Structure

The Company has 1 person, as Audit Chief, in charge of Internal Audit Department under the Board of Directors. The appointment and removal of he/she is governed by law, and approved by Audit Committee and submitted to the Board of Directors for resolution. The appointment and removal, evaluation and compensation of the auditors, signed by Audit Chief through approval procedure, and submitted to the Chairman of the Board of Directors for approval, are subject to the “Code of Practice on Corporate Governance” of the Company.

Its main responsibilities are to inspect and evaluate the effectiveness of the internal control system, the measurement of the efficiency of operations, the reliability of reporting and compliance with relevant laws and regulations, and provide timely suggestions for improvement to ensure the continuous and effective implementation of each system.

Operation

The routine audit is carried out in accordance with the annual audit plan. The dedicated project audit is established and implemented as necessary, in order to identify possible deficiencies in internal controls, provide recommendations for improvement, and issue audit reports to the Board of Directors on a regular basis to assist the Board of Directors and management in achieving the objectives by evaluating and improving the effectiveness of risk management, control and monitoring processes. Furthermore, Audit Department also encourages each unit to perform self-inspection and self-monitoring mechanism in the company, and uses the evaluation results as a basis to recommend the Board of Directors and the General manager of the Company for the issuance of internal control statement.

The internal audit process is as follows:

The internal audit is carried out in accordance with matters provided by Financial Supervisory Commission. Apart from the major transaction cycles (engineering and collection, procurement and payment, investment, financing, production, salary, fixed assets), the key points also include: endorsement guarantee, loans of funds to others, property management, budget management, financial statements, derivative financial products, transactions with related parties, supervision and management of subsidiaries, operation of board meetings, prevention of insider trading etc., and will be reported to Audit Committee for review in accordance with regulations.

In order to prevent the moral risks of employees that may arise during the operation of the company, in addition to strengthening the strict requirements on the moral conduct of personnel, as for system design, we also adopt strict internal control, rules and regulations, and cooperate with regular and irregular internal audits to prevent fraud from happening.

The appointment and removal and salary of internal auditors must be reported to the Board of Directors of the Company. The evaluation of internal auditors is carried out once a year, signed by the Audit Chief, and then reported to the Chairman of the Board of Directors of the Company. The content of the appointment and removal is disclosed in the Company’s internal regulations.