Internal Audit

• Purpose of Internal audit：
  The Company has established an internal audit system to facilitate the Board of Directors and the management in inspecting and evaluating the effectiveness of internal control system; to provide timely recommendations for improvement so as to help the Company achieve internal control targets; to ensure the continuity of implementation; and to provide a basis for review and modification of the internal control system.
• Organization of Internal Audit：
  The Internal Audit Department reports to the Board of Directors. Depending on the business scale, operating status, management needs and other relevant laws and regulations, the Company designates the appropriate number of internal auditors, including one Internal Audit Officer and five internal auditors.
• Operation of Internal Audit：
  • Internal auditors shall conduct an audit in various departments in accordance with the yearly audit plan in an independent, objective and impartial manner. The subjects of the internal audit include the parent company and all subsidiaries. The scope of audit includes all matters of business and management, such as financial, operation, and research and development. Internal auditors will perform an audit on ten major operating cycles, and other transactional operations or programs.
  • The Internal Audit Officer devises a yearly audit plan according to risk assessment, and reports to the Board of Directors the execution status and results on a regular basis, so as to uphold the spirit of corporate governance.
  • According to items, schedule and procedures prescribed in the yearly audit plan, internal auditors will perform on-site audit on different departments and subsidiaries. During the audit period, the audited units must produce documentation, accounting records, supporting documents for audit. Internal auditors are responsible for the collection, inspection, consolidation, analysis and interpretation of data. An audit report and recommendations of improvement will be prepared based on audit trails and the relevant information, which shall also be provided.
  • Internal auditors and the audited units shall engage in adequate communication in relation to the audit results during the audit period. For any internal control weaknesses or anomalies, internal auditors will document in their report and perform follow-up to ensure that the units in question have undertaken the appropriate improvement measures in a timely manner.
  • At each year-end, different departments of the parent company and various subsidiaries will be required to perform self-inspection on the effectiveness of the internal control system. Internal auditors will then review the self-inspection reports of different departments of the parent company and various subsidiaries. Pursuant to the format prescribed, within three months after the closing of each accounting year, an internal control statement will be issued on the website designated by the Securities and Futures Bureau and published in the annual report.
• Appointment and Dismissal of Internal Auditors：
  The appointment, dismissal, performance appraisal, salary and remuneration of internal auditors should be undertaken and determined pursuant to the Regulations for the Management of Recruitment and Appointment of Employees, the Regulations for the Management of Employee Salary, the Regulations for the Management of Employee Performance Appraisal, and the Regulations for Resignation or Sabbatical Leave of Employees. The performance appraisal is performed twice a year. For the aforementioned appointment, dismissal, performance appraisal, salary and remuneration, the Internal Audit Officer will report to the Chairman for review pursuant to the approval process. The aforementioned regulations are disclosed in the document and information management system of the Company.