>Corporate Governance>Internal Auditing & Control
Internal audit organization structure
- CTBC has established an internal audit unit as a direct subsidiary of the Board of Directors. In addition, CTBC has set up a general auditor system to manage all audit-related business in a detached, independent, and impartial manner. Under the system, all audit business is reported to the Board of Directors and the Audit Committee at least every six months.
- The general auditor, the audit officer, and auditors are charged with supervising and executing the audit business of CTBC and its subsidiaries.
Internal audit function
- The internal audit unit conducts routine business audits of CTBC at least once per year. It also completes target audits of CTBC and its subsidiaries’ finances, risk management, and compliance with applicable acts and regulations at least once every six months. All internal audit reports are delivered to the Audit Committee for review and, within two months of the audit’s completion, are submitted to the competent authority by letter.
The unit’s reports on its routine business audits of CTBC disclose the following information at a minimum:
- Audit scope; summary commentary; financial status; capital adequacy; operation performance; asset quality; management of shares; management of the operation of the Board of Directors; compliance with major acts, rules, and regulations; internal controls; interested party transactions; control and internal management of all business tasks; protection and management of customers’ data; information management; management of customer data confidentiality; protective measures for consumers and investors and the results of self-inspection; and the evaluation of above matters.
- Opinions on any major legal errors or faults in all departments, and suggestions of disciplinary action for any employees who fail to fulfill their duties.
- Feedback provided or faults identified by the financial examination agency, accountants, the internal audit unit, or department self-assessments, and the progress status of items determined by the internal control statement as requiring further improvement.
- The internal audit unit conducts constant follow-up reviews on all examination opinions and audit deficiencies presented by the financial examination authority, CPA, or internal audit unit, and on matters specified in the internal control system statement as requiring stronger improvement efforts. Furthermore, a written report detailing the implementation of measures to improve deficiencies is submitted to the Board of Directors, with a copy also provided to the Audit Committee. These reports serve as crucial considerations in the performance evaluation of each department.
- The internal audit unit periodically reviews the documents submitted by CTBC subsidiaries, such as board meeting minutes, CPA audit reports, and examination reports issued by financial examination agencies. For subsidiaries with their own internal audit units, the CTBC unit also reviews audit plans and reports on significant deficiencies identified in internal audit reports and the status of improvements thereof. The unit also monitors the implementation of improvements by each subsidiary.
- The general auditor of CTBC is, if required by business, permitted to dispatch the internal auditors of any CTBC subsidiary to conduct an internal audit of CTBC or a subsidiary, and to evaluate the efficacy of the internal audit activities of a subsidiary annually. After having reported to the Board of Directors, the general auditor may also send the evaluation results to the relevant subsidiary’s own Board of Directors for its reference in personnel evaluations.
- The internal audit unit is also charged with ensuring that all of CTBC’s internal departments and subsidiaries carry out self-inspections, and with reviewing self-inspection reports regarding the internal control system. Such self-inspection, together with the reports on the correction of any deficiencies or irregularities discovered in the internal control system by the internal audit unit, serve as a basis for the Board of Directors, general manager, general auditor, and compliance officer to evaluate the overall efficacy of the internal control system and to issue internal control system statements.
Other important audit activities includes:
- Participating in the drafting of CTBC policies and procedures, and assessing the effectiveness of the internal control system.
- Proposing changes to audit-related regulations.
- Participating in domestic and international audit-related business seminars in order to gain industry-leading auditing concepts and techniques for further development and application.
- Continuing to improve audit programs, workflows, and skills, as well as actively developing computer-assisted audit tools to enhance the effectiveness of auditing work.
- Continuing to strengthen individual auditors' skills based on the classification of respective audit functions and issuing assignments in accordance with individuals' specializations.
Internal Control Statement