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CORPORATE GOVERNANCE

Communications Between The Independent Directors, The Internal Auditors And CPAs

The policy of the communication.
  1. The independent directors and CPAs:The CPAs hold meetings at least twice a year, which focus on the financial conditions of the company, the operation ,financial conditions and internal audit of foreign subsidiary ,and fully communicating with the significant adjusting journal entries and the influence of modified regulation.In the case of emergency, a meeting may be convened at any time.
  2. The independent directors and the internal audit managers: the internal auditors hold meetings on a quarterly basis,communicating the result of the audit report and the situation of internal control.In the case of emergency, a meeting may be convened at any time.
The communication between the independent directors and CPAs has been functioning well, and major discussions in the past two years are as below:
Date Meeting Communication Matter Report Highlight Communication Results and the Company’s Response
March 15, 2021 Communication   2020 Financial Statements 2020 Financial Audit Report, Significant Accounting Standards and Update of tax laws and regulations. CPAs explained condition of 2019 financial and gains (losses),and conducted discussions and communications focusing on accounting principles and application of tax regulations, and no objections from independent directors.
Key Audit matters 2020 Key Audit matters in inventory evaluation, business combination, and impairment assessment of goodwill. Based on CPAs’ professional judgements, Key Audit matters of 2019 financial statements of the Company are approved without objections from independent directors.
The major concerns of competent authority The contents by competent authority’s letter, and the enhanced audit matters in 2020 financial report. Approved after discussion and communication, and no objections from independent directors.
August 6, 2021 Communication The Financial Statement of first half of 2021 Financial Audit Report, Significant Accounting Standards and Update of tax laws and regulations for first half of 2020. CPAs explained condition of the first half of 2021 financial and gains (losses), and conducted discussions and communications focusing on accounting principles and application of tax regulations, and no objections from independent directors.
Quarterly Financial Statement and reinforcing audit items The Company shall continuously reinforce the evaluation of impact on corporation continuity ability, impairment loss of assets and financing risk, and relevant audit and verification process shall be enhanced. CPAs reinforced the assessment of company customer contract revenue, contract assets and loss allowances for accounts receivable, inventory loss, asset impairment, continued operation and financing risk, and no objections from independent directors.
Annual Audit Plans Identification of Key Audit matters and major audit procedures. Acknowledged by independent directors.
 
Date Meeting Communication Matter Report Highlight Communication Results and the Company’s Response
March 16, 2020 Communication   2019 Financial Statements 2019 Financial Audit Report, Significant Accounting Standards and Update of tax laws and regulations. CPAs explained condition of 2019 financial and gains (losses),and conducted discussions and communications focusing on accounting principles and application of tax regulations, and no objections from independent directors.
Key Audit matters 2019 Key Audit matters in inventory evaluation, business combination, and impairment assessment of goodwill. Based on CPAs’ professional judgements, Key Audit matters of 2019 financial statements of the Company are approved without objections from independent directors.
Proposal of preparation of Financial Report The competent authority’s explanation in letters and the company’s assessment on the necessity to adjust the internal control operations of the financial statement preparation process management. Approved after discussion and communication, and no objections from independent directors.
August 5, 2020 Communication The Financial Statement of first half of 2020 Financial Audit Report, Significant Accounting Standards and Update of tax laws and regulations for first half of 2020. CPAs explained condition of the first half of 2020 financial and gains (losses), and conducted discussions and communications focusing on accounting principles and application of tax regulations, and no objections from independent directors.
Quarterly Financial Statement and reinforcing audit items Upon request by competent authority’s letter, the Company shall reinforce the evaluation of impact on corporation continuity ability, impairment loss of assets and financing risk due to COVID-19, and relevant audit and verification process shall be enhanced. CPAs reinforced the assessment of company customer contract revenue, contract assets and loss allowances for accounts receivable, inventory loss, asset impairment, continued operation and financing risk, and no objections from independent directors.
Annual Audit Plans Identification of Key Audit matters and major audit procedures. Acknowledged by independent directors.
 
The communication between the independent directors and the internal auditing officer has been functioning well, and major discussions in the past two years are as below,
Date Meeting Discussion Communication Results and the Company’s Response
March 15, 2021 Audit Committee   2020 Internal Control System Statement and Report on implementation status of self-evaluation. No objections from independent directors and submitted for report to the Board of Directors after resolution.
Audit implementation report in Q4, 2020, and post-term follow-up audit descriptions. After discussion and communication, no objections from independent directors against audit implementation report.
May 12, 2021 Audit Committee Audit implementation report in Q1, 2021. After discussion and communication, no objections from independent directors against audit implementation report.
August 6, 2021 Audit Committee Audit implementation report in Q2, 2021. After discussion and communication, no objections from independent directors against audit implementation report.
November 9, 2021 Audit Committee 2022 Audit Plans (Internal audit managers discussed with independent directors prior to the meeting) No objections from independent directors and submitted for report to the Board of Directors after resolution.
Audit implementation report in Q3, 2021. After discussion and communication, no objections from independent directors against audit implementation report.
 
Date Meeting Discussion Communication Results and the Company’s Response
March16, 2020 Audit Committee   2019 Internal Control System Statement and Report on implementation status of self-evaluation. No objections from independent directors and submitted for report to the Board of Directors after resolution.
Audit implementation report in Q4, 2019, and post-term follow-up audit descriptions. After discussion and communication, no objections from independent directors against audit implementation report.
May 8, 2020 Audit Committee Audit implementation report in Q1, 2020. After discussion and communication, no objections from independent directors against audit implementation report.
August 5, 2020 Audit Committee Audit implementation report in Q2, 2020. After discussion and communication, no objections from independent directors against audit implementation report.
November 6, 2020 Audit Committee 2021 Audit Plans (Internal audit managers discussed with independent directors prior to the meeting) No objections from independent directors and submitted for report to the Board of Directors after resolution.
Audit implementation report in Q3, 2020. After discussion and communication, no objections from independent directors against audit implementation report.