Internal Audit: Organization & Functions
Internal Audit Organization
Internal Audit Organization
1.Organizational Independence The Internal Audit Department operates as an independent unit reporting directly to the Board of Directors. It is responsible for the systematic examination and evaluation of internal control systems to drive operational performance and efficiency.
2.Leadership and Compliance The department is led by a Head of Internal Audit whose qualifications strictly adhere to regulatory requirements. The appointment or dismissal of the Head of Internal Audit must be approved by Board resolution. Additionally, the Head of Internal Audit completes mandatory annual professional training and all required regulatory filings.
3.Personnel Management The appointment, dismissal, performance evaluation, and compensation of internal audit personnel are conducted in accordance with the Company’s Delegation of Authority and are submitted to the Chairman for final approval.
Core Functions and Responsibilities
1.Evaluating the adequacy and effectiveness of internal control systems for the Company and its subsidiaries to ensure strict compliance.
2.Assisting in the design and optimization of internal control frameworks and operational processes.
3.Verifying the accuracy and integrity of financial information, financial reporting, and operational data.
4.Validating the existence and security of corporate assets to prevent potential loss or misappropriation.
5.Disclosing internal violations or non-compliance.
6.Planning, executing, and monitoring self-assessment reports across all departments and subsidiaries.
7.Executing special projects and assignments directed by senior management or the Board.
Operational Execution
Internal Audit Operations
1.Annual Audit Plan: Based on risk assessments of critical transaction cycles, financial controls, and operational workflows, the department develops an Annual Audit Plan. This plan is submitted to the Board for approval before execution.
2.Reporting & Recommendations: The department evaluates the completeness of regulations and operational compliance. Audit reports are issued to present findings and provide actionable recommendations for improvement.
3.Deficiency Tracking: Any identified weaknesses or anomalies are disclosed in audit reports. The department performs quarterly follow-ups until all issues are fully rectified, ensuring that relevant departments have implemented appropriate corrective measures.
4.Self-Assessment Oversight: The department facilitates annual self-assessments for all units, reviews the results, and consolidates these findings into an Internal Control Effectiveness Report. This report serves as the basis for the Board’s “Statement on Internal Control.”
Communication Summary
Communication Between Independent Directors and Internal Audit
1.Monthly Reporting: Written summaries of audit findings and improvement progress are submitted monthly to the Independent Directors for review.
2.Committee Interaction: The Head of Internal Audit delivers comprehensive reports on audit execution and status during Audit Committee meetings.
3.Direct Channels: Direct and transparent communication channels exist between the Head of Internal Audit and Independent Directors, with meetings held as needed to address specific concerns.
Recent Communication Status
| Meeting Date | Nature / Meeting Type | Content / Agenda | Outcome & Results |
|---|---|---|---|
| 2025/3/12 | Audit Committee | 1. Audit plan and execution status 2. Audit deficiency tracking report | Noted and Acknowledged |
| 2025/4/23 | Audit Committee | 1. Audit plan and execution status 3. Audit deficiency tracking report | Noted and Acknowledged |
| 2025/8/13 | Audit Committee | 1. Audit plan and execution status 4. Audit deficiency tracking report | Noted and Acknowledged |