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Chapter Law Content

Title: Implementation Rules for Bank Internal Audit and Internal Control System CH
Category: Financial Supervisory Commission(行政院金融監督管理委員會)
Attachment:
Chapter 2. Internal Control System.
Section 5. Audits by the Accountant.
Article 25
When a bank engages an accountant to audit its annual financial statements, it shall also ask the same accountant to audit its internal control system and express opinion regarding the accuracy of information provided in the financial statements as well as the implementation of the bank’s internal control system, regulatory compliance system, and the appropriateness of bank’s bad debt reserve policy.
The accountant’s audit fees will be at the expense of the bank as agreed between the bank and the accountant.
Paragraph 1 does not apply to a bank which is taken over by the competent authority pursuant to laws.
Article 26
Where necessary, the competent authority may invite the bank and its accountant to a discussion meeting regarding the audit as described in the preceding article, and ask the bank to replace its accountant to conduct another audit if the competent authority deems that the accountant is incompetent for the audit work.
Article 27
In carrying out audit as described in Article 25 herein, the accountant shall inform the competent authority immediately in case of any of the following situations:
1. In the process of audit, the accountant was unable to continue the audit work because the bank did not provide the statements, supporting documents, account books or meeting minutes asked by the accountant or refuse to provide explanation to the inquires of the accountant, or due to the other objective circumstances.
2. The bank under audit is found to contain untruthful information in its accounting or other records, falsify, or omit accounting or other records, and the situation is of serious nature.
3. The bank under audit does not have adequate assets to cover its liabilities or its financial conditions markedly deteriorate.
4. Evidence indicates that a transaction of the bank might bring about material loss to its net assets.
Where the bank under audit is found to be in any of the situations described in subparagraphs 2 ~ 4 of the preceding paragraph, the accountant shall first submit a summary report to the competent authority based on the audit results.
Article 28
A bank shall file the previous year’s audit report of its accountant regarding the audits described in Article 25 herein to the competent authority before the end of April every year. Such audit report shall contain at least information on the scope and basis of audit, audit procedure and results.
The accountant of a bank is obliged to provide relevant information and explanations to the questions raised by the competent authority regarding the audit report.