Section II Self-assessment and Internal Control System Statement |
| Article 21 | The purpose of self-assessment by a company of its internal control systems is to implement the company’s self-monitoring mechanisms and adapt to changes in the environment in a timely manner, so as to adjust the design and operation of the internal control systems and to enhance the internal audit department's audit quality and efficiency. The self-assessment scope shall include the design and operation of all of the company's internal control systems.
Before carrying out the assessment under the preceding paragraph, a public company shall set out in its internal control systems the procedures and methods for self-assessment operations.
A public company shall pay close attention to matters relating to compliance with applicable laws, regulations, and bylaws, and shall decide procedures and methods for self-assessment operations based on the results of the risk assessment, and the following items, at least, shall be included:
1. Determination of the control activities that shall be tested.
2. Determination of the business units that shall be included in the self-assessment.
3. Assessment of the design effectiveness of each control activity.
4. Assessment of the operating effectiveness of each control activity. |
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| Article 22 | When conducting self-assessments of its internal control systems, a public company shall first see that all internal departments and subsidiaries conduct self-assessments at least once each year, have its internal audit departments review the self-inspection reports prepared by all departments and subsidiaries, and submit the self-assessment reports, together with the reports on the correction of defects and irregularities of internal control systems discovered by its internal audit departments, to serve as the primary basis for the board of directors and general manager to evaluate the overall efficacy of all internal control systems and to produce Internal Control System Statements.
The self-assessments under the preceding paragraph shall be recorded in working papers that shall be preserved, together with the self-assessment reports and relevant materials, for no less than 5 years. |
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| Article 23 | A public company's findings in its self-assessment of its internal control systems shall classify the systems as either "effective internal control systems" or "materially defective internal control systems" based on whether or not they can reasonably ensure the following:
1. That the board of directors and the general manager understand the degree of achievement of operational effectiveness and efficiency objectives.
2. That the reporting of the company reliable, timely, transparent, and complies with applicable rules.
3. That applicable laws, regulations, and bylaws have been complied with. |
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| Article 24 | A company conducting initial public issuance of its stock, or a public company, shall conduct annual self-assessment of the design and operating effectiveness of its internal control systems, and, except as otherwise provided by the FSC, shall publicly announce and report the Internal Control System Statement on the websites designated by the FSC within 3 months from the end of each fiscal year in the prescribed format.
Where a public company has established an audit committee, the design and operating effectiveness of the internal control system as referred to in the preceding paragraph shall be subject to the approval of the audit committee, and the provisions of Article 4, paragraph 4 shall apply mutatis mutandis.
The Internal Control System Statement referred to in paragraph 1 shall be passed by the board of directors. The same shall apply to any amendments thereto, and the company furthermore shall publicly announce the reasons for and content of the amendments on the websites designated by the FSC within 2 days counting inclusively from the date of passage by the board of directors.
The Internal Control System Statement referred to in paragraph 1 shall be published in the company's annual report, public offering and issuance prospectus, and other prospectuses in compliance with relevant regulations. |
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