Our list of qualified suppliers and factories is established and maintained in reliance on specific qualification standards and protocols developed by IPS, a function within our company that implements L Brands' standards and compliance protocols. First, the company's sourcing process includes a supplier verification and risk assessment procedure to prevent involvement with high-risk suppliers. Once a supplier has passed the risk assessment, the relationship between L Brands and a qualified supplier begins with a written master sourcing agreement wherein the supplier certifies that the factories that it contracts with and its own direct suppliers will strictly adhere to L Brands Sourcing and Labor Standards
, including those pertaining to slavery and human trafficking. Each supplier must agree to allow L Brands, or an independent third party hired by L Brands, to conduct an audit of the supplier's business unannounced, without prior notice. Depending on the circumstances, IPS or a third party conducts announced or unannounced audits of each of our approved factories at least annually to ensure compliance. The company may conduct more frequent reviews of suppliers located in countries designated as high risk by the U.S. State Department's Trafficking In Persons Report
. Exemptions from annual audits may be granted to highly compliant factories based on the previous year's audit scores.