Internal Audit Unit Organization
I.Organization and Allocation
The Company’s Audit Office is an independent unit with a Chief Auditor and full-time auditors. It reports directly to the Board of Directors. The management pays close attention to the internal audit unit and personnel. The appointment of the Chief Internal Auditor requires the approval of the Audit Committee and the Board of Directors in accordance with laws and the appointment and evaluation of auditors are reported to the Chairman of the Board for approval. The Audit Office is fully empowered and encouraged to conduct effective audits and evaluate discrepancies and operating efficiency of the internal control system to ensure the continuous and effective implementation of the internal control system, assist the Board of Directors and management in fulfilling their duties, and implement corporate governance.。
(I) Audit Responsibilities The purpose of internal audit is to help the Board of Directors and the management check and evaluate the effectiveness of internal controls, provide timely recommendations for improvement, ensure the continuous implementation of the internal control system, provide a basis for review and modification of the internal control system.
(II) Work Scope The scope of the audit includes all financial, business, operation, and management functions. The audit is divided into eight major cycles and important management regulations which are audited separately. The targets of the audit include all units of the Company and subsidiaries that meet regulatory requirements are also supervised and audited by the Audit Office of the Company.
(III) Audit Method and Report The audit method mainly consists of the production of the annual audit plan in accordance with risk assessment mechanisms and project audits where necessary to identify potential discrepancies in the internal control system and propose recommendations for improvement. The Audit Office also supervises self-inspections of the internal control system by each unit and uses the results of the self-inspections as the basis for the Statement on Internal Control issued by the Board of Directors and the President of the Company. An audit report is submitted to the President and reported to the Chairman after the completion of the audit. The Chief Auditor and Independent Directors convene at least one meeting each quarter to report on the implementation status of the Company’s internal audit and internal controls and exchange ideas. The Chief Auditor also regularly attends meetings of the Board of Directors to report matters. The Chief Auditor also reports to the Chairman, Audit Committee, and President whenever necessary to ensure the implementation of corporate governance.
