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Internal Auditing Department, IAD, Organization and operations

Internal Audit Department, IAD

The main duty for Internal Audit Department is to carry out audits in inspecting and reviewing defects in the internal control systems as well as measuring operational effectiveness and efficiency, to ensure the sustained operating effectiveness of the systems and to provide a basis for review and correction.

Internal audit department under the board of directors, and shall appoint qualified persons in an appropriate number as full-time internal auditors according to size, business condition, management needs, and other applicable laws and regulations.

The appointment or discharge of internal audit officers for passage by the board of directors, and shall report such information to the FSC for recordation via the Internet-based information system by the 10th day of the month next following passage by the board of directors. Meanwhile, the meeting minutes of the board of directors shall record the said activities as referendum to be inspected by FSC.

Job scope of Internal Audit Department

Execute Inspection of internal control systems, to measure the effectiveness of, and compliance with, existing policies and procedures, and their effects on operational activities.

Conduct inspection to operating units to measure the effectiveness of, and compliance with, existing policies and plans, and their designed functions.

To assist Board of directors and General Manager establish self-inspections of internal control systems, to serve as the primary basis to know the degree of achievement of operational effectiveness and efficiency objectives.

To establish and sustain written implementation rules.

Annual Audit planning

Internal audit department, according to Article 13 of 「 Regulations Governing Establishment of Internal Control Systems by Public Companies 」 , formulates annual audit plans based on the results of the risk assessment, and implement the annual audit plans. In the said year conduct audit on the listed operation cycles to evaluate the completeness and effectiveness of internal control system by responsible departments.

•  Sale and receipt cycle.

•  Purchase and payment cycle.

•  Production cycle.

•  Labor and wage cycle.

•  Finance cycle.

•  Fixed asset cycle:

•  Investment cycle:

•  Research and development (R&D) cycle.

•  Computerized information processing system

•  Others.

Internal audit Department shall conduct a monthly audit on engaging in derivatives transactions, shareholder services and a quarterly audit on extending loans to others, granting endorsements or guarantees for others. P reparing follow-up reports at least on a quarterly basis until such time as correction is made, to ensure that the relevant departments have taken appropriate corrective measures in a timely manner.

IAD submits the required reports to the FSC on time, in the prescribed format via the internet-based information system. They are:

• To complete the submission of next year's audit plan by the end of each fiscal year.

• To complete the claim of the names, ages, educational background, experience, seniority, and training of internal auditors by the end of January each year.

• To complete a report on the execution of previous year's annual audit plan within two months from the end of each fiscal year.

• To complete the public announcement and report the Internal Control System Statement within four months from the end of each fiscal year.

• To complete the submission of corrections of any defects and irregularities of the internal control system discovered during the past year's internal auditing within five months from the end of each fiscal year.


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