Evaluation on Auditor’s Independence
Evaluation on Auditor’s Independence
The Company’s Audit Committee evaluates the auditor’s independence and competence yearly. The Company requires the auditor to provide the “Auditor’s Independence Declaration” and evaluate the result based on the below standard. The Company does not have financial interest and business relationship other than the audit and tax filing. The Company has submitted the results to the board of directors on March 9, 2022, and the audit committee has approved the results.
Auditor's Independence Evaluation Items
|Evaluation items||Evaluation results||Compliance of independence|
|1. Does the accountant have a direct or material indirect financial interest in the Company?||No||Yes|
|2. Have the accountant received a loan or guarantee from the Company or the Company’s directors?||No||Yes|
|3. Does the accountant have a close business relationship and potential employer-employee relationship with the Company?||No||Yes|
|4. Is the accountant or audit committee member currently holding or has in the past two years held, a position in the Company as director or managerial personnel, or a position that has a significant impact on the audit work?||No||Yes|
|5. Has the accountant provided the Company with non-audit related services that may directly impact the audit work?||No||Yes|
|6. Has the accountant acted as an agent of shares or other securities issued by the Company?||No||Yes|
|7. Has the accountant acted as a defender of the Company or represented the Company in mitigating a dispute with a third party?||No||Yes|
|8. Is the accountant a relative of the Company’s director, managerial personnel, or personnel whose position has a significant influence on the audit?||No||Yes|
Internal Audit Implementation
1. Internal Audit Organization：
- The internal audit activity must be independent and the internal audit unit is under the board of directors. Chief audit executive reports to the independent directors periodically and attends the board meetings to present the internal audit activities.
- Based on the business size, business condition, management needs, and the provisions of other applicable laws and regulations, the company shall establish an internal audit unit and shall appoint qualified chief audit executive and internal audit staff in an appropriate number as full-time internal auditors.
- The appointment or dismissal of chief audit executive shall be subject to be approved by more than half of the Board of Directors. The qualified full-time internal audit staffs should comply with the laws and regulations and meet the required hours for continuing professional education.
2. Internal Audit Operation
- The scope of internal audit activities includes the company’s financial, sales and operation systems, and evaluates the adequacy and effectiveness of the internal control systems.
- The chief audit executive must establish a risk-based plan annually and the internal audit unit performs internal audit activities in accordance with the annual audit plan approved by the board of directors. To assure the internal control systems can be implemented continuously and effectively, the internal auditor shall provide recommendations for improvements in a timely manner and conduct project audits as necessary.
- The internal control self-assessment reports, prepared by the company and its subsidiaries and reviewed by BORA on an annual basis, along with audit reports on findings of internal control systems serve as the primary basis for the board of directors and general manager to assess the overall effectiveness of the internal control system and to produce internal control system statement.
- The internal auditor shall follow up and review the audit deficiencies reported by the administrative authorities, accountants, and internal audit unit.
- Review the audit relevant documents submitted by each subsidiary: Review the subsidiaries’ audit plans, the internal audit reports, the major audit deficient reports and the correction reports. Supervision the correction of any defects and irregularities in internal control systems of each subsidiary.
- Evaluate the performance of the internal audit of each subsidiary: Evaluate the performance of the internal audit operation of each subsidiary, and provide the performance review to the chairman of each subsidiary as part of the personnel appraisal.
3. The appointment, dismissal and evaluation of Internal Audit
According to the company’s ” Corporate Governance Practice Principles ” and “Grant of Authority”, the appointment, dismissal, evaluation and review, salary and compensation of internal auditors shall be submitted by chief audit executive to the chairman for approval. The appointment and dismissal of the chief audit executive shall be approved by the audit committee and submitted to the Board of Directors for approval. The content of relevant regulations has been disclosed in the company’s internal regulations section.
4. Summary review for the communication between independent directors and chief audit executive
- In the quarterly audit committee meetings, chief audit executive shall present the internal audit activities, the major audit deficiencies, and the corrections of any defects and irregularities of the internal control systems. Chief audit executive shall respond to questions raised by independent directors and improve according to their instructions.
- Chief audit executive shall submit the audit and follow-up reports for review by the independent directors by the end of the month next following the completion of the audit reports. If the independent directors have questions or instructions, the independent directors will communicate with Chief audit executive by telephone, email or in person.
|Meeting Dates||Meeting||Item discussed||Opinion of Independent Directors|
|12/2/2022||audit committee meeting||The annual audit plan for 2023.||All independent directors had no opinion.|
|11/14/2022||audit committee meeting||The Internal Auditor’s report for July~Sep. 2022.||All independent directors had no opinion.|
|8/12/2022||audit committee meeting||The Internal Auditor’s report for April~June 2022.||All independent directors had no opinion.|
|5/10/2022||audit committee meeting||The Internal Auditor’s report for Jan.~Mar. 2022.||All independent directors had no opinion.|
|The revision of annual audit plan for 2022.|
|4/11/2022||audit committee meeting||The revision of annual audit plan for 2022.||All independent directors had no opinion.|
|3/9/2022||audit committee meeting||The Internal Auditor’s report for Oct.~Dec. 2021.||All independent directors had no opinion.|
|The Internal Control System Statement for 2021.|
|The revision of internal control systems.|
|12/29/2021||audit committee meeting||The annual audit plan for 2022.||All independent directors had no opinion.|
|8/11/2021||audit committee meeting||The revision of annual audit plan for 2021.||All independent directors had no opinion.|
|5/13/2021||audit committee meeting||The revision of internal control systems.||All independent directors had no opinion.|
|3/30/2021||audit committee meeting||Progress of establishing subsidiary’s internal control systems||All independent directors had no opinion.|
5. Summary of communication between the independent directors and the auditor
The Company’s auditor communicates three times with the independent directors in 2022, communicated items referenced in the table below:
|3/16/2023||The Company’s 2022 Q4 Financial Statement and security regulation update||No comment|
|11/14/2022||The Company’s 2022 Q3 Financial Statement, security regulation update, and tax regulation update||No comment|
|5/10/2022||The Company’s 2022 Q1 Financial Statement and security regulation update||No comment|
|3/9/2022||The Company’s 2021 Q4 Financial Statement, key audit matter, auditor’s independence, security regulation update, and tax regulation update||No comment|
|12/29/2021||The Company’s 2022 Q4 Financial Statement audit planning, internal control implementation strategy, evaluation on key audit matter, and security regulation update||No comment|
|8/11/2021||The Company’s 2021 Q2 Financial Statement, security regulation update, and tax regulation update||No comment|
|3/30/2021||The Company’s 2020 Q4 Financial Statement, internal control audit, evaluation on auditor’s independence, status on Company’s financial reporting, security regulation update and tax regulation update||No comment|