Corporate Governance

The Company established internal audits to aid the board of directors and management to check and evaluate deficiencies in the internal control system and the effectiveness and efficiency of business operations, and provide timely recommendations for improvement to help the company achieve internal control targets, in order to ensure that the internal control system can continue to be effectively implemented, and to provide a basis for review and modification of the internal control system, which will facilitate the Company's sound operations.

The Company established an internal audit unit subordinate to the Board of Directors to conduct internal audits. A suitable number of competent full-time internal auditors are appointed according to the Company's scale, business situation, management needs, and other regulatory requirements.

Internal auditors must meet competency requirements set forth in the law, and receive the required number of hours of continuing education. The name, age, education, experience, years of service, and training received by internal auditors are submitted to the FSC in the required format via its online information system before the end of January each year for future reference.

Internal auditors uphold the spirit of independence and perform their duties objectively and impartially. Besides regularly reporting audit affairs to supervisors, the chief auditor is also required to attend Board meetings to give reports.

The Company's internal auditors formulate annual audit plans based on risk assessment results. The plans specify audit items, time, procedures, and methods. Auditors regularly or irregularly conduct on-site audits, and audit results along with working papers and related documents are compiled into an audit report, ensuring that the Company's internal control system can continue to be effectively implemented.

This urges the Company's internal units and subsidiaries to examine the effectiveness of the internal control system each year. After evaluating and inspecting the effectiveness of the design and implementation of the internal control system, the internal audit unit reviews the self-inspection reports of each unit and subsidiaries. Combined with improvements made to deficiencies and abnormalities in the internal control system found by the internal audit unit, this provides the basis used by the Board of Directors for evaluating the overall effectiveness of the internal control system and issuing a Statement on Internal Control. The Statement on Internal Control is announced on the website designated by the FSC within 3 months after the end of each fiscal year, and also published in the annual report.

Deficiencies and abnormalities found by internal auditors during internal audits, listed in the Statement on Internal Control, found during self-inspections, and found by accountants during review shall be disclosed in audit reports, and must be tracked after the audit report is submitted. Follow-up reports must be regularly prepared to ensure that related units have taken suitable improvement measures, which is listed as an important item in the evaluation of department performance.

After the audit report and follow-up report are approved, they are submitted to supervisors for review before the end of the following month after the audit item is completed. If a material violation is discovered by internal auditors or the Company is at risk of sustaining significant losses, a report shall immediately be prepared and supervisors shall be notified.

Internal auditors shall submit the following in the required format to the FSC for future reference via the online information system: the annual audit plan for the following year must be submitted before the end of each fiscal year; implementation status of the annual audit plan for the previous fiscal year must be submitted within two months after the end of a fiscal year; improvements to deficiencies and abnormalities in the internal control system found during internal audits in the previous year must be submitted within five months after the end of each fiscal year.

(I) Independent directors and supervisors meet regularly with the accountants at least twice a year, and the accountants report the Company's financial position, the financial position and overall operations of overseas subsidiaries, and audits of the internal control system to the independent directors and supervisors. They then fully communicate whether or not there were material adjustments or law amendments that affected accounts: Meetings may be convened at any time in the event of a major abnormality.

(II) The supervisors engage professional accountants to review the Company's financial statements and issue audit opinions for the supervisors to consider.

(III) The chief internal auditor meets with independent directors and supervisors at least once every six months, and gives a report on the implementation status of internal audits, as well as operations of the internal control system: Meetings may be convened at any time in the event of a major abnormality.

(IV) Communication between independent directors, supervisors, chief internal auditor, and accountants