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79

Annual Report 2013 − China Pacific Insurance (Group) Co., Ltd.

Internal Control

I. The Board’s Statement in Respect of Internal Control Responsibilities

The Board of Directors of the Company will be responsible for establishing and maintaining an internal control system for ensuring the completeness of financial reports.

The objectives of an internal control system regarding the financial report are to ensure that the information in the financial report is true, complete and reliable, and to prevent the risks of making material misstatements. Given the inherent limitations of an internal control system, reasonable guarantee can only be given in relation to the aforementioned objectives.

The board of directors of the Company has evaluated the self-control system in relation to financial reports in accordance with the "Basic Norms of Internal Control", and is of the opinion that such rules were effective on 31 December 2013.

In its self-evaluation regarding internal control, the Company did not find any significant and important defects regarding matters that did not relate to the financial report. General defects that may lead to risks were within a manageable risk and did not constitute a substantial impact on the overall operations of the Company. Corrective measures to such risks have been and continue to be implemented.

II. Establishment and Improvement of the Company’s Internal Control System

The Company is committed to establishing a sound internal control system in order to provide reasonable assurance of the achievement of internal control objectives, including the legal compliance of our operation and management, assets security and reliability, truthfulness and completeness of financial reports and related information, improvement of operation efficiency and implementation of development strategies for the sustainable development of the Company.

The Board of Directors of the Company is responsible for the sound establishment and effective implementation of its internal control. It is also responsible for reviewing the internal control structure, major internal control policy and the solution for significant risks, and studying and evaluating the comprehensiveness, rationality and effectiveness of internal control regularly. The Operation and Management Committee of the Company is responsible for establishing a sound internal control structure, improving the internal control system and providing guidelines for the the daily operation of internal control system. The Board of Supervisors of the Company is responsible for overseeing the establishment and implementation of sound internal control by the Board of Directors and the management.

In order to improve the internal control system, the Company established the “Provisional Measures of Internal Control for China Pacific Insurance (Group) Co, Ltd.”. The model of internal control with three levels was further strengthened and the responsibilities of management at each level of internal control were clarified, facilitating the effective operation of internal control. In 2013, we further enhanced the long-term effectiveness of our internal control system, focusing on process management and the prevention of contingent risks in new offices, new businesses and new processes. We also focused on risk respone and rectification, beginning with self-assessment which was reinforced by the issue of an updated internal control manual. To this end, we improved our identification, evaluation, mitigation of risks, thereby continually strengthening the internal control of the Company.

We conducted a self-assess of internal control as of 31 December 2013, with the key findings set out below:

Based on the conclusions relating to the major deficiencies of the Company’s internal control for financial reporting, on the baseline date there were no such deficiencies. The Board of Directors believes that the Company maintained effective internal control for financial reporting in all major aspects.

Corporate Governance

Internal Control

80 2013 年度報告 ( H 股 ) - 中國太平洋保險 ( 集團 ) 股份有限公司

reporting, on the baseline date there was no such deficiencies.

There were no factors which may affect these conclusions regarding the internal control effectiveness between the baseline date and the date of the issuance of the internal control assessment report.

The Company’s auditors also issued an audit report on the Company’s internal control, which is of the opinion that as of 31 December 2013 the Company has maintained effective internal control in all major aspects for financial reporting in compliance with the Basic Standards For Enterprise Internal Control and the supplementary guidelines as well as other applicable rules and regulations.

III. Progress of the Implementation of Internal Control

In 2013, in light of the the Basic Standards For Enterprise Internal Control and the supplementary guidelines (caikuai 2008, No. 7 and caikuai 2010, No. 11) jointly promulgated by the Ministry of Finance, CSRC, the Auditing Administration of the PRC, CBRC and CIRC, the Company continued to push ahead with the cultivation of its internal control system and with success. First, continuous efforts were made to enhance internal control by focusing on the contingent risks of new offices and new business, as well as creating long-term effctiveness by way of preventative and mitigating meaures. Secondly, we successfully carried out self- evaluation of internal control according to the working schedule and assessment standards were improved. Thirdly, the Company conducted audit work on internal control and achieved good progress.

IV. Establishment and Implementation of Accountability System for Material

Errors in Annual Report

The Company is committed to improving the development of its information disclosure system. It has set up and continuously improved the “Information Disclosure Management Measures” and “Working Procedures of Regular Reports”, which provided detailed rules for the report, circulation, review and disclosure procedures of information relevant to regular reports and established a standardized system for the collection, reporting and public disclosure of information and an accountability system for discrepancy.

Corporate Governance