COMPAL ELECTRONICS INDIA PRIVATE LIMITED - Greater Noida

Internal Audit
Organization and Operation Process

1. Establishment

The Internal Audit Office is established under the board of directors, there are total 8 internal auditors including the chief internal auditor located in Taipei Headquarter and major production plant in China. Appointment, dismissal, evaluation and review, salary and compensation of the Company's internal auditors shall be submitted by the chief auditor to chairperson for approval. The auditing scopes cover the functions of Taipei headquarter and controlled subsidiaries of non-public company. The operations include: annual audit plans, special projects and reported matters.

2. Operation

A. The Internal Audit Office formulates annual audit plans based on the results of the risk assessment on law requirements, internal incidents and external environment, and unethical behavior. The plans are approved by Audit Committees and the board of directors before execution.

B. Every audit, following the audit plan, is supported by working papers and all related information. The audit procedures include review documentations and walk through processes, auditors fully communicate with the auditees. When there are findings, improvements will be discussed with the auditees immediately. Complete results are disclosed in the audit reports.

C. After an audit is completed, a report is presented to vice chairman, chairman and independent director to review.

D. Previously reported issues and their progresses are followed up on quarterly basis.

E. The chief internal auditor attends to the audit committee and board meetings and presents the audit findings and progresses.

F. The Internal Audit Office presents a review of the Compal and its subsidiaries’ annual self-evaluation, audit findings, corrections and improvements on the internal control system to the board of directors and the president. This review is an important reference for the board of directors and the president to evaluate effectiveness of the internal control system and issue the Statement of Internal Control.

G. The annual audit plans for subsidiaries are designed based on Compal’s holding ratio, business importance, and operation type. The Internal Audit Office communicates audit findings to the subsidiaries for corrections or improvements, and follows up periodically to ensure the appropriate actions are taken.