To ensure the implementation of integrity in operations, Eurocharm KY has established an audit office in accordance with the ” Regulations Governing Establishment of Internal Control Systems by Public Companies.” The internal audit unit directly reports to the board of directors and is responsible for auditing relevant regulations, ISO systems, and internal control systems. Before conducting audit operations, audit personnel should determine the purpose and scope of the audit, conduct preliminary investigations, assess risks, and gather all relevant documents to prepare an audit plan. Based on the audit plan, audits of relevant regulations, ISO systems, and internal control systems are conducted, with explanations provided to department managers of the audited departments regarding audit objectives, scope, and procedures. The department’s operational procedures and relevant documents are reviewed, interviews are conducted with relevant personnel, and actual operations are observed. If necessary, relevant personnel may be asked to demonstrate operations on-site. If discrepancies are found during the audit, full communication and discussion with the audited department will take place, and suggestions for improvement will be proposed. After organizing relevant discussion materials, an “Audit Report” is prepared and submitted to the designated directors specified by the board. The completed audit items are submitted to each independent director for review by the end of the following month, serving as a basis for subsequent follow-up improvements. Audit personnel should distribute issues from the previous quarter to the audited departments in the first month of each quarter, and the audited departments should respond to the audit office with the status of improvements or upcoming improvement measures by the second month of each quarter. The audited departments should complete improvements within three months, except in cases where reasonable justifications are provided for special circumstances. In the fiscal year 2023, 113 audit reports were submitted, proposing a total of 20improvement suggestions. The audited departments were promptly notified, and appropriate improvement measures were taken based on the suggestions, which were incorporated into the company’s audit management for ongoing monitoring of improvement progress. After the completion of each audit item, reports are submitted to each independent director for review in accordance with regulations.
The company has established an audit office directly reporting to the board of directors, headed by one manager, and staffed with a suitable number of dedicated internal audit personnel. In addition to regularly reporting audit activities to the Audit Committee, the audit manager also attends board meetings. The purpose of the audit work is to assist the board of directors and management in examining and reviewing deficiencies in internal control systems, assessing the effectiveness and efficiency of operations, and providing improvement suggestions in a timely manner to ensure the continuous and effective implementation of internal control systems and to serve as a basis for reviewing and amending internal control systems. The appointment, assessment, and salary compensation of internal audit personnel are handled in accordance with the provisions of the “Internal Audit Implementation Rules,” “Salary Management Measures,” “Assessment Operation Measures,” and “Transfer and Resignation Operation Measures.” The appointment of the internal audit manager requires approval from the board of directors, and their assessment is conducted twice a year. Assessment and salary compensation are submitted for approval to the chairman through the signature approval process. The aforementioned relevant regulations have been disclosed in the company’s internal regulations section. The appointment of the internal audit manager and the acting appointment of the audit manager were approved by the Audit Committee on October 31, 2023, and ratified by the board of directors.
Communication between the independent directors and the internal audit manager and the accountant
Communication policy between the independent directors and the internal audit manager and the accountant
- The independent directors and the accountants meet regularly at least twice a year at the Audit Committee meetings, and the accountants report to the independent directors on the audit of the Company and its domestic and overseas subsidiaries, and communicate adequately on any material adjustments to the records.
- The internal audit manager reports to the independent directors at each Audit Committee meeting on the performance of the Company’s internal audit and internal control operations.
| Type | Frequency | Communication Highlights |
|---|---|---|
| Internal Audit Performance Report | Every Quarter | Audit report on internal audit of business execution, self-assessment of internal control and improvement of audit findings. |
| Internal Audit Report | Every Year | The audit supervisor conducts an internal audit and reports the result to the independent director. |
| Audit Program | Every Year | The audit supervisor proposes an annual audit plan. |
Summary of Communication between Independent Directors and Accountants
| Date | Meeting Members | Communication Matters | Opinions and Suggestions |
|---|---|---|---|
| 2023.02.24 (Pre-meeting) | Independent Director Chen-Tien Yuan Independent Director Yi-Jen Kuo Independent Director Yen-Hsi Lin Accountants Kuo-Shuai Chen | ● Audit matters for the fiscal year 2023 financial report and updates on securities regulations, as well as updates on tax laws. ● Introduction to the amendments of the tenth edition of the Corporate Governance Evaluation System. | Notified and understood |
| 2023.02.24 | Independent Director Chen-Tien Yuan Independent Director Yi-Jen Kuo Independent Director Yen-Hsi Lin Accountants Kuo-Shuai Chen | ● Audit results of the consolidated and individual financial statements for the year 2022. | Notified and understood |
| 2023.08.08 (Pre-meeting) | Independent Director Chen-Tien Yuan Independent Director Yi-Jen Kuo Independent Director Yen-Hsi Lin Accountants Kuo-Shuai Chen | ● Explanation of key audit matters and significant accounting and auditing issues for the first half of 2023 financial report. ● Updates on securities regulations and tax laws ● Introduction to the latest trends in sustainable development. | Notified and understood |
| 2023.08.08 | Independent Director Chen-Tien Yuan Independent Director Yi-Jen Kuo Independent Director Yen-Hsi Lin Accountants Kuo-Shuai Chen | ● Audit results of the consolidated financial statements for the second quarter of 2023. | Notified and understood |
| 2023.12.26 (project meeting) | Independent Director Chen-Tien Yuan Independent Director Yi-Jen Kuo Independent Director Yen-Hsi Lin Accountants Kuo-Shuai Chen | ● Audit key audit matters ● Comprehensive risk assessment ● Accounting materiality and significant audit items ● Transaction process discussions | Notified and understood |
Summary of the Communication between Independent Directors and the Internal Auditor at Separate Communication Meetings or other Meetings
| Date | Communication Matters | Opinions and Suggestions |
|---|---|---|
| 2023.02.24 | ● 2022 Statement of Internal Control System ● 2022 Internal Control System Self-Assessment Implementation Report | Notified and understood Approved by the Audit Committee and submitted to the Board of Directors for resolution |
| 2023.05.09 | ● Internal Audit Performance Report for the first quarter of 2023 ● Follow-up report for performance improvement of 2023 | Notified and understood Notified and understood |
| 2023.08.08 | ● Internal Audit Performance Report for the second quarter of 2023 ● Follow-up report for performance improvement of 2023 | Notified and understood Notified and understood |
| 2023.10.13 | ● Internal Audit Performance Report for the third quarter of 2023 ● Follow-up report for performance improvement of 2023 | Notified and understood Notified and understood |
| 2023.12.26 | ● Summary of self-assessment for internal control ● Proposal for internal control plans in 2024 ● Internal Audit Performance Report for the fourth quarter of 2023 ● Follow-up report for performance improvement of 2023 | Notified and understood Approved by the Audit Committee and submitted to the Board of Directors for resolution |