NANPAO Internal Control and Internal Audit

Internal Control and Internal Audit

Internal Control 

The internal control policies are formulated in accordance with the Regulations Governing Establishment of “Internal Control Systems by Public Companies” promulgated by Financial Supervisory Commission (FSC) and by taking into consideration the design of actual operating activities which is approved by the Board of Directors by resolution. The policies are executed and the processes are managed by the Board of Directors, Managers and other employees. The internal control policies include control mechanism for corporate and operational levels. The objective of the policies is to delineate the scope and standard of internal control system of various business units to ensure the effectiveness of internal control design and execution, thus facilitating a robust management.

 

Internal Audit 

Nan Pao has established an Auditing Office, which is under the supervision of the Board of Directors, to assist the Board and Managers in inspecting and evaluating the effectiveness of internal control, measuring results and efficiency of business management, as well as reliability, timeliness and transparency of reporting and legal compliance. The Auditing Office also proposes recommendations on improvement measures to reasonably ensure that the internal control system is implemented in an effective manner, and serve as the basis for reviewing amendments made to the internal control system.

 

Based on the scale of investment, operation status, management needs and other regulatory requirements, the group-wide Auditing Office is designated to have one executive, and internal audit personnel capacity who meet the job requirements and perform internal audit assignments in an independent, objective, and fair manner. The internal audit personnel consistently attend training to enhance their auditing quality and capability. They also consistently improve the auditing procedures and skills, proactively developing audit supporting tools to increase the effectiveness of the audit.

 

The Auditing Office has established a risk-oriented internal control system and performed auditing based on the yearly audit plan, in which, the scope covers the internal control system of the Company and its subsidiaries. It also reviews the self-evaluation report on internal control of the Company and its subsidiaries, which shall serve as the basis for evaluation on the overall internal control system and the issuance of Internal Control Statement by the Board of Directors and Managers, along with findings on internal control weaknesses and improvements on anomalies.

 

The head of internal audit reports to the Independent Directors on a regular basis and communicate the audit results to them. Furthermore, the head of internal audit also updates on the internal audit operation in the Board Meeting. In the event of a special circumstance, the head of internal audit shall also report to the Independent Directors. In 2023, there was no such circumstance. Meanwhile, the head of internal audit also needs to consistently follow up on the requirements and recommendations proposed by the Independent Directors, Audit Committee and Board of Directors, and completes and reports the actions taken therein within a given time period.

 

The company's “Corporate Governance Code of Practice” was approved and formulated by the board of directors on April 12, 2018. The content has been disclosed in the company's important internal regulations forthe investor zone, which stipulate that the appointment and removal of internal auditors, evaluation and remuneration must be mentioned. Report to the board of directors or the audit supervisor to sign for approval by the chairman of the board of directors, and the internal auditors' appraisal is carried out once a year, and the audit supervisor signs to the chairman of the board of directors for approval.

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