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Article 4
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In the listing year and in the following two fiscal years, or in the three fiscal years following the second year after listing in the case of a TIB primary listed company, a TWSE primary listed companyor a TIB primary listed company, when submitting the hardcopies of the annual report, shall also file the CPA internal control system audit report of the previous year on the TWSE-designated information reporting system.
The provisions of the preceding paragraph shall apply mutatis mutandis to a TWSE primary listed company or a TIB primary listed company if, after the expiration of the time period set out in the preceding paragraph, it voluntarily engages a CPA to conduct a special audit of its internal control system.
A CPA engaged to conduct a special audit of the internal control system of a TWSE primary listed company or a TIB primary listed company shall conduct the audit in compliance with the provisions of Chapter III, Section III of the Regulations Governing the Establishment of Internal Control Systems by Public Companies.
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Article 8
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The scope of review by the TWSE in connection with the financial reports listed in the preceding article shall be CPA audit or review reports and financial statements. In the case of financial forecasts, it shall be CPA reports with assurance provided, pro forma financial reports, financial forecast statements, summaries of significant accounting policies, and summaries of major accounting assumptions.
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Article 10
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During review of the financial reports of a TWSE primary listed companyor a TIB primary listed company, items on the formal examination checklist and substantive examination checklist shall be checked item-by-item to ascertain whether their accounting treatment violates any relevant laws or generally accepted accounting principles. The following matters shall also be checked:
- Whether investment in derivatives products is duly disclosed.
- Whether there are any irregularity in trading with related parties.
- Whether there are any loans granted to others due to financing needs not arising out of company business transactions.
- Whether there are any irregularities in the purchase and sale of block assets.
- Whether there are any endorsements and guarantees for others due to needs not arising out of company business transactions.
- Whether the board of directors is operating in accordance with regulations.
- The status of improvement in deficiencies noted in previous reviews or follow-up review of previously noted irregularities.
During review of financial forecasts, items in the formal examination checklist and the substantive examination checklist shall be reviewed and checked item-by-item. In addition, the following matters shall also be checked:
- Whether there is any irregularity in the CPA conclusion with assurance provided.
- Whether the basic accounting assumptions in the financial forecasts are reasonable.
- Whether there is any irregularity in the point in time at which the financial forecasts were updated (or corrected).
- Whether all necessary items are included in the summaries of major accounting assumptions in the financial forecasts.
- The status of improvement in deficiencies noted in previous reviews or follow-up review of previously noted irregularities.
The following rules shall be observed in evaluating whether a listed company delays the updating (or correction) of financial forecasts:
- The discrepancy between the estimated figures before the update and the company's own un-audited figures shall be monitored on a monthly basis, and if the discrepancy has reached the standard for the time for an update, the cause and the basis leading to the discrepancy with the actual time of the update shall be ascertained.
- The time of occurrence of the cause for a financial forecast correction shall be monitored in order to ascertain the cause and basis for the discrepancy with the actual time of the correction.
- The supporting materials and the rationality of the company's explanation for the cause of an update (or correction) shall be analyzed.
Attention shall be given to the following matters when assessing the rationality of basic accounting assumptions in financial forecasts:
- Comparing any material differences between the financial forecasts before and after the update (or correction), ascertaining the main cause for the differences, and analyzing item-by-item the rationality of the evaluation materials relating to the basic accounting assumptions.
- Analyzing the historical financial information of the company reviewed for the most recent 2 years and the financial forecasts of the current year to see if there are any material differences, and ascertaining their causes and rationality.
- Obtaining relevant analysis reports for the company's industry belongs to, and comparing financial reports prepared by companies in the same industry in order to understand changes related to the industry's business cycles.
- Ascertaining whether revenues are overestimated or expenditures underestimated in the pro forma statement of non-operating income and expenses. If the company being reviewed plans to dispose non-current financial assets or major assets, it shall obtain a definite and objective price reference or appraisal report in order to determine whether there is a reasonable basis for the figures it prepares. When figures for the company's share of profits or losses of associates and joint ventures recognized under the equity method were adopted for the estimate, materials related to relevant industries, the same industry, or securities market fluctuations shall also be obtained to facilitate analysis and judgment.
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Article 12
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During formal review of financial reports, if the TWSE discovers that a financial report was not submitted pursuant to the regulations, an incomplete set of documents was filed, or the CPA produced an audit report not with an unqualified opinion or review report not with unqualified conclusions, affecting the fair presentation of the financial report to the extent that a restatement is required, or that the company's internal control system has significant deficiencies; or if, during the formal examination of a financial forecast, it is found that incomplete information was submitted or incomplete information was publicly released, or the date of public disclosure and filing or the date of preparation exceeded the deadline, or the CPA produced an assurance report with a modified conclusion, the TWSE shall formulate a concrete method of handling or suggestions for handling the matter for inclusion in its related report to the competent authority.
After reviewing a financial report, the TWSE shall explicitly express a review conclusion and an opinion on a concrete method of handling. If deficiencies or omissions are found, the TWSE shall request the company to rectify and, in the event of any irregular case with material deficiencies or omissions which requiresthe TWSEto handle the matter pursuant to the Securities and Exchange Act or to request the assistance of relevant agencies, the TWSE shall attach its review report with the given case, formulate an opinion on its handling, and report to the competent authority, or request that the competent authority transfer the case to the specific competent authority for the target industry for further investigation and handling.
If common deficiencies are found during the review of financial reports, the TWSE may issue a letter to the company as a reference for improvement and forward a copy to the competent authority.
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Article 17
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For audits of the implementation of audit plans by the internal auditors of a TWSE primary listed companyor a TIB primary listed company, the random case selection rate is at least 25 percent per quarter in principle.
Instead of conducting the audit referred to in the preceding paragraph, the TWSE may use the CPA internal control system audit report of the previous year presented by the company under Article 4 of these Rules. If the fiscal year for the selection of TWSE primary listed companies and TIB primary listed companies whose internal control systems are to be audited by the TWSE is the fiscal year of initial listing, the period covered by the internal control system audit report may be determined by the Procedures for Reviewing Internal Control System Audit Reports Issued by Certified Public Accountants.
Where a material unexpected incident occurs to a TWSE primary listed company or a TIB primary listed company,or where the competent authority or the TWSE deems it necessary for other reasons, the TWSE may examine the effectiveness of the design and implementation of said company’s internal controls.
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