Corporate Governance

◆The Company has established an internal audit unit (Audit Office) that reports directly to the Board of Directors. One full-time chief auditor with the appropriate background and qualifications is appointed based on the company’s size, business situation, management requirements and other statutory requirements. A deputy shall also be appointed.

◆Appointment and dismissal of internal auditors have been outlined in the Company’s Internal Audit Rules - General Provisions in accordance with Article 11 of “Regulations Governing Establishment of Internal Control Systems by Public Companies”; the terms of which have been approved by the Audit Committee and resolved by the board of directors. Performance evaluation (once a year), salary, and compensation of internal auditors are circulated to and approved by the Chairman.

◆Internal Audit Enforcement Rules - The general rules explicitly state that the purpose of internal audits is to examine and assess the internal control system for any deficiencies, measure its operational efficiency, and provide suggestions for improvements when appropriate to ensure that the internal control system can continued to be implemented in an effective manner and to assist the management with fulfilling its responsibilities.

◆The internal audit unit develops an annual audit plan in accordance with the “Criteria Governing Establishment of Internal Control Systems by Public Reporting Companies” issued by the Securities and Futures Bureau and risk assessments. The plan is submitted to the Board of Directors for approval before it is implemented by the audit unit. Special audits or reviews may also be conducted as necessary. The execution of general and special audits provide the management with a picture of internal control operations.

◆Auditors shall carry out their duties in an independent and impartial manner. They must also report their audit activities to the Audit Committee and the Board of Directors.

◆The internal audit unit is responsible for reviewing the self-assessment reports from each unit and subsidiary. These along with the internal control deficiencies and corrective actions taken on anomalies are used by the Board of Directors and the President to evaluate the overall effectiveness of the internal control system and to serve as the primary basis for the issuing of internal control system declarations.

◆The internal audit unit must complete the following online reporting operations within the time period given by the Securities and Futures Bureau:

• Submit the “Chief auditor and audit personnel details” for the year by the end of January.
• Submit the “Audit Plan Outcome” for the previous year by the end of February.
• Submit the “Internal Control System Declaration” for the previous year by the end of March.
• Submit the “Internal Control System Deficiencies and Corrective Actions” for the previous year by the end of May.
• Submit the “Annual Audit Plan” for the following year by the end of December.