| Title： |
Regulations Governing Establishment of Internal Control Systems by Public Companies(2007.07.17) |
| Date： |
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Article 8
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In addition to control activities for different types of transaction cycles as set out in the preceding article, a public company shall include controls for the activities listed below in its internal control systems:
1. management of the use of seals.
2. management of the receipt and use of negotiable instruments.
3. management of the budget.
4. management of assets.
5. management of endorsements and guarantees.
6. management of liabilities, commitments, and contingencies.
7. implementation of authorization and deputy systems.
8. management of loans to others.
9. management of financial and non-financial information.
10. management of related party transactions.
11. management of the procedures for preparation of financial statements.
12. supervision and management of subsidiaries.
13. management of operation of board meetings.
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Article 13
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A public company's internal audit unit shall formulate annual audit plans based on the results of the risk assessment, including matters to be audited monthly, and shall faithfully implement the annual audit plans, so as to check its internal control systems, and prepare audit reports, annexing working papers and relevant materials.
A public company shall include as audit items in its annual audit plan, at least, the control activities for major financial or business activities, such as for acquiring or disposing of assets, engaging in derivatives transactions, extending loans to others, granting endorsements or guarantees for others, supervision and management of subsidiaries, management of operation of board meetings, information flow security inspection, and major transaction cycles set out in Article 7 such as the sale and receipt cycle and purchase and payment cycle.
A public company's annual audit plan, and any amendments thereto, shall be passed by the board of directors.
Where a public company has established independent director position(s), when it submits the annual audit plan to the board of directors for deliberation under the preceding paragraph, the board of directors shall take into full consideration each independent director's opinions, and shall include their opinions in the board meeting minutes.
The audit report referred to in paragraph 1, the working papers, and relevant information referred to therein shall be preserved for no less than five years.
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Article 22
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When conducting self-inspections of its internal control systems, a public company shall first see that all internal departments and subsidiaries conduct self-inspections 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-inspection 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-inspections under the preceding paragraph shall be recorded in working papers that shall be preserved, together with the self-inspection reports and relevant materials, for no less than five years.
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