Where an internal audit conducted under the direction of the chief auditor has any of the following situations, the competent authority may, depending on the severity of the case, demand rectification by ordering the credit cooperative to remedy the situation within a prescribed time period or to dismiss its chief auditor:
1. Factual evidence shows that the chief auditor has engaged in improper lending practice, grossly violated the guidelines for extension of credit or has improper financial relationship with customer.
2. Factual evidence shows that the chief auditor abuses his/her authority to engage in illicit activity or profit self or others, or takes advantage of his/her position to damage the interests of the credit cooperative or others.
3. Disclosing or delivering information or making public the whole or any part of the financial examination report to people unrelated to the execution of audit work without the approval of the competent authority.
4. Failing to notify the competent authority regarding major fraud inside the credit cooperative due to poor management.
5. Failing to disclose in the internal audit report serious deficiencies in cooperative’s finance or business.
6. Issuing an untruthful audit report on findings in internal audit.
7. Failing to discover serious deficiencies in the finance or business of the credit cooperative due to the inadequate assignment or incompetence of internal auditor.
8. Failing to follow the instructions of competent authority in handling the audit work or providing relevant information.
9. Engaging in other conduct that impairs the reputation or interest of the credit cooperative.

A credit cooperative shall specify punishment to be meted out to manager and relevant personnel for violating the Rules herein or the internal control rules of the credit cooperative.
The credit cooperative should constantly examine the incident of violation of Article 16 herein by internal auditors, and any transgression is discovered, reassign the violator to another position within one month from the date of discovery.
The credit cooperative should check whether its internal auditors comply with the provisions in Article 20 and Article 21 when filing the basic information of internal auditors in accordance with Article 34 herein, and if non-compliance is found, demand remediation in two months or else immediately reassign the non-complying auditor to another position.

The central competent authority will set forth formats specified in the Rules herein.

The Rules herein shall be in force on the date of promulgation.