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Article 4
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Follow-up, assessment, and guidance with respect to a rating of "substandard" for internal auditing operations:
- When a securities firm's internal auditing operations have been rated as "substandard," the TSEC shall notify the securities firm to issue a warning disposition to its internal auditors or self-auditing personnel in accordance with relevant regulations (the managerial officers at a branch office of a securities firm conducting self-audits and the internal auditing personnel of the firm's head office responsible for their supervision shall also bear responsibility for lack of appropriate supervision), and in addition, shall require that the securities firm submit within one week a self-assessment report on internal auditing operations, which shall include concrete measures for correction and which shall be submitted to the TSEC for recordation after being signed or chopped by the securities firm's responsible person and its internal auditors.
- The TSEC shall send personnel to the securities firm within one month to perform detailed verification of the self-assessment report of the preceding paragraph, and shall step up guidance of the securities firm in implementation of the internal auditing procedures adopted by the securities firm as well as redoubling the rate and scope of test audit items, which shall be rigorously performed.
- If a securities firm's internal auditing operations have been rated "substandard," but repeated guidance and assessment do not achieve correction and a related targeted examination is already being performed, guidance of the securities firm shall be performed in accordance with the Regulations Governing Targeted Examinations of and Guidance to Securities Firms.
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