Exploring security auditing

That is, in security audits, “Item 3: Whether the costs allocated to security measures meet the **standard percentage**.” So **what is the standard for the proportion of funds allocated to safety?**

It should be the \"Interim Measures for the Financial Management of Safety Production Expenses in Enterprises in High-Risk Industries\", but there are significant differences in the degree of implementation across different regions

The Interim Measures for the Financial Management of Safety Production Expenses in High-Risk Industry Enterprises apply only to enterprises that are already in operation; it specifies the proportion of expenses to be allocated for safety purposes. For other enterprises, including newly established ones, no clear proportion for safety investments is outlined

Notice on Pre-tax Deduction of Safety Production Expenses in High-Risk Industries and Coal Production Safety Expenses, New Local Taxation Document No. [2008]69, Date of issuance: May 22, 2008. To the Local Tax Bureaus of Ili Kazakh Autonomous Prefecture, as well as those of various counties, prefectures, and cities; and to the directly affiliated collection bureaus and inspection bureaus of the Autonomous Region’s Local Tax Bureau: In accordance with the “Decision of the State Council on Further Strengthening Work Safety” (State Council Document No. 2), the Ministry of Finance and the **State Administration for Work Safety jointly formulated the “Interim Measures for the Financial Management of Safety Production Expenses in High-Risk Industry Enterprises” (Finance and Enterprise Affairs Document No. [2006]478). The **State Administration for Work Safety and the **Coal Mine Safety Supervision Bureau jointly issued the “Notice on Adjusting the Standards for Setting Aside Coal Production Safety Expenses and Strengthening the Management and Supervision of Such Expenses” (Finance and Construction Document No. 168). The following provisions are now established regarding the pre-tax deduction of safety production expenses for enterprises in high-risk industries, as well as those related to coal production: Enterprises engaged in coal production, mining, construction, hazardous material production, and road transportation, as well as other economic organizations, shall not be able to directly deduct the safety expenses for coal production or the safety production expenses specific to high-risk industries, which are calculated in accordance with relevant standards, before paying income tax ； The actual expenses incurred as mentioned above shall be deducted before tax in accordance with the actual amount ； For assets that constitute assets, depreciation or amortization is carried out in accordance with tax regulations. If a company had such unresolved issues from previous years, it shall be handled in the same manner. Attachments: 1. Notice from the Ministry of Finance and the State Administration of Work Safety on Issuing the “Interim Measures for the Financial Management of Safety Production Expenses in Enterprises in High-Risk Industries” (Caiqi [2006] No. 478). 2. Notice jointly issued by the State Administration of Work Safety and the Coal Mine Safety Supervision Bureau regarding the adjustment of the standards for allocating safety production expenses in coal mining, as well as measures to strengthen the management and supervision of such expenses (Caijian No. 168). 3. Notice from the Ministry of Finance, the National Development and Reform Commission, and the Coal Mine Safety Supervision Bureau on issuing the “Measures for the Allocation and Use of Safety Production Expenses in Coal Mining” and several regulations regarding the standardized management of funds allocated for coal mine maintenance (Caijian No. 119). March 21, 2008. Attachment 1: Notice from the Ministry of Finance and the State Administration of Work Safety on Issuing the “Interim Measures for the Financial Management of Safety Production Expenses in Enterprises in High-Risk Industries” (Caiqi [2006] No. 478). To the finance departments (bureaus) and work safety supervision bureaus of all provinces, autonomous regions, municipalities directly under the Central Government, and cities designated as separate planning units, as well as to the Finance Bureau of the Xinjiang Production and Construction Corps, and relevant centrally-administered enterprises: In order to establish a long-term mechanism for investment in work safety in enterprises in high-risk industries and to improve the financial management of such expenses, in accordance with the “Decision of the State Council on Further Strengthening Work Safety” (Guo Fa No. 2), the Ministry of Finance and the State Administration of Work Safety have jointly formulated the “Interim Measures for the Financial Management of Safety Production Expenses in Enterprises in High-Risk Industries”. It is hereby issued for your compliance. Appendix: Interim Measures for the Financial Management of Safety Production Expenses in Enterprises in High-Risk Sectors, December 8, 2006. Appendix: Interim Measures for the Financial Management of Safety Production Expenses in Enterprises in High-Risk Sectors. Chapter I: General Provisions. Article 1: These measures are formulated in order to establish a long-term mechanism for investment in safety production in enterprises in high-risk sectors, to strengthen the financial management of such expenses, and to protect the interests of enterprises, employees, as well as the public interest, in accordance with relevant laws and decisions issued by the State Council. Article 2 These Provisions apply to enterprises and other economic organizations (hereinafter referred to as enterprises) that engage in mining, construction, production of hazardous materials, and road transportation within the territory of the People’s Republic of China. **Where there are separate provisions for coal mining enterprises and fireworks manufacturing enterprises, such provisions shall apply. This regulation does not apply to less hazardous non-coal mines such as geothermal sites, hot springs, mineral water sources, salt mines, river sand mining, gold mining vessels, and small brick and tile clay mines. Article 3 Enterprises shall establish a management system for safety production expenses. Safety production expenses (hereinafter referred to as safety costs) refer to the funds that enterprises set aside in accordance with prescribed standards and include in their costs, specifically for improving and enhancing the conditions for safe production within the enterprise. Article 4: Safety expenses shall be financially managed in accordance with the principles of \"collection by enterprises, **supervision, ensuring necessity, and standardized use\". Article 5: The terms used in these measures mean the following: Mining refers to the exploration and production of petroleum and natural gas, metal ores, non-metallic ores, and other mineral resources, as well as the closure of mines and related activities. Construction refers to the construction, expansion, renovation of civil engineering projects, building projects, shaft and tunnel works, pipeline and equipment installation, as well as decoration projects, as well as mine construction. Hazardous goods refer to items listed in the **Standard ‘List of Hazardous Goods’ (GB12268)** and the **‘Catalogue of Highly Toxic Chemicals’** determined and published by relevant authorities, including hazardous goods used in military production as well as civilian **goods**, etc. Road transportation refers to the transport of passengers and goods using motor vehicles as means of transport. Chapter 2 Standards for Allocating Safety Expenses Article 6 Safety expenses for mining enterprises shall be allocated on a monthly basis, based on the output volume of the raw minerals mined. The standards for allocating safety expenses per unit of output for various types of mineral ores are as follows: (1) For petroleum, 17 yuan per ton of crude oil ； (II) Natural gas: 5 yuan per thousand cubic meters of raw gas ； (III) Metal mines: 4 yuan per ton for open-pit mines, and 8 yuan per ton for underground mines ； (IV) Nuclear industry mines: 22 yuan per ton ； (5) Non-metallic mines: 1 yuan per ton (cubic meter) for open-pit mines, and 2 yuan per ton (cubic meter) for underground mines ； (VI) Small open-pit quarries, namely those with an annual extraction volume of 500,000 tons or less and a maximum mining depth of no more than 50 meters, whose output is used in construction and road paving – such quarries are subject to a fee of 0.5 yuan per ton. Crude mineral production does not include tailings and low-grade ores used for comprehensive utilization in metal and non-metal mine tailing ponds and waste dumps. Article 7: For coal mines, as well as metal and non-metal mines that occur in association with coal, mines operated underwater, mines at risk of spontaneous combustion, mines operated beneath buildings or structures that need protection or railways, and other mines with special requirements regarding safe production, the extraction standards may be increased on the basis specified in Article 6 of these regulations, upon approval by the provincial work safety supervision agency in conjunction with the finance department (bureau). However, the increase in the extraction standards shall not exceed 50% of the original standards. Article 8 Construction enterprises shall use the cost of construction and installation projects as the basis for calculation. The standards for allocating safety costs for various types of projects are as follows: (1) For building construction projects and mining projects, it is 2.0% ； (II) For power engineering, water resources and hydropower engineering, and railway engineering, it is 1.5% ； (III) Municipal public works, smelting projects, mechanical and electrical installation projects, chemical and petroleum engineering, port and waterway projects, highway projects, and communication projects are 1.0%. The safety funds allocated by construction companies are included in the project cost, and they must not be deducted during bidding. **If there are separate provisions regarding the estimated cost of capital construction investment, those provisions shall apply. The general contractor shall pay the safety expenses to the subcontractors in proportion, without the subcontractors making additional deductions. Article 9: Hazardous goods manufacturing enterprises shall calculate the provision based on their actual sales revenue for the current year, using an excess progressive method and in accordance with the following standards on a monthly basis: (1) If the actual annual sales revenue is 10 million yuan or less, a provision of 4% shall be made ； (II) For the portion of the actual annual sales revenue ranging from 10 million yuan to 100 million yuan (inclusive), a levy of 2% shall be applied ； (III) For the portion of the actual annual sales revenue ranging from 100 million yuan to 1,000 million yuan (inclusive), a levy of 0.5% shall be applied ； (IV) For the portion of the actual annual sales revenue that exceeds 1,000 million yuan, a levy of 0.2% shall be applied. Article 10 Road transportation enterprises shall calculate the provision based on their operating revenue, in accordance with the following standards on a monthly basis: (1) For passenger transport services, the provision shall be calculated at 0.5% ； (II) The ordinary freight transportation business is subject to a levy of 1% ； (III) A fee of 1.5% is charged for special freight services such as those involving hazardous goods. Article 11: When the balance in the special account for safety expenses of small and medium-sized enterprises and large enterprises at the end of the previous year reaches 5% and 2% of the enterprise’s sales revenue for that previous year, respectively, with the approval of the local work safety supervision and management department in conjunction with the finance department, the enterprise may defer or reduce the amount of safety expenses to be set aside for that year. The criteria for classifying enterprise sizes are in accordance with the provisions set out in the \"Notice on Issuing Interim Regulations on the Standards for Small and Medium-sized Enterprises\" issued by the former **Economic and Trade Commission, the former **Planning Commission, the Ministry of Finance, and the **Statistics Bureau (Guo Jing Jiao Zhong Xiao Qi 143), as well as the \"Interim Methods for Classifying Enterprises into Large, Medium, and Small Sizes for Statistical Purposes\" issued by the **Statistics Bureau (Guo Tong Zi 17). Article 12: Before the promulgation of these measures, if provincial-level authorities had already established rules regarding the allocation and use of funds for enterprise safety production, and those standards were lower than those specified in these measures, they shall be adjusted in accordance with these measures ； If it is higher than the standards specified in these regulations, the original standards shall apply. Chapter 3 Use and Management of Safety Production Expenses Article 13 Safety expenses shall be used within the scope specified below. (1) Expenditures for improving, upgrading, and maintaining safety protection equipment and facilities, including: 1. Safety equipment and facilities in mining enterprises refer to comprehensive dust control systems, geological monitoring systems, fire and explosion prevention measures, water control systems, hazardous gas detection systems, ventilation systems, equipment for supporting structures and preventing slope failures, mechanical and electrical equipment, power supply and distribution systems, transportation (elevation) systems, as well as tailing ponds (dams), etc ； 2. Safety equipment and facilities in hazardous materials manufacturing enterprises refer to devices and systems such as those for monitoring, surveillance, ventilation, sun protection, temperature control, fire prevention, fire suppression, explosion prevention, pressure relief, poison prevention, disinfection, neutralization, moisture prevention, lightning protection, static electricity prevention, corrosion prevention, leakage prevention, as well as protective barriers or isolated operation areas in workplaces such as workshops and warehouses ； 3. Safety equipment and facilities for road transportation enterprises refer to systems for detecting and maintaining the safety condition of transport vehicles, as well as additional safety devices attached to these vehicles. (II) Expenditures on necessary emergency rescue equipment and devices, as well as safety protection items for on-site workers. (III) Expenditures on safety production inspections and evaluations. (IV) Expenditures on the assessment, rectification, and monitoring of major hazard sources and potential major accidents. (5) Expenditures on safety skills training and emergency rescue drills. (VI) Other expenses directly related to work safety. Article 14 Within the scope of use specified in these measures, enterprises shall prioritize using safety funds to meet the remedial actions required by the work safety supervision and management authorities for ensuring safe production, or to cover the expenses necessary to meet work safety standards. Article 15: Enterprises shall keep safety funds in a separate account for accounting purposes and allocate them for use within the prescribed scope. The annual surplus is carried forward to the following year; if the safety expenses allocated in the current year are insufficient, the excess amount is accounted for through regular cost and expense channels. After going through its internal decision-making processes, the group company can centrally manage and allocate in a coordinated manner the safety funds set aside by its subsidiaries. Article 16 Enterprises shall establish and improve internal systems for managing safety expenses, clarify the procedures, responsibilities, and authorities regarding the use and management of such expenses, and submit to the supervision of the work safety supervision and management departments as well as the financial authorities. Article 17 Assets formed from safety funds utilized by enterprises shall be included in the relevant assets for management. Article 18: Enterprises shall arrange group personal accident insurance or individual accident insurance for employees who are engaged in high-risk tasks such as work at heights, under high pressure, with flammable or explosive materials, in environments involving highly toxic substances, in radioactive areas, for high-speed transportation, in the field, or in mines. The required insurance costs are directly included in the costs (expenses) and are not accounted for under safety expenses. The costs incurred by enterprises for occupational disease prevention and control, work-related injury insurance, and medical insurance for their employees are not included in the safety expenses. Article 19: Mining enterprises that have already allocated funds for maintaining simple reproduction shall continue to do so, but such funds may no longer be used for purposes related to safe production. Article 20: When a hazardous materials manufacturing enterprise changes its production scope, suspends production, ceases operations, or dissolves, the remaining amount of safety funds shall be used to cover the expenses associated with dealing with the equipment used in hazardous materials production or storage, the inventory products, and the raw materials required prior to such change in production scope, suspension of production, cessation of operations, or dissolution. Article 21: Where an enterprise changes its equity structure or organizational form due to factors such as the transfer of property rights or restructuring into a corporate form, the surplus safety funds shall continue to be managed and used in accordance with these provisions. When an enterprise adjusts its business operations, ceases to operate, or undergoes liquidation in accordance with the law, the remaining safety funds must be transferred to the current period’s earnings or the liquidation proceeds. Chapter 4 Financial Supervision Article 22 Enterprises shall allocate safety funds in a timely and sufficient manner, and use them in accordance with relevant regulations. In the annual financial accounting report, enterprises should disclose the specific details regarding the allocation and use of safety expenses. Article 23 The financial authorities and the work safety supervision and management departments shall supervise and inspect the allocation, management, and use of enterprise safety funds. Article 24: If an enterprise fails to allocate and utilize safety funds in accordance with these provisions, the work safety supervision and management department shall, in conjunction with the finance department, order it to make corrections within a specified time limit and issue a warning. If the violation is not corrected within the prescribed time, the work safety supervision and management department will take action in accordance with relevant regulations. Chapter 5 Supplementary Provisions Article 25 The accounting treatment of enterprise safety expenses shall comply with the provisions of the **uniform accounting system. Article 26 The financial departments and work safety supervision and management departments of various provinces, autonomous regions, and municipalities directly under the Central Government may formulate specific implementation measures in light of the actual conditions of their respective regions, and submit them to the Ministry of Finance and the **State Administration of Work Safety for the record. Article 27 These measures shall be interpreted by the Ministry of Finance and the **General Administration of Work Safety Supervision and Management. Article 28 These Provisions shall come into force as of January 1, 2007. Appendix 2: Notice from the **General Administration of Work Safety** and the Coal Mine Safety Supervision Bureau regarding the adjustment of the standards for setting aside funds for coal production safety, as well as the strengthening of management and supervision over the use of such funds. Date: April 8, 2005; Document No.: Cai Jian 168. To the finance departments (bureaus), development and reform commissions, economic and trade commissions, work safety supervision bureaus, coal mine safety supervision agencies, and coal industry management departments in all provinces, autonomous regions, municipalities directly under the Central Government, and cities with separate planning status; as well as to coal mine safety supervision agencies at all levels and coal mining enterprises under central government management: In order to encourage coal production enterprises to invest more in safety facilities, the provisions related to the standards for setting aside funds for coal production safety (hereinafter referred to as “safety funds”) and the management of their use, as outlined in the notice issued by the Ministry of Finance, the **Development and Reform Commission**, and the **Coal Mine Safety Supervision Bureau** titled “Notice on Issuing the Measures for the Setting Aside and Use of Funds for Coal Production Safety and Several Provisions on Regulating the Management of Funds Allocated for Coal Mine Maintenance” (Cai Jian [2004] No. 119), are being adjusted and improved. The specific notices are as follows: I. Adjustment of the standards for allocating safety funds (1) Large and medium-sized coal mines: For mines with high gas levels, coal and gas outbursts, severe spontaneous combustion issues, or high water inflow, the amount per ton of coal should be no less than 8 yuan; among these, 45 key coal production enterprises are required to allocate no less than 15 yuan per ton of coal (the list is attached) ； 2. In low-gas mines, it should be no less than 5 yuan per ton of coal ； 3. The cost per ton of coal in open-pit mines should be no less than 3 yuan. (II) Small coal mines: 1. For mines with high gas concentrations, coal and gas outbursts, severe spontaneous combustion issues, and high water inflow, the cost per ton of coal shall be no less than 10 yuan ； 2. For low-gas mines, it should be no less than 6 yuan per ton of coal. Coal production enterprises should, on the basis of the aforementioned standards and in accordance with the actual needs of safe production, determine scientifically and reasonably the specific criteria for allocating safety funds, and submit them to the local competent tax authorities, financial departments, coal industry regulatory agencies, coal mine safety supervision bodies, as well as coal mine safety inspection agencies at all levels for record-keeping. Once the standard for allocating safety expenses is established, coal production enterprises shall not change it arbitrarily. If a change is indeed necessary, it must be filed with the local competent tax authorities, financial departments, coal industry regulatory bodies, coal mine safety supervision agencies, and coal mine safety inspection agencies at all levels before it can be implemented starting from the following year. II. No department or entity shall, in any form, collect the safety funds set aside by coal production enterprises. III. Improve the regulatory measures for the allocation and use of safety funds. Coal production enterprises must allocate safety funds in a timely and sufficient manner in accordance with the established standards, and use them entirely for expenditures related to safe coal mining operations as required by regulations. Coal mine safety supervision agencies at all levels, as well as relevant local departments – in particular those responsible for coal mine safety regulation – must strictly adhere to relevant regulations and take scientific and effective measures to strengthen supervision and inspection of the allocation and use of safety funds by coal production enterprises, so as to maximize the effectiveness of these funds. IV. Matters not covered in this notice shall continue to be governed by the Notice issued by the Ministry of Finance, the **Development and Reform Commission, and the **Coal Mine Safety Inspection Bureau regarding the issuance of the \"Regulations on the Allocation and Use of Funds for Coal Production Safety\" and the \"Several Provisions on Standardizing the Management of Funds for Coal Mine Simplification\" (Cai Jian [2004] No. 119). V. This notice shall come into effect as of April 1, 2005. The work safety supervision and management department may forward this notice to all coal production enterprises within the country. CC: General Office of the State Council, National Audit Office, **State Taxation Administration, Office of the State Council’s Work Safety Committee, Work Safety Committees of various provinces, autonomous regions, municipalities directly under the Central Government, and cities designated as separate planning units, Work Safety Committee of the Xinjiang Production and Construction Corps. Appendix 3: Notice from the Ministry of Finance, the National Development and Reform Commission, and the Coal Mine Safety Inspection Bureau regarding the issuance of the “Regulations on the Allocation and Use of Funds for Coal Production Safety” and the “Several Provisions on Standardizing the Management of Funds for Coal Mine Maintenance”, dated May 21, 2004, Document No. Cai Jian 119. To the finance departments (bureaus), development and reform commissions (planning commissions), economic and trade commissions (economic committees), coal mine safety inspection bureaus, and coal industry management agencies of all provinces, autonomous regions, municipalities directly under the Central Government, and cities with separate planning status; as well as to the coal mine safety inspection offices of the Beijing and Xinjiang Production and Construction Corps, and to coal mining enterprises under central government administration: In order to establish a long-term mechanism for investing in coal mine safety facilities, and with the approval of the State Council, a system has been put in place requiring coal production enterprises to set aside dedicated funds for safety purposes, while also standardizing the management of funds intended for coal mine maintenance. The Ministry of Finance, the **Development and Reform Commission**, and the **Coal Mine Safety Supervision Bureau**, based on consultations with the China Coal Industry Association, jointly formulated the \"Regulations on the Allocation and Use of Funds for Coal Production Safety\" and the \"Several Provisions on Standardizing the Management of Funds for Coal Mine Maintenance and Simplification.\" It is hereby issued; please comply with it. This Notice is to be forwarded by the **coal mine safety supervision agency to all coal production enterprises within the country. Attachments: 1. Measures for the Allocation and Use of Funds for Coal Production Safety; 2. Several Provisions on Standardizing the Management of Costs Related to Coal Mine Maintenance. Copies sent to: General Office of the State Council, **National Audit Office, **State Taxation Administration, Office of the State Council’s Work Safety Commission, as well as the work safety commissions of various provinces, autonomous regions, municipalities directly under the Central Government, cities designated as separate planning units, and the Xinjiang Production and Construction Corps. Appendix 1: Measures for the Allocation and Use of Funds for Coal Production Safety Article 1: In order to establish a long-term funding mechanism for safety facilities in coal mines, all coal production enterprises within China (hereinafter referred to as enterprises) shall implement a system for setting aside funds for coal production safety (hereinafter referred to as safety funds). These measures are formulated to strengthen the management of safety expenses. Article 2: The safety funds referred to in these measures are the funds that enterprises allocate from their costs, based on the actual output of raw coal, for investment in safety facilities in coal mines. Article 3: Enterprises shall allocate safety expenses to their costs on a monthly basis in accordance with the following standards. (1) Large and medium-sized coal mines: 1. For mines with high gas levels, coal and gas outbursts, severe spontaneous combustion issues, and high water inflow, the cost is 3 to 8 yuan per ton of coal ； 2. For low-gas mines, 2 yuan to 5 yuan per ton of coal ； 3. The cost for open-pit mines is 2 to 3 yuan per ton of coal. (II) Small coal mines: 1. For mines with high gas levels, coal and gas outbursts, severe spontaneous combustion issues, and high water inflow, 10 yuan per ton of coal ； 2. 6 yuan per ton of coal for low-gas mines. Regarding the enterprise classification standards, the current **Coal Industry Mine Design Standards** shall be followed ； The classification of high-gas, low-gas mines, and coal and gas outburst mines shall be carried out in accordance with the current provisions of the Coal Mine Safety Regulations. Prior to the issuance of these regulations, if enterprises have already been applying the safety expense allocation standards set by departments at or above the provincial level, they shall, in comparison with these regulations, follow the higher standard and file the relevant records in accordance with the prescribed procedures. Article 4: Enterprises shall determine their own standards for allocating safety expenses within the floating range set by the aforementioned standards and regulations, and submit them to the local competent tax authorities, coal management departments, and coal mine safety supervision agencies for record-keeping. Once the standard for allocating safety expenses is established, it shall not be altered arbitrarily. If a change is indeed necessary, it must be filed with the competent tax authorities, coal management departments, and coal mine safety supervision agencies before the new extraction standards can come into effect starting from the following year. Article 5: Safety expenses shall be arranged and used by the enterprise within the scope stipulated by these measures, stored in a dedicated account, and used exclusively for those purposes. The annual surplus funds can be carried over for use in the following year. Article 6 The specific uses of safety funds are as follows: (1) Expenditures for the renewal and renovation of the main ventilation equipment in mines ； (II) Expenditures for improving and upgrading mine gas monitoring systems and extraction systems ； (III) Improving and upgrading expenditures for comprehensive prevention and control of coal and gas outbursts in mines ； (IV) Improve and upgrade expenditures for mine fire prevention and control ； (V) Improving and upgrading expenditures for water control in mines ； (VI) Expenditures on improving and upgrading the safety protection equipment and facilities for mine mechanical and electrical equipment ； (VII) Expenditure on improving and upgrading the safety protection equipment and facilities in mine power supply and distribution systems ； (8) Expenditure on improving and upgrading the safety protection equipment and facilities of mine transportation (elevator) systems ； (IX) Expenditures on improving and upgrading the comprehensive dust control system in mines ； (10) Other expenses directly related to the safe production of coal mines. Article 7: The safety expenses allocated by enterprises may be deducted before the payment of enterprise income tax. Article 8: Accounting matters related to safety expenses shall be handled in accordance with the **Unified Accounting System. Article 9: Enterprises must effectively strengthen the management of the allocation and use of safety funds. An annual usage plan should be established and incorporated into the company’s overall budget. At the end of each year, enterprises shall submit reports on the allocation and use of safety expenses to the local authorities in charge of finance, taxation, auditing, coal management, as well as the coal mine safety supervision agencies, so as to be under supervision. Enterprises that fail to withdraw and use safety funds in accordance with these measures shall be ordered by the relevant authorities to make corrections within a specified time limit, and shall be punished in accordance with relevant laws and administrative regulations. Article 10 These measures shall come into effect as of the date of issuance. Appendix 2: Several Provisions on Regulating the Management of Coal Mine Maintenance Costs Article 1 These provisions are formulated to further standardize the management of costs for maintaining the simple reproduction of coal mines (hereinafter referred to as coal mine maintenance costs) and to improve the mechanism for investing in such maintenance. Article 2: The coal mine maintenance fund referred to in these regulations is the funds that all coal production enterprises within China (hereinafter referred to as enterprises) set aside from their costs, specifically for maintaining simple reproduction. Given that the expenditure items previously used for safety investments within the coal mine maintenance funds have been separated out, and a separate fund for coal production safety has been established (for the management procedures, see Annex 1 to this document), the coal mine maintenance funds referred to in these regulations do not include safety expenses, but do include costs related to shafts and tunnels. Article 3: Based on the actual output of raw coal, enterprises shall allocate funds for coal mine maintenance and simplification to costs on a monthly basis in accordance with the following standards: (1) For coal mines in provinces (regions) such as Hebei, Shanxi, Shandong, Anhui, Jiangsu, Henan, Ningxia, Xinjiang, and Yunnan, the amount is 8–50 yuan per ton of coal ； (II) Coal mines in provinces such as Heilongjiang, Jilin, and Liaoning: 8–70 yuan per ton of coal ； (III) Coal mines in Inner Mongolia Autonomous Region: 9–50 yuan per ton of coal ； (IV) Coal mines in other provinces (regions, municipalities): 10–50 yuan per ton of coal. Prior to the issuance of these regulations, the standards for the extraction of coal mine maintenance funds that enterprises were previously using, as set by departments at or above the provincial level, shall be compared with these regulations; the higher of the two standards shall be applied, and the matter shall be filed in accordance with the prescribed procedures. Article 4: The coal mine streamlining fees shall be accrued by coal enterprises in accordance with the prescribed standards, and the use of such funds shall be determined by the enterprises themselves. The extraction and use of coal mine streamlining funds should adhere to the principles of extracting funds first and then using them, operating within available resources, earmarking funds for specific purposes, and conducting separate accounting for them. The annual surplus funds from coal mine maintenance costs can be carried over for use in the following year. Article 5: The coal mine streamlining funds are primarily used for activities such as the expansion and deepening of mining operations to ensure the continuous and stable operation of the mines as well as safe production, thereby improving efficiency. The specific areas of application are: (1) mine (open-pit) development and deepening projects ； (II) Technical transformation of mines (open-pit) ； (III) Update and renovation of fixed assets in coal mines, as well as occasional purchases of fixed assets ； (IV) Supplementary exploration for production in mining areas ； (V) Expenditure on comprehensive utilization and treatment of ‘three wastes’ ； (VI) Costs associated with the demolition of 50 or more residential houses at large coal mines, as well as compensation for relocations within the affected areas of small and medium-sized coal mines ； (7) Promotion of new mining technologies ； (8) Joint projects for the renovation of small mines. Article 6: Accounting issues related to the cost savings for coal mines shall be handled in accordance with the **Unified Accounting System. Article 7: No unit or department shall force enterprises to withdraw the cost funds for streamlining operations. Article 8 These provisions shall come into force as of the date of issuance. Article 9: Matters not covered by these provisions shall continue to be governed by the previous regulations and procedures issued regarding maintenance fees.

Are the costs associated with safe production and the costs related to safety investments the same? They are different, aren’t they?

Security audit – well, it’s called a security audit; some companies refer to it as internal control. Its main content is still the existing stuff. Take our unit as an example; first, we check the implementation of the responsibility system. Second is to check the situation of safety education and training. Third is to check safety inspections and the rectification of potential hazards, etc.

Fully leverage the role of third parties and price assessment agencies. Monitor the progress of relevant matters.

This term, security audit, is indeed the first time I’ve heard of it, and I’ve never come across it before.

1. Responsibility system 2. Operational safety management 3. Training and education 4. Insurance 5. Investment 6. Accident handling 7. Risk management 8. Product safety 9. Inherent safety of equipment 10. Inspections