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The audit was prompted by allegations in the Mail on Sunday of poor working and living conditions for workers at the plant in LongHau in China's Shenzhen province.

Apple interviewed over 100 randomly selected employees representing a cross-section of line workers, inspected factory floors, dormitories, dining hall and recreation areas and reviewed thousands of documents including personnel files, payroll data, time cards, and security logs.

The investigators found no evidence whatsoever of the use of child labour, any form of forced labour or forced overtime. Living conditions for the plant's 200,000 workers, of whom less than 15 per cent work on Apple products, include housing, banks, a post office, a hospital, supermarkets, and a variety of recreational facilities including football fields, a swimming pool, TV lounges and Internet cafes. The 10 cafeterias and 13 restaurants offer a variety of menu choices such as fresh vegetables, beef, seafood, rice, poultry, and stir-fry noodles. In addition, employees have access to 13 different restaurants on campus.

'Employees were pleased with the variety and quality of food offerings,' Apple said.

Although the inspection of on-site dormitories found no violations of the Code of Conduct, they were not satisfied with the living conditions of three of the off-site leased dorms, which it felt were overcrowded, confirming at least one of the Mail on Sunday allegations. But Apple said that Foxconn had already acquired additional land and is currently building new dormitories to increase the total living space by 46 per cent over the next four months.

The audit showed that all workers earn at least the local minimum wage, with more than half earning above minimum wage. Employees can also earn

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bonuses and receive a comprehensive medical plan including free annual check-ups. However the pay structure was deemed too complex, making it difficult to understand the combination of base pay, skill bonus, attendance bonus, housing allowance, meal allowance and overtime. Foxconn has since introduced a simplified remuneration package in line with Apple policy. It has also set weekly overtime limits after Apple found that some employees were exceeding its 60 hours per week ceiling.

'Although our Code of Conduct allows overtime limit exceptions in unusual circumstances, we believe in the importance of a healthy work-life balance and found these percentages to be excessive,' Apple said.

Working conditions inside the factories were found to be good: bright, clean and modern with air-conditioned assembly line areas. Workers are provided with protective gear and there is an employee grievance process, including a telephone hotline, a CEO mailbox for complaints and employee suggestion boxes.

Isolated disciplinary practices, however were condemned, with two employees reporting that they had been made to stand at attention.

'Apple has a zero tolerance policy for any instance, isolated or not, of any treatment of workers that could be interpreted as harsh,' the company said. Foxconn has begun an 'aggressive' manager and employee training program to ensure such behaviour is not repeated.

Apple will complete audits of all final assembly suppliers of Mac and iPod products in 2006.

'Apple is committed to the highest standard of social responsibility in everything we do and will always take necessary action accordingly,' it said. 'We are dedicated to ensuring that working conditions are safe and employees are treated with respect and dignity wherever Apple products are made.'

To read the complete report go to apple.com/hotnews/ipodreport.

Having survived Apple's audit, Foxconn is now in line to become the third manufacturer of MacBook portables, which are currently assembled by Asustek and Quanta. Foxconn currently builds Apple desktops.