Internal Audit

Internal Audit Organization and Operation

The comprehensive internal audit system and Audit Committee of Walsin Lihwa help ensure effective internal control and report. The company’s internal audit procedures stipulate the power and responsibilities of its Auditing Office, audit requirements, and approval authority. All the business activities at Walsin Lihwa and its subsidiaries are subject to internal audits.

The Auditing Office– an independent unit with a chief audit executive and dedicated auditors — reports directly to the board of directors. Corporate Governance Best Practice Principles of the company stipulates that the appointments and removals of the dedicated auditors, assessment of their performance, and their compensation packages are reported by the chief audit executive to the chairman of the board for approval. The management of Walsin Lihwa values the Auditing Office, Audit Committee, and their auditors, which are adequately empowered to ensure ongoing and effective implementation of the internal audit system by rigorously checking and evaluating internal control shortcomings and operational effectiveness while assisting the board of directors and management in fulfilling their corporate governance duties.

The chief audit executive and independent directors of the board shall meet at least once quarterly to report the statuses of internal control and audit implementation to the Audit Committee. In case of major abnormalities, their meetings can be convened anytime. The Audit Committee convener can also discuss internal control implementation with the chief audit executive on an as-needed basis quarterly.

The board of directors reviews audit reports on a quarterly basis, and the chief audit executive reports to the chairman of the board, president, and Audit Committee on an as-needed basis in addition to regular reports to the board of directors.

Audit Planning and Implementation

At the end of every year, the Auditing Office shall decide the scope of auditing in the following year based on risk evaluation results. During its annual auditing, the Auditing Office shall also review the results of self-assessment of its internal control systems conducted by individual business units themselves to comprehensively evaluate the effectiveness of internal control design and implementation.

Major audits are implemented based on annual audit planning approved by the board of directors, and the board of directors may ask for ad-hoc audits when necessary to timely keep the management updated on existing or potential internal control issues. All the audit findings along with correction and/or prevention measures subsequently taken as well as improvements made are recorded for follow-ups and timely reported to the management.