Internal Audit
Purpose
The purpose of internal audit is to assist the Board of Directors and management in examining and reviewing deficiencies in the internal control system, as well as to assess operational effectiveness and efficiency. Internal audit also provides timely recommendations for improvement to ensure the continuous and effective implementation of internal controls, and serves as a basis for reviewing and revising the internal control system.
Organization
The company’s internal audit is an independent unit reporting directly to the Board of Directors. Internal audit personnel perform their duties with complete independence and objectivity.
The appointment or dismissal of the head of internal audit requires the approval of a majority of the Board. Based on the company’s size, business conditions, management needs, and relevant legal regulations, an appropriate number of full-time internal audit personnel should be assigned. A deputy should also be appointed, who shall carry out audit duties in accordance with applicable standards when acting as the substitute.
The audit head is responsible for planning, executing, coordinating, reporting, and following up on audit activities, and attends Board meetings to report on relevant audit matters.
Functions
1.Evaluate the soundness, rationality, and effectiveness of the company’s internal control and management systems.
2.Assess the efficiency of each unit in implementing plans or policies and performing assigned functions; ensure appropriate staffing and organization in each unit, proper recordkeeping for all transaction cycles, and adequate safeguards against cash, securities, or other asset misappropriation, fraud, or inefficiency; compare and analyze operational performance, review business outcomes, and adopt effective measures to enhance efficiency.
3.Review audit reports and self-assessment reports submitted by subsidiaries, and track improvements on identified internal control deficiencies and anomalies.
4.Internal audit personnel shall maintain complete independence, perform duties with objectivity and fairness, pursue truth and accuracy, and act with loyalty, diligence, and professional care.
Information Disclosure and Filing
1.The appointment or dismissal of the audit head must be approved by the Board. Any changes shall be reported to the competent authority within two days from the occurrence of the event, including the reason and details of the change, through the internet information system.
2.Basic information of internal audit personnel, including training courses completed, shall be filed in the prescribed format on the website designated by the competent authority before the end of January each year.
3.The company shall submit the audit plan for the following fiscal year before the end of each fiscal year, and within two months after the end of each fiscal year, submit the implementation status of the previous year’s audit plan in the prescribed format on the designated website.
4.Within five months after the end of each fiscal year, the company shall submit the improvement status of internal control deficiencies and anomalies identified by internal audit in the previous fiscal year, in the prescribed format, to the designated website.