Internal Audit Operations

To assist the Board of Directors and management in inspecting and reviewing deficiencies in the internal control system; in evaluating the effectiveness and efficiency of operations; in ensuring that reporting is reliable, timely, transparent, and compliant with relevant standards; and in ensuring compliance with applicable laws and regulations, and to provide improvement recommendations in a timely manner, so as to ensure the internal control system is continuously and effectively implemented and to serve as a basis for reviewing and revising the internal control system.

Taking into account business characteristics, organizational scale, and potential risks, the audit unit formulates an annual audit plan, which is submitted to and approved by the Board of Directors. Based on this plan, the audit unit examines the internal control systems of the Company’s departments and subsidiaries, and prepares audit reports together with working papers and relevant supporting information. For deficiencies in the internal control system and irregularities identified during audits, in addition to disclosure in the audit report for approval, follow-up actions are conducted after such approval. Follow-up reports are prepared at least quarterly until improvements are completed. This helps ensure that relevant units take appropriate corrective actions in a timely manner, and such matters shall also be included as key items in performance evaluations of each unit.

After approval, audit reports and follow-up reports shall be submitted to the independent directors of the Audit Committee for review no later than the end of the month following the completion of the audit items. Where any material violation is identified or there is a risk of significant damage to the Company, a report shall be prepared for approval immediately and the independent directors of the Audit Committee shall be notified.

Self-assessment operations: To strengthen the Company’s self-supervision mechanism and respond promptly to environmental changes so as to adjust the design and implementation of the internal control system and enhance audit quality and efficiency, each department and subsidiary of the Company conducts self-assessment operations at least once a year. The audit unit reviews the self-assessment reports and, together with the improvements made in response to internal control deficiencies and irregularities identified by the audit unit, uses them as the primary basis for the Board of Directors and the President to evaluate the overall effectiveness of the internal control system and to issue the internal control system statement.

Basis of operations: The Company’s internal control system, internal audit system, and the regulations governing the management of self-assessment operations for the internal control system.