Clause No.

Orignal Clause
Requirement
Levels of Non-
Conformance
Audit 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.
5
Description of Non Compliance: According to the social insurance payment receipt provided by
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
local waiver cannot override national law, auditors concluded this issue as a finding.
Remarks: The factory provided commercial accident insurance to 32 employees with a valid
period from April 29, 2013 to April 28, 2014.
Legal Requirement: In accordance with Article 73 of the Labor Law of the Peoples Republic of
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
entitled to, must be timely paid in full amount.
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.
Legal Requirement: In accordance with Article 41 of the Labor Law of the PRC, after
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
the health of employees is guaranteed.
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.
Legal Requirement: In accordance with Article 18 of Rules for Warehouse Fire Prevention
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
passages shall be at least 2 meters.
Recommended Corrective Action: It is recommended that management adopt practices and
controls to ensure that the width of gap between stacks and walls are in accordance with the
legal requirement.
Company: DONGGUAN J.D. LEATHER GOODS CO LTD
Address: NO.2 XIWU STREET, XINAN ROAD ,HADI COMMUNITY SOUTHERN DISTRICT DONGGUAN GUANGDONG CHINA
BV Reference: 10131150248
Audit Date: 27-May-13
Auditor(s): QUINCY MEI, KYLE LU
Factory ID: F20179
Supplier ID: 056262
Color Rating YELLOW
Next Audit Cycle 27-Nov-14
Company Representative
Acknowledgment:
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. 17
Overtime in excess of
law or code (I D)
Minor (YELLOW)
7. 1. 15
No or missing
machine guards (O)
Minor (YELLOW)
7. 1. 62 Other (I O D) Minor (YELLOW)
Corrective Action Plan Report
HEALTH AND SAFETY

BUREAU VERITAS (CPS)

IMAGE RECORD

Image Record Rev. 1 (feb15th, 2006)
BV REPORT #: 10131150248 Client Name J. C. Penney Purchasing
Corporation
Date of Audit: May 27, 2013 Facility Name: Dongguan J. D. Leather Goods
Co., Ltd
Auditor Name(s): Kyle Lu, Quincy Mei Any additional
Information
Nil





No bimanual handle device
on stamping machines
Stacks against wall in finished
product warehouse