Internal audit

The Company’s internal audit unit reports directly to the Board of Directors. An audit director is in charge of the Company’s internal audit business and supervises the internal audit work. The design, implementation and internal audit of the Company’s internal control system are carried out in accordance with the guidelines for the establishment of internal control systems by publicly listed companies and relevant laws and regulations.

1. Purpose of internal audit
   The design, implementation, and internal audit of our company's internal control system are conducted in accordance with the guidelines for the establishment of internal control systems by publicly listed companies and relevant laws and regulations.
2. Organization of internal audit
   The internal audit unit is dedicated to internal auditing. In accordance with the company's size, business situation, management needs, and other relevant laws and regulations, it is staffed with one audit supervisor and an appropriate number of qualified full-time internal audit personnel.
   The appointment and removal of the head of internal audit must be approved by the audit committee and submitted to the board of directors for resolution.
   The internal auditors are qualified to meet the statutory requirements for competence and have completed the required number of hours of continuous training.
3. Operation of internal audit
   Our internal audit work is based on the risk assessment results to formulate an annual audit plan, which specifies the audit items, time, procedures and methods. The audit work is mainly carried out in accordance with the audit plan approved by the board of directors. Auditors conduct routine and special audits regularly or irregularly. The audit results are submitted as audit reports, along with working papers and relevant information, and are reported to the audit committee regularly. Auditors also attend board meetings to report.

The company urges all its internal departments to conduct annual self-assessments of the effectiveness of their internal control systems. Each department's self-assessment supervisor conducts an assessment of the design and implementation effectiveness of the internal control system based on internal control risk data. The internal audit department then reviews each department's self-assessment report and, together with the audit department's findings on internal control deficiencies and anomalies, the improvement status of these reports. These reports serve as the primary basis for the Board of Directors and the General Manager to assess the overall effectiveness of the internal control system and to issue an internal control system statement.

Internal auditors shall truthfully disclose any deficiencies and irregularities in the internal control system discovered during internal audits, as listed in the internal control statement, self-assessments, and auditor's special reviews, in the audit report. Following up on the audit report after its review, follow-up reports shall be prepared quarterly to ensure that relevant units have taken appropriate corrective measures in a timely manner, and these shall be included as important items in departmental performance evaluations. The audit report and follow-up reports shall be submitted to the audit committee for review by the end of the month following the completion of the audit project. If internal auditors discover any material violations or if the company is at risk of significant damage, they shall immediately prepare a report and notify the board of directors and the audit committee.

Our company's Corporate Governance Practices Code, established on August 23, 2017 and revised on April 30, 2020, stipulates that the appointment, dismissal, performance evaluation, and remuneration of our internal audit personnel should be submitted to the Board of Directors or approved by the Chairman after being signed by the Audit Supervisor. Under our current system, the appointment and dismissal of the Internal Audit Supervisor requires the approval of the Audit Committee and a resolution of the Board of Directors.