply with local laws and regulations and the requirements of Hallmark's Code of Conduct.

(3) Visiting workers
a. The auditor will randomly select some employees in the factory for individual interviews. Before interviewing the workers, the factory is expected to prepare a separate room for the auditor. Factory personnel are not allowed to be present during the auditor's visit. The interview will involve the workers' age, salary, province of origin, and their understanding of various factory regulations and rules.

(4) Internal meetings
a. The auditor discusses the non-conformities found during the factory visit, document review, and worker interviews and completes a preliminary report.

(5) Summary meeting
a. After all documents have been checked and the workers have been interviewed, the auditor will hold a summary meeting with the management to discuss the preliminary review results and areas that the factory needs to improve. If the audit results do not meet the requirements, Hallmark will request a re-audit of your factory.

2. Audit Report The formal audit report includes the non-conformities found in the audit and suggestions on how the factory can make improvements. The audit report is sent to the factory by the purchasing department of Hallmark. After receiving the report, the factory management needs to give Hallmark a corrective action plan or hold a meeting with Hallmark to discuss the corrective measures that the factory needs to take.

3. Re-audit Hallmark will arrange a re-audit of the supplier to verify whether the supplier has implemented corrective measures. If it is found that the factory has not taken any corrective measures within the deadline, Hallmark will cancel the unfinished order with the factory and terminate its business relationship with it.