Exhibit 10.1

CHINA VALVES TECHNOLOGY, INC.
AUDIT COMMITTEE CHARTER

The Purpose of the Audit Committee

The purpose of the Audit Committee of China Valves Technology, Inc. (the
“Company”) is to represent and assist the board of directors in its general
oversight of the Company’s accounting and financial reporting processes, audits
of the financial statements, and internal control and audit
functions.  Management is responsible for (a) the preparation, presentation and
integrity of the Company’s financial statements; (b) accounting and financial
reporting principles; and (c) the Company’s internal controls and procedures
designed to promote compliance with accounting standards and applicable laws and
regulations.  The Company’s independent auditing firm is responsible for
performing an independent audit of the consolidated financial statements in
accordance with generally accepted auditing standards.

The Audit Committee members are not professional accountants or auditors and
their functions are not intended to duplicate or to certify the activities of
management and the independent auditor.  Consequently, it is not the duty of the
Audit Committee to conduct audits or to determine that the Company’s financial
statements and disclosures are complete and accurate and are in accordance with
generally accepted accounting principles and applicable rules and
regulations.  These are the responsibilities of management and the independent
auditor.  The Audit Committee serves a board level oversight role where it
oversees the relationship with the independent auditor, as set forth in this
charter, receives information and provides advice, counsel and general
direction, as it deems appropriate, to management and the auditors, taking into
account the information it receives, discussions with the auditor, and the
experience of the Audit Committee’s members in business, financial and
accounting matters.

Membership and Structure

The Audit Committee is comprised of at least three directors determined by the
board of directors to meet the director and audit committee member independence
requirements and financial literacy requirements of The NASDAQ Stock Market,
Inc. (“NASDAQ”), the Securities and Exchange Commission or any other applicable
requirements.  At least one member of the Audit Committee must be financially
sophisticated, as determined by the Board, and no Audit Committee member may
have participated in the preparation of the financial statements of the Company
or any of the Company’s current subsidiaries at any time during the past three
years, each as required by NASDAQ listing standards.  Appointment to the Audit
Committee, including the designation of the Chair of the Audit Committee and the
designation of any Audit Committee members as “audit committee financial
experts”, shall be made on an annual basis by the full Board upon recommendation
of the Governance and Nominating Committee.  Meetings of the Audit Committee
shall be held at such times and places as the Audit Committee shall determine,
including by written consent.  When necessary, the Audit Committee shall meet in
executive session outside of the presence of any senior executive officer of the
Company.  The Chair of the Audit Committee shall report on activities of the
Audit Committee to the full Board.  In fulfilling its responsibilities the Audit
Committee shall have authority to delegate its authority to subcommittees, in
each case to the extent permitted by applicable law.
 
 
 
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Operations

The Audit Committee meets at least four times a year, on a quarterly
basis.  Additional meetings may occur as the Audit Committee or its chairperson
deems advisable.  The Audit Committee shall meet in executive session privately,
with the independent auditor, without the chief internal auditor and management
present, not less frequently than quarterly.  The Audit Committee will cause
adequate minutes of all its proceedings to be kept, and will report on its
actions and activities at the next quarterly meeting of the board of directors
of the Company.  Audit Committee members will be furnished with copies of the
minutes of each meeting and any action taken by unanimous consent.  The Audit
Committee is governed by the same rules regarding meetings (including meetings
by conference telephone or similar communications equipment), action without
meetings, notice, waiver of notice, and quorum and voting requirements as are
applicable to the board of directors of the Company.  The Audit Committee is
authorized to adopt its own rules of procedure not inconsistent with (a) any
provision of this Charter, (b) any provision of the Bylaws of the Company, or
(c) the laws of the state of Nevada.

The Chairman of the Audit Committee is to be contacted directly by the chief
internal auditor or the independent auditor (1) to review items of a sensitive
nature that can impact the accuracy of financial reporting or (2) to discuss
significant issues relative to the overall Board responsibility that have been
communicated to management but, in their judgment, may warrant follow-up by the
Audit Committee.

Authority

The Audit Committee will have the resources and authority necessary to discharge
its duties and responsibilities.  The Audit Committee shall have the authority
to engage independent legal, accounting and other advisers, as it determines
necessary to carry out its duties. The Audit Committee shall have sole authority
to approve related fees and retention terms.  Any communications between the
Audit Committee and legal counsel in the course of obtaining legal advice will
be considered privileged communications of the Company and the Audit Committee
will take all necessary steps to preserve the privileged nature of those
communications.

The Audit Committee may form and delegate authority to subcommittees and may
delegate authority to one or more designated members of the Audit Committee.

Responsibilities

The Audit Committee:

1.           is directly responsible for the appointment, compensation,
retention and oversight of the work of the independent auditor (including
resolution of disagreements between management and the auditors regarding
financial reporting), who shall report directly to the Audit Committee;
 
 
 
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2.           obtains and reviews annually a report by the independent auditor
describing the firm’s internal quality-control procedures, any material issues
raised by the most recent internal quality-control review or peer review or by
any inquiry or investigation by governmental or professional authorities, within
the preceding five years, respecting one or more independent audits carried out
by the firm, and any steps taken to deal with any such issues;

3.           reviews and discusses with the independent auditor the written
statement from the independent auditor concerning any relationship between the
auditor and the Company or any other relationships that may adversely affect the
independence of the auditor, and, based on such review, assesses the
independence of the auditor;

4.           establishes policies and procedures for the review and pre-approval
by the Audit Committee of all auditing services and permissible non-audit
services (including the fees and terms thereof) to be performed by the
independent auditor;

5.           reviews and discusses with the independent auditor (a) its audit
plans, and audit procedures, including the general audit approach, scope,
staffing, fees and timing of the audit, (b) the results of the annual audit
examination and accompanying management letters, and (c) the results of the
independent auditor’s procedures with respect to interim periods;

6.           reviews and discusses reports from the independent auditor on (a)
all critical accounting policies and practices used by the Company, (b)
alternative accounting treatments within GAAP related to material items that
have been discussed with management, including the ramifications of the use of
the alternative treatments and the treatment preferred by the independent
auditor, and (c) other material written communications between the independent
auditor and management;

7.           reviews and discusses with the independent auditor the independent
auditor’s judgments as to the quality, not just the acceptability, of the
Company’s accounting principles and such further matters as the independent
auditors present the Audit Committee under generally accepted auditing
standards;

8.           discusses with management and the independent auditor quarterly
earnings press releases, including the interim financial information and
business discussion included therein, reviews and discusses with management and
independent auditor the unaudited quarterly or interim financial statements and
the management discussion and analysis in the quarterly report or the annual
report, the year-end audited financial statements and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and, if deemed
appropriate, recommends to the board of directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year;

9.           reviews and discusses with management and the independent auditor
various topics and events that may have significant financial impact on the
Company or that are the subject of discussions between management and the
independent auditors;
 
 
 
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10.           reviews and discusses with management the Company’s major
financial risk exposures and the steps management has taken to monitor and
control such exposures;

11.           reviews and approves related-party transactions (as defined in the
relevant NASDAQ requirements);

12.           reviews and discusses with management, the independent auditor,
and the Company’s chief internal auditor (a) the adequacy and effectiveness of
the Company’s internal controls (including any significant deficiencies and
significant changes in internal controls reported to the Audit Committee by the
independent auditor or management), (b) the Company’s internal audit procedures,
and (c) the adequacy and effectiveness of the Company’s disclosure controls and
procedures, and management reports thereon;

13.           reviews annually with the chief internal auditor the scope of the
internal audit program, and reviews annually the performance of both the
internal audit group and the independent auditor in executing their plans and
meeting their objectives;

14.           reviews and concurs in the appointment, replacement, reassignment,
or dismissal of any chief internal auditor of the Company;

15.           reviews the use of auditors other than the independent auditor in
cases such as management’s request for second opinions;

16.           reviews matters related to the corporate compliance activities of
the Company;

17.           establishes procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls, or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters;

18.           establishes policies for the hiring of employees and former
employees of the independent auditor;

19.           publishes the report of the Audit Committee required by the rules
of the Securities and Exchange Commission to be included in the Company’s annual
proxy statement;

20.           periodically reviews with the Company’s in-house and independent
counsel any legal matters that could have a significant impact on the Company’s
financial statements, the Company’s compliance with applicable laws and
regulations, and any material reports or inquiries received from regulators or
governmental agencies;

21.           obtains timely reports from management and the Company’s senior
internal auditing executive and counsel that the Company and its subsidiaries
are in conformity with applicable legal requirements and the Company’s Code of
Ethics, including disclosures of insider and affiliated party transactions;
 
 
 
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22.           advises the Board of Directors with respect to the Company’s
policies and procedures regarding compliance with applicable laws and
regulations and with the Company’s Code of Ethics;

23.           reviews and approves the Company’s Code of Ethics, as it may be
amended and updated from time to time, and ensures that management has
implemented a compliance program to enforce such Code (which shall include
reporting of violations of such Code to the Audit Committee);

24.           reviews reported violations of the Company’s Code of Ethics;

25.           reviews and approves (a) any change or waiver in the Company’s
Code of Ethics for principal executives and senior financial officers and (b)
any disclosures made on Form 8-K regarding such change or waiver;

26.           when appropriate, designates one or more of its members to perform
certain of its duties on its behalf, subject to such reporting to or
ratification by the Audit Committee as the Audit Committee shall direct; and

27.           will engage in an annual self-assessment with the goal of
continuing improvement, and will annually review and reassess the adequacy of
its charter, and recommends any changes to the full Board.

The Audit Committee shall consult with management but may not delegate these
responsibilities, except as specifically provided for above.

Adopted by the Board of Directors on December 4, 2008

 
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