Internal Audit

Pou Chen’s Internal Audit Department is an independent unit with one manager and three officers that reports directly to the Board of Directors. Besides informing the Board of Directors during its ordinary meetings, it briefs the Chairman and Audit Committee on a monthly and on as needed basis.

All departments of Pou Chen and its subsidiaries are open for review by Internal Audit.

The Company’s internal control systems clearly state and cover all its operational activities that Internal Audit Department is responsible for the examination and assessment. According to the audit plan approved by the Board of Directors, which is based on the risk assessment results, regular internal audits and special audit projects are executed to periodically review the effectiveness of the Company’s internal controls, effectiveness and efficiency of operations, reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance with applicable laws and regulations. These audits assist management to identify existing or potential risks in the system, and also provide recommendations for further improvements. Besides, audit reports shall be submitted for review by each independent director by the end of the following month.

In addition, the Internal Audit Department also examines the mechanisms and results of self-assessments prepared by all departments and subsidiaries of the Company to ensure the quality of implementation. The Internal Audit Department then consolidates related inspection reports for the Board of Directors and the President of the Company to evaluate the overall efficiency of internal control systems and to generate the Internal Control System Statement.