The Purpose of Internal Audit

The Company has set out an internal audit office to perform internal audit systems, the purpose of which is to assist the Board of directors and managers in examining and reviewing auditing findings in the internal control systems and evaluating the effectiveness and efficiency of operations, and to provide improvement recommendation in appropriate time, so that to reasonably ensure the internal control systems is continuously and effectively implemented and to serve as a basis for reviewing and revising the internal control systems.

The Organization of Internal Audit

The Company has set out an Internal Audit Office which was under the Board of Directors. The Audit Office is staffed with a full-time Internal Audit Supervisor who performs the Company's internal audit operations with due diligence, an independent and impartial spirit, and an objective attitude.
The appointment, performance review and compensation of internal audit supervisors are handled in accordance with the company's "Personnel Recruitment and Appointment Procedures", "Performance Review Management Regulations", "Employee Transfer and Promotion Management Regulations" and "Resignation Management Regulations". The appointment and dismissal of audit supervisors must be approved by the Board of Directors and the Audit Committee, and the appointment and dismissal of auditor must be approved by the Chairman.

The Operations of Internal Audit

1. Audit Scope：

• The scope of the Company's internal audit covers all types of internal operational activities of the Company.

2. Audit objects：

• including all units of headquarters and subsidiaries of the Company.

3. Auditing work：

• Auditors shall conduct risk assessments on various internal operating activities of the company each year and submit annual audit plans to the Audit Committee and the Board of Directors based on the risk assessment results. After the annual audit plan is approved by the Audit Committee and the Board of Directors, the auditors shall perform relevant audit operations in accordance with the annual audit plan in the following year.
• The audit work performed by Audit Office is divided into the following types：
  (1) Annual audit planned work：
  Performing a variety of audit operations is based on the annual audit plan which was approved by the Board of Directors.
  (2) Special audit Projects：
  Performing specific audit items is based on the instructions of the board of directors, management requests or projects and business related to the audit work itself.

4. Audit Report：

• The Audit Office of the Company shall inspect and evaluate the implementation of the Company’s internal control systems in accordance with the annual audit plan and prepare audit reports monthly submit and review by the General Manager and Chairman. Auditors shall fully communicate with the audited units on the audit results. Any audit finding and abnormalities in the internal control systems found during the audit period shall be disclosed honestly in the audit reports. In accordance with the provisions of：
  Regulations Governing Establishment of Internal Control Systems by Public Companies, the audit reports shall be submitted to all members of the Audit Committee before the end of the next month after completion of the audit reports, and the audit reports shall be also reported to the Board of Directors by each quarter.
• After the audit reports are submitted, they must be tracked and follow-up regularly to ensure that the relevant units have taken appropriate measures in time until complete improvement.
• The company's audit supervisor shall attend the board of directors' meetings and report on the results of internal audit work every quarter.
• Assessment of the internal control systems with the internal control statement shall be reported to the Audit Committee and the Board of Directors for review and approval annually.

5. Assist each unit in conducting self-assessment：

• The Audit Office shall regularly supervise the internal units and subsidiaries of the Company to conduct self-assessment each year. Each unit and subsidiary of the Company shall conduct self-assessment based on the internal control systems implementation of each operation item and issue an assessment form to record the assessment results. After the assessment is completed, the Audit Office shall review whether the internal control self-assessment results of each unit and subsidiary are valid based on the assessment forms and summarized the assessment results to the Board of Directors for approval, the Company shall file an annual internal control statement to the assigned website.

6. External filing work：

• Based on the " Regulations Governing Establishment of Internal Control Systems by Public Companies ", all filling information must be uploaded to the Public Information Observation Station Reporting System within Regulatory deadlines.