If the factory has been selected by SHC Company for a supplier code of conduct audit, SHC will arrange for an auditor from SHC or a third-party certification body to conduct an unannounced factory audit, with the audit costs borne by the supplier. SHC will not pre-notify suppliers/factories about the audit information. All suppliers/factories should be ready to accommodate SHC's factory audit at any time. If the factory refuses the auditor's audit work or refuses to provide documents and employee interviews, the audit will be deemed unsuccessful.

For standard factory audits, SHC will assign two inspectors to conduct a one-day review. The audit process includes an introductory meeting with relevant management, factory tours, document review, employee interviews, and a discussion of identified issues. Upon completion of the on-site audit, inspectors will submit a formal audit report to SHC. After reviewing the report, SHC will issue a formal audit rating: Acceptable, Continual Improvement Required, or Not Acceptable. Subsequently, a formal audit report with the conclusions will be emailed to the supplier/factory. Suppliers must review the audit results as required and ensure the factory develops a detailed action plan and timeline for improvements based on the audit report. Factory audit standards will be based on local laws and regulations, SHC's Supplier Code of Conduct, and the Customs-Trade Partnership Against Terrorism (CTPAT) requirements.