Mega Holdings

I. Internal Audit Organization of the Company

1. The company sets up an internal audit unit that is directly subsidiary to the board of directors, which should perform audit business independently and honestly. The internal audit unit currently consists of 12 full-time internal auditors, including the Chief Auditor.
2. The company establishes a chief auditor system to manage all audit business. The chief auditor has the power as a general co-manager. The auditor is not allowed to take a job that will cause conflicts or limitations to the audit work.

II. Internal Audit Operations of the Company

1. Based on the audit plans, the auditing office of the Company shall conduct a routine audit and a special audit on its finance, risk management, and compliance with applicable acts and regulations at least annually; a special audit on its finance, risk management, and compliance with applicable acts and regulations at least semiannually. The auditing office shall allocate the required auditing manpower and number of days to conduct each audit, based on subsidiary’s comprehensive risk level, business profile, and implementation of the internal control system. For those subsidiaries with higher comprehensive risk level, more complicated business profile, and poor implementation of the internal control system, the auditing office shall allocate more auditing manpower and number of days accordingly.
2. The Company will follow up on the improvements made according to the examination comments or faults listed by the financial examination agency, accountants, internal audit unit, and self-inspection people, and the improvement status of items that enlisted as ‘need further improvement’ by the internal control statement.
3. The chief auditor is empowered to, if required by business, dispatch the internal auditors of its subsidiaries to conduct the internal audit task on the Company or its subsidiaries.
4. The chief auditor is required to report its audit business to the Board of Directors and Audit Committee at a minimum period of every six months.
5. The Company has established a communication mechanism among the Independent Directors, the Audit Committee, and the internal audit unit. The internal audit unit reports the status of such communications to the Board of Directors on an annual basis.
6. The chief auditor shall periodically evaluate the efficacy of the internal control activities of a subsidiary and, after having reported to the board of directors, send the evaluation results to the relevant subsidiary’s board of directors for their reference in personnel evaluations.
7. The internal auditors of the Company shall take part in the stipulation, revision or abolition of the Company’s articles of association and respective operational regulations, if required.
8. Other project inspection task assigned.

III. Approval of the Appointment, Performance Evaluation, and Remuneration of Internal Auditors

Article 7 of the Company's Corporate Governance Best Practice Principles stipulates that the appointment, performance evaluation, and remuneration of internal auditors, other than the Chief Auditor, shall be reviewed and submitted by the Chief Auditor to the Chairman for approval.