In July 2002, the US Congress worked out the "Sarbanes-Oxley Act", setting down regulations on internal control and information disclosure for listed companies in the US. In June 2008, the Chinese Ministry of Finance(MOF), the National Audit Office, and all three major industry regulators: the China Securities Regulatory Commission (CSRC), the China Banking Regulatory Commission(CBRC), and the China Insurance Regulatory Commission(CIRC) jointly launched “the Basic Standard for Enterprise Internal Control”. The Standard will be effective from 1 July 2009 among listed companies. Shanghai Stock Exchange and Hong Kong Exchange and Clearing Limited also set up rules on strengthening internal control of listed companies accordingly. Sinopec, a company listed on 4 domestic and overseas stock exchanges, has established a team for internal control led by the Chairman, President and CFO to promote the Company’s construction of internal control system. Special organizations have been set up within headquarters and all subsidiaries, respectively responsible for implementation and management of internal control.

In accordance with laws and regulations and considering the current operation and management status of the Company, centering on the Company’s development strategy, compliance goal, assets security goal, financial report goal, operational effect and efficiency goal, Sinopec comprehensively systemized all businesses and major events and finished compilation of “Internal Control Instruction”. The Instruction includes several parts, such as internal environment, risk evaluation, control activity, information and communication, internal supervision and so forth. The internal control system is classified to standardize management at important phrase and milestones in different business sectors. Meanwhile, subsidiaries are requested to work out detailed implementation rules along with each practical situation and finally form a two-level internal control system with Sinopec characteristics. After compilation and test in 2003, trial implementation in 2004, the Board of Directors approved the Instruction at the end of 2004. 1 January 2005 marked comprehensive implementation of internal control system in Sinopec.

Since the implementation of the internal control system started from 2005, the Company gradually extends the controlling range, fully makes use of controlling system like ERP to advance the combination of internal control system with daily management. In particular, on the basis of risk-orientation, controlling range is enlarged from business procedures to the whole company. Meanwhile, the Company established and perfected long-acting mechanism of internal control. For instance, updating the Institution in accordance with new supervision request and operational and management demand to improve internal control system. 2009 Internal Control Instruction was approved on the 26th plenary session of the 3rd Board of Directors in December 2008. 2009 Instruction consists of 18 categories, namely procurement, budget, cost, marketing, investment, etc. It also contains 59 business procedures, covering all aspects about company management.

In order to strictly conduct internal control system and ensure efficiency of the system, the Company formulated internal control self-check and evaluation method, constructed “headquarter-subsidiaries” two levels evaluation system. Headquarter annually organizes internal control evaluation, and subsidiaries regularly practice internal control self-check and procedures test. Besides, self-check and evaluation results will be included in evaluation system towards subsidiaries and their management level. In 2008, the Company self-checked internal control performance within all subsidiaries (including IT control system) and solved the existing problems.
 
In line with supervision requirements home and abroad, the Company made a self-evaluation on internal control effectiveness. It proved that the internal control performed function within reporting period and an effective anti-malpractice mechanism has been established, which can reasonably guarantee realization of the Company’s development strategy and every internal control goal. The financial reports met the local accounting standards and information was disclosed according to the regulatory requirements. Assessment report on the efficiency of the Company's internal control system has been worked out by external auditors.