Internal Audit Organization Operations

In accordance with the “Regulations Governing Establishment of Internal Control Systems by Public Companies” promulgated by the Financial Supervisory Commission (FSC), the Company has established an Audit Office under the Board of Directors. The Audit Office is headed by a Chief Auditor and executes audit plans based on business scope. Audit reports are submitted in writing on a regular basis to senior management, the Audit Committee, and the Board of Directors.

Internal Audit Practices

To effectively implement the internal control system and corporate governance, Aurotek Corporation (the “Company”) has established the Internal Audit Implementation Rules, which are reviewed and approved by the Board of Directors in accordance with the “Regulations Governing Establishment of Internal Control Systems by Public Companies.” These rules define the objectives, organizational structure, and compliance standards for the Company’s audit operations to ensure the attainment of audit goals. The appointment, dismissal, performance evaluation, and compensation of internal auditors shall be submitted by the Chief Auditor for approval by the Chairman of the Board.

Audit Objectives

The purpose of internal audits is to assist the Board of Directors and management in examining and reviewing deficiencies in the internal control system and in evaluating the effectiveness and efficiency of operations. Internal audits also provide timely recommendations for improvement to ensure the continuous and effective implementation of the internal control system, and to serve as a basis for reviewing and revising the system as needed.

Audit Responsibilities

• Ensuring the achievement of operational effectiveness and efficiency.
• Ensuring the reliability, timeliness, transparency, and compliance of reporting with applicable standards.
• Ensuring compliance with relevant laws and regulations.

Audit Operations

Formulation and Approval of the Annual Audit Plan:
Before the end of each year, the Audit Office formulates the audit plan for the following year in accordance with legal requirements, risk assessments, and directives of the Board of Directors. The plan is submitted to and approved by the Board of Directors.

During the year, the Audit Office executes the following audit cycles to assess the soundness, adequacy, and effectiveness of the Company’s internal control system and departmental operations:

• Sales and Receivables Cycle
• Procurement and Payment Cycle
• Production Cycle
• Payroll Cycle
• Financing Cycle
• Property, Plant and Equipment Cycle
• Research and Development Cycle
• Information Systems Management

The Audit Office conducts monthly audits of derivative trading activities, quarterly audits of procedures for lending funds to others and endorsement/guarantee practices, and performs an annual self-assessment of the internal control system to enhance the Company’s operational performance. In accordance with the “Regulations Governing Establishment of Internal Control Systems by Public Companies,” audit reports shall be submitted to each independent director by the end of the month following the completion of the audit report.

In accordance with the deadlines prescribed by the Securities and Futures Bureau of the Financial Supervisory Commission (FSC), the Audit Office completes online filings for the following items:

• By the end of January: Filing of “Information on Chief Auditor and Audit Personnel and Their Continuing Education” for the current year.
• By the end of February: Filing of “Implementation Status of the Annual Audit Plan” for the previous year.
• By the end of March: Filing of “Internal Control System Statement” for the previous year.
• By the end of May: Filing of “Deficiencies in Internal Control System and Improvement Status” for the previous year.
• By the end of December: Filing of “Annual Audit Plan” for the following year.