Internal Audit

Internal audit purposes

1. Strengthen internal control environment
2. Improve efficiency and reduce operating risk
3. Take precautions against a calamity
4. Ensure the operations follow the regulations
5. Assist the company in accomplishing its goals
6. Provide diversified services to the company and the related companies

Internal audit organization

PCSC’s internal audit organization is an independent entity comprised of the Business Auditing Team, the Operations Auditing Team and the Risk Management Team. It consists of 21 personnel and is directly under the Board of Directors. The appointment and removal of the chief audit executive may only be approved by the Audit Committee and the Board of Directors. The appointment and removal, performance evaluation and salary of the internal auditors may only be approved by the Chairman.

Internal audit scope

For all profit or non-profit activities of each department, store and subsidiary, auditing shall follow the standard operating procedures established by PCSC regarding the fifteen major circulations and relative regulations promulgated by public offices.

Internal audit operation

1. PCSC has established and carries out “internal control systems,” “internal audit implementation rules” and “procedures and methods for internal control self-evaluation operations” according to the Regulations Governing Establishment of Internal Control Systems promulgated by the Securities and Exchange Act.
2. Internal audits shall be executed in accordance with the audit plans, which shall be approved by the Board of Directors and formulated based on the results of the risk assessment. Special audit plans shall be executed if needed.
3. After conducting internal audits, PCSC shall prepare and submit the audit report to the Chairman (or authorized person). The internal auditors shall make recommendations and communicate with the audited department if any defect or irregularity is found, and shall follow up on the correction process regularly.
4. In addition to the Chairman (or authorized person), the audit report and correction process shall also be reviewed by the independent directors and reported to the Board of Directors and the Audit Committee.
5. The internal audit office shall review the self-evaluation reports prepared by all departments and subsidiaries and submit the self-inspection reports together with the reports on the correction of defects and irregularities of internal control systems. This review shall serve as the primary basis for the Board of Directors and President to evaluate the overall efficacy of all internal control systems and to produce Internal Control System Statements.