The 19^th FREP BAC meeting of the first term BAC was convened on the afternoon of April 21^st on the 15^th floor in Quanzhou office building, with presence of Chairman Warren Wilder and committee members Chen Xiaobo, Lin Li and Scott Sullivan.

FREP Chief Auditor Liu Cuixia presented to the Committee the accomplishment of 2014 internal audit KPIs and the assessment on FREP overall controls. BAC Secretary Mo Ping reported to the Committee the follow-up items agreed at last meeting and the overview of key audit items since then, with a key focus on the review of service provider audit in the previous years as requested by committee member Scott Sullivan. Finance General Manager Joe M. Francis made a presentation on control gap closure and 2015 controls plan on behalf of the Company management; KPMG also made a report on 2014 financial report audit as well as 2015 work plan.

The four committee members and directors affirmed the performance of internal audit in 2014. They regarded FREP internal audit team as a highly professional team that had absorbed and further optimized the advanced experiences of all shareholders to establish its own thinking and procedures of audit business, which also attracted quite a few buddy companies to learn from us as a model of SINOPEC joint ventures. In 2014, the internal audit team not only 100% completed the audit plan issued by BAC but also expanded the audit service scope with innovation in the fields of consultation service prior to audit and investigation during audit, making quite a big progress in competency improvement and team development.

The committee members appreciated the result of special audit on service procurement in previous years conducted by the internal audit team. No matter the amount of recovered cash or the pertinent recommendations indicated the professional value and position of the internal audit. They encouraged the team to build up a sound cycle of wrap-up, review, reference and improvement in the future, and provide more assistance and support to 2015 TA management team by drawing lessons from the findings of high and medium risks from audit on 2013 TA as well as 2011 TA so as to avoid recurrence of similar issues. In the meantime, the committee members endorsed the improvement plan and gap closure plan developed by 2015 TA management team and highly recognized the plans for business controls, control gap closure and internal work process optimization put forward by Mr. Joseph Francis on behalf of OOP. They expected the Company management to reinforce control of open gaps to prevent any business risk in the future.

The 2014 Audit Report prepared by KPMG was reviewed and endorsed at the meeting to be submitted to BOD for approval. Next BAC will be convened at the same time with BOD. (Wang Chuanhai)