Corporate Governance
I. Internal Audit Organization
(1) Internal Audit Organization:
The functions of internal audit are to investigate and evaluate deficiencies in the internal control system, assess operational efficiency, and provide timely recommendations for improvement to ensure the continued effective implementation of the internal control system. Internal audit also assists the Board of Directors and management in fulfilling their responsibilities effectively.
The Internal Audit Office is directly under the Board of Directors and consists of the Chief Internal Auditor and internal auditors. The acting auditor is designated in accordance with the Company's table of job deputies. The appointment and dismissal of the Chief Internal Auditor shall be approved by the Board of Directors and reported to the competent authority for recordation through the Internet Information System by the 10th day of the month following the Board's approval.
The Internal Audit Office operates as an independent and dedicated internal audit function and conducts regular and ad hoc operational and financial audits to effectively evaluate the soundness, reasonableness, and effectiveness of compliance with the internal control system.
(2) Responsibilities of the Internal Audit Function:
The Internal Audit Office is directly under the Board of Directors and consists of the Chief Internal Auditor and internal auditors. The acting auditor is designated in accordance with the Company's table of job deputies. The appointment and dismissal of the Chief Internal Auditor shall be approved by the Board of Directors and reported to the competent authority for recordation through the Internet Information System by the 10th day of the month following the Board's approval.
The Internal Audit Office operates as an independent and dedicated internal audit function and conducts regular and ad hoc operational and financial audits to effectively evaluate the soundness, reasonableness, and effectiveness of compliance with the internal control system.
1. Assist in auditing the implementation of various rules and regulations.
2. Provide recommendations for improvement to management.
3. Audit operating performance, budget execution, and financial conditions.
4. Formulate and implement the annual audit plan.
5. Coordinate the activities of internal and external audits.
6. Audit the documented procedures for various business cycles.
7. Update the internal control system and ensure its effective implementation.
2. Provide recommendations for improvement to management.
3. Audit operating performance, budget execution, and financial conditions.
4. Formulate and implement the annual audit plan.
5. Coordinate the activities of internal and external audits.
6. Audit the documented procedures for various business cycles.
7. Update the internal control system and ensure its effective implementation.
II. Internal Audit Operations
1. Independent Internal Audit Function: The Company's internal audit function is an independent unit directly under the Board of Directors and attends regular Board meetings to report on the implementation of internal audit activities.
2. Group Chief Audit Executive: The Company has a Group Chief Audit Executive and audit personnel at each major operating subsidiary.
3. Annual Audit Plan and Special Audits: Internal audit activities are primarily conducted in accordance with the annual audit plan, which shall be approved by the Board of Directors; the same applies to any amendments thereto. Special audits are also conducted as necessary. General and special audits provide management with information on the effectiveness of internal control functions and promptly communicate existing or potential deficiencies to management.
4. Review of Internal Control Self-Assessments: Internal Audit reviews the results of internal control self-assessments conducted by each unit, including whether the relevant procedures have been implemented and the supporting documentation, to ensure the quality of implementation. Based on the consolidated self-assessment results, Internal Audit prepares the Internal Control System Statement for submission to the Board of Directors.
5. Follow-up on Audit Deficiencies: Deficiencies identified through internal audits shall be properly followed up and reported.
6. Regulatory Filings: Internal audit personnel shall, on an annual basis and in accordance with the prescribed format, submit the required items to the competent authority for recordation through the Internet Information System within the prescribed deadlines:
8. Follow-up on Deficiencies: Internal audit personnel shall disclose deficiencies and abnormal matters in the internal control system identified during assessments in the audit reports. After the reports have been reviewed and approved, follow-up reports shall be prepared at least quarterly until the deficiencies have been rectified.
9. Retention of Audit Records: Audit reports, working papers, follow-up reports, and related materials shall be retained for at least five years.
2. Group Chief Audit Executive: The Company has a Group Chief Audit Executive and audit personnel at each major operating subsidiary.
3. Annual Audit Plan and Special Audits: Internal audit activities are primarily conducted in accordance with the annual audit plan, which shall be approved by the Board of Directors; the same applies to any amendments thereto. Special audits are also conducted as necessary. General and special audits provide management with information on the effectiveness of internal control functions and promptly communicate existing or potential deficiencies to management.
4. Review of Internal Control Self-Assessments: Internal Audit reviews the results of internal control self-assessments conducted by each unit, including whether the relevant procedures have been implemented and the supporting documentation, to ensure the quality of implementation. Based on the consolidated self-assessment results, Internal Audit prepares the Internal Control System Statement for submission to the Board of Directors.
5. Follow-up on Audit Deficiencies: Deficiencies identified through internal audits shall be properly followed up and reported.
6. Regulatory Filings: Internal audit personnel shall, on an annual basis and in accordance with the prescribed format, submit the required items to the competent authority for recordation through the Internet Information System within the prescribed deadlines:
1. Before the end of each fiscal year: File the audit plan for the following year.
2. By the end of January each year: File the roster of internal audit personnel.
3. Within two months after the end of each fiscal year: File the implementation status of the annual audit plan for the preceding year.
4. Within three months after the end of each fiscal year: File the Internal Control System Statement for the preceding year.
5. Within five months after the end of each fiscal year: File the deficiencies and abnormal matters in the internal control system identified through internal audits during the preceding year and the status of corrective actions.
7. Review by the Audit Committee and Independent Directors: A public company shall, after the audit reports and follow-up reports have been reviewed and approved, provide such reports to the Audit Committee and all independent directors for review by the end of the month following completion of the relevant audit items.2. By the end of January each year: File the roster of internal audit personnel.
3. Within two months after the end of each fiscal year: File the implementation status of the annual audit plan for the preceding year.
4. Within three months after the end of each fiscal year: File the Internal Control System Statement for the preceding year.
5. Within five months after the end of each fiscal year: File the deficiencies and abnormal matters in the internal control system identified through internal audits during the preceding year and the status of corrective actions.
8. Follow-up on Deficiencies: Internal audit personnel shall disclose deficiencies and abnormal matters in the internal control system identified during assessments in the audit reports. After the reports have been reviewed and approved, follow-up reports shall be prepared at least quarterly until the deficiencies have been rectified.
9. Retention of Audit Records: Audit reports, working papers, follow-up reports, and related materials shall be retained for at least five years.
III. Internal Audit Implementation Guidelines
(1) Scope of Internal Audit:
1. The Company's internal auditors shall conduct audit activities in accordance with the provisions of this system.
2. The scope of internal audit covers all units of the Company and all subsidiaries.
3. Internal audit activities are divided into regular and ad hoc audits. Regular audits shall be conducted by internal auditors in accordance with the audit plan, while ad hoc audits shall be conducted in accordance with the instructions of the Company's highest-ranking executive or an authorized person.
(2) Objectives of Internal Audit:
2. The scope of internal audit covers all units of the Company and all subsidiaries.
3. Internal audit activities are divided into regular and ad hoc audits. Regular audits shall be conducted by internal auditors in accordance with the audit plan, while ad hoc audits shall be conducted in accordance with the instructions of the Company's highest-ranking executive or an authorized person.
The objectives of internal audit are to examine and evaluate deficiencies in the internal control system, assess operational efficiency, promote sound business operations, and provide timely recommendations for improvement to ensure the continued effective implementation of the system. Internal audit also assists the Board of Directors, managers, and other employees in carrying out their management responsibilities and assists the heads of various units in understanding the timeliness of employees' business operations and verifying whether various operations comply with applicable laws and regulations and the Company's internal rules, thereby enhancing management effectiveness and reasonably ensuring the achievement of the following objectives:
1. Effectiveness and efficiency of operations.
2. Reliability of financial reporting, including ensuring that external financial statements are prepared in accordance with the accounting principles prescribed by the competent authorities and that transactions are appropriately authorized.
3. Compliance with applicable laws and regulations.
(3) Responsibilities of Internal Audit Personnel:
1. Effectiveness and efficiency of operations.
2. Reliability of financial reporting, including ensuring that external financial statements are prepared in accordance with the accounting principles prescribed by the competent authorities and that transactions are appropriately authorized.
3. Compliance with applicable laws and regulations.
1. Internal audit personnel shall, under the direction and supervision of the Company's highest-ranking executive, conduct the Company's internal audit activities.
2. When performing their duties, internal audit personnel shall, in the event of any questions, obtain explanations and fully understand the relevant matters before proposing recommendations for handling.
3. Internal audit personnel shall conduct audit activities with the following objectives:
2. When performing their duties, internal audit personnel shall, in the event of any questions, obtain explanations and fully understand the relevant matters before proposing recommendations for handling.
3. Internal audit personnel shall conduct audit activities with the following objectives:
(1) To determine whether the internal control system is effective and complete.
(2) To verify that all assets actually exist and determine whether there are any assets other than those recorded in the accounts.
(3) To verify that all liabilities actually exist and determine whether there are any liabilities other than those recorded in the accounts.
(4) To compare revenues, expenditures, and costs with prior-period financial statements or the current-period budget. Where there are overspending, revenue shortfalls, or failure to achieve targets, the causes shall be investigated. The basis for recording transactions, classification criteria, calculation and carry-forward amounts shall also be reviewed to ensure compliance with the accounting system.
(5) To verify that all figures recorded in account books, cards, and files are supported by legitimate and appropriate documentation.
(6) To evaluate operating performance, cost comparisons, budget execution, and financial conditions.
(2) To verify that all assets actually exist and determine whether there are any assets other than those recorded in the accounts.
(3) To verify that all liabilities actually exist and determine whether there are any liabilities other than those recorded in the accounts.
(4) To compare revenues, expenditures, and costs with prior-period financial statements or the current-period budget. Where there are overspending, revenue shortfalls, or failure to achieve targets, the causes shall be investigated. The basis for recording transactions, classification criteria, calculation and carry-forward amounts shall also be reviewed to ensure compliance with the accounting system.
(5) To verify that all figures recorded in account books, cards, and files are supported by legitimate and appropriate documentation.
(6) To evaluate operating performance, cost comparisons, budget execution, and financial conditions.
4. If internal audit personnel discover any improper conduct by an employee in the course of their duties, they shall notify the employee's direct supervisor and immediately report the matter to the Company's highest-ranking executive and supervisors, and assist the highest-ranking executive in handling the matter.
5. Internal audit personnel may access all relevant files and records in the course of their duties. The audited unit shall not refuse or conceal such information.
6. In addition to regularly reporting internal audit activities to the supervisors, the Chief Internal Auditor shall attend meetings of the Board of Directors to report on internal audit matters.
7. To enhance the quality and capabilities of internal audit personnel, newly appointed personnel shall participate in relevant training, and all internal audit personnel shall receive continuing education each year and complete the training hours required by the competent authority.
(4) Precautions for Internal Audit Personnel:
5. Internal audit personnel may access all relevant files and records in the course of their duties. The audited unit shall not refuse or conceal such information.
6. In addition to regularly reporting internal audit activities to the supervisors, the Chief Internal Auditor shall attend meetings of the Board of Directors to report on internal audit matters.
7. To enhance the quality and capabilities of internal audit personnel, newly appointed personnel shall participate in relevant training, and all internal audit personnel shall receive continuing education each year and complete the training hours required by the competent authority.
1. When performing their duties, internal audit personnel shall maintain impartiality and independence, uphold a factual and truth-seeking approach, and maintain a cordial and cooperative attitude.
2. Audit procedures shall be conducted in accordance with the audit plan. Unnecessary discussions and consultations should be avoided, and disruption to the work of personnel in the audited units should be minimized. If any matter is unclear, inquiries shall be made at an appropriate time until the matter is fully understood.
3. Internal audit personnel shall avoid arguing with personnel of audited units regarding deficiencies in systems or procedures. When errors are identified, they shall adopt an assistance-oriented approach and request corrective action rather than merely criticizing the deficiencies. If personnel of the audited unit have complaints or suggestions, internal audit personnel shall listen carefully and avoid arguing. If an audited unit fails to correct identified deficiencies within the specified period, the matter shall be reported to the highest-ranking executive for appropriate action.
4. Internal audit personnel shall have a thorough understanding of applicable laws and regulations, be familiar with the Company's current internal control systems, procedures, and rules, and fully understand the specific procedures and circumstances of the audited unit.
5. Internal audit personnel shall familiarize themselves in advance with the history of the audited unit, its important information, and the contents of previous audit reports.
6. Internal audit personnel shall exercise reasonable judgment regarding audit findings. Such judgments shall be supported by reliable theoretical foundations and sufficient and appropriate audit evidence.
7. Information and documents obtained by internal audit personnel in the course of official audit activities constitute confidential Company information. Such information shall be kept strictly confidential. Internal audit personnel shall remain vigilant regarding information security and properly safeguard relevant documents to prevent loss or unauthorized disclosure.
2. Audit procedures shall be conducted in accordance with the audit plan. Unnecessary discussions and consultations should be avoided, and disruption to the work of personnel in the audited units should be minimized. If any matter is unclear, inquiries shall be made at an appropriate time until the matter is fully understood.
3. Internal audit personnel shall avoid arguing with personnel of audited units regarding deficiencies in systems or procedures. When errors are identified, they shall adopt an assistance-oriented approach and request corrective action rather than merely criticizing the deficiencies. If personnel of the audited unit have complaints or suggestions, internal audit personnel shall listen carefully and avoid arguing. If an audited unit fails to correct identified deficiencies within the specified period, the matter shall be reported to the highest-ranking executive for appropriate action.
4. Internal audit personnel shall have a thorough understanding of applicable laws and regulations, be familiar with the Company's current internal control systems, procedures, and rules, and fully understand the specific procedures and circumstances of the audited unit.
5. Internal audit personnel shall familiarize themselves in advance with the history of the audited unit, its important information, and the contents of previous audit reports.
6. Internal audit personnel shall exercise reasonable judgment regarding audit findings. Such judgments shall be supported by reliable theoretical foundations and sufficient and appropriate audit evidence.
7. Information and documents obtained by internal audit personnel in the course of official audit activities constitute confidential Company information. Such information shall be kept strictly confidential. Internal audit personnel shall remain vigilant regarding information security and properly safeguard relevant documents to prevent loss or unauthorized disclosure.
V. Accountant's Special Audit Report on the Internal Control System: None.
