Operation of Internal Audit

Aside from conducting annual audits mandated by governmental regulations, the audit staff evaluates operational risks and develops the annual audit plan for the coming year with details listed. The plan is implemented upon the approval of the Audit Committee and the Board.

Once completed, the audit report is forwarded to the Audit Committee for review prior to the end of the subsequent month. Quarterly progress reports on improvements made are presented to the Audit Committee and the Board for review. Major violations or potential damages to the Company are immediately reported to the President of each Business, the Audit Committee and the Board.

2022 Implementation

FENC conducted 62 audit projects in 2022 and identified minor internal control risks. The majority of the improvement projects have been completed. As of the end of December 2022, deficiencies identified in 12 audit projects remained outstanding with improvement measures in progress.

2022 Priority Task

Internal Control Self-Evaluation

Internal audit self-evaluations at FENC are implemented through an electronic platform, which optimizes the process with enhanced efficiency and benefits for all units and subsidiaries. After the results are reviewed by the audit units, they become the basis for evaluating the effectiveness of FENC’s internal control system by the Board and Presidents. Along with the deficiencies identified and improvements made, these records serve as references for the Internal Control System Statement, and they are published in the annual report and the Market Observation Post System to demonstrate the Company’s commitment to implementing effective internal control.

Digital Transformation

FENC is creating an auditing data platform that leverages the data analysis technology and risk dashboard to analyze data accuracy and monitor indicators of anomalies. The platform helps identify operational risks and provides recommendations to improve operational performance and efficiency.

Subsidiary Supervision

FENC conducts regular reviews over subsidiary operations and management, examining documents such as the financial report, inventory status and credit recovery. When anomalies are detected, the subsidiary is notified in the form of a work report to facilitate immediate adjustments and improvements.

Training for Audit Personnel

Each year, the audit staff undergo internal audit training held by organizations certified by the Financial Supervisory Commission and complete the hours in accordance with regulatory requirements. They are also required to attend training and seminars from internal and external sources such as consulting firms or academic institutions. In addition, staff take part in the annual meeting of the Institute of Internal Auditors-Chinese Taiwan to polish their professional skills and knowledge of risk control. Before the end of each January, the Company files the names of internal auditors and the training they have received on the Market Observation Post System.

⇥ Internal Audit Organization and Internal Control Approaches