REQUIREMENTS FOR A QUALIFIED ILS AUDIT AND ILS AUDIT REPORT

Disney encourages you to submit available audit reports that meet the definition of a qualified ILS Audit Report. Submitting preexisting qualified audits may help minimize audit duplication, reduce costs, and redeploy resources to remediation and continuous improvement. To be “qualified,” an ILS Audit and ILS Audit Report must meet requirements in four key areas

described in detail in this section:

• DATE OF THE ILS AUDIT REPORT

• TIMELY SUBMISSION OF THE ILS AUDIT REPORT

• MANNER OF CONDUCTING THE ILS AUDIT

• CONTENT AND FORMAT OF THE ILS AUDIT REPORT

THE FOLLOWING SECTION DESCRIBES IN DETAIL THE CONDITIONS TO BE MET IN

ORDER FOR AN ILS AUDIT REPORT TO BE CONSIDERED QUALIFIED:

DATE OF THE ILS AUDIT REPORT

The ILS Audit must have been conducted no more than six months prior to the date of its submission to Disney. The report also must be dated subsequent to any ILS Audit Reports previously provided to or obtained by Disney that identify MCS violations in the Facility.

TIMELY SUBMISSION OF THE ILS AUDIT REPORT

The ILS Audit Report must be received by Disney on or prior to the required submission date. You should regularly review your monthly Licensee/Vendor Status Report as well as any Corrective Action Plan (“CAP”) to determine the audit due date established by Disney. See Appendix 16: Sample Monthly Licensee/Vendor Status Report for details.)

MANNER OF CONDUCTING THE ILS AUDIT

ILS Audits must be conducted according to one of the following requirements:

* ILS Audits must be conducted in accordance with the standards of a multi stakeholder or industry initiative program recognized by Disney and must be performed by an authorized Social Compliance Monitoring Organization as designated by the respective program. (See the ILS Audits Conducted by Multi Stakeholder or Industry Initiative Programs section for the links to the respective program websites of authorized monitoring organizations.)

OR

* ILS Audits must be conducted in accordance with Disney’s ILS Audit standards and must be performed by a Social Compliance Monitoring Organization that is approved by Disney to conduct ILS Audits. (See Appendix 5: Social Compliance Monitoring Organizations for a representative sample of organizations that conduct ILS Audits.)

OR

* ILS Audits must be conducted in accordance with the standards of a well established brand, retailer, Licensee, or Vendor program recognized by Disney and must be performed by one of the qualified Social Compliance Monitoring Organizations as noted above. This may include audits performed by the internal or dedicated audit function of the recognized brand, retailer,Licensee, or Vendor program where approved by Disney.