Internal Audit

LITE-ON Internal Audit Organization and Operation

Internal audit at LITE-ON is handled by an independent unit that reports directly to the board of directors. In addition to presenting routine reports in board meetings, the unit delivers reports to the Audit Committee, the chairman, and the CEO as needed as part of the commitment to corporate governance.

The LITE-ON internal audit implementation rules establish clearly the internal control mechanisms for the internal audit and review procedures. The rules serve to report the adequacy or lack thereof of the design and routine practices of the controls for the purpose of maintaining an effective internal control system. The internal control system and the scope of audit encompass all operations in the company and in its subsidiaries.

Audits are conducted mainly by following board-approved audit plans, which are devised according to the results of the risk assessment. Special audits or reviews may be conducted as needed. In summary, the aforesaid general audits and special audits produce updates for the management on performance of the internal control system, and give the management another channel for acquiring up-to-date knowledge of existing or potential internal control defects. Internal auditors issue written audit reports and follow-up reports after reviewing audit plans, and submit the reports regularly to the Audit Committee for review.

Internal auditors review internal control self-assessments conducted by individual units. A review will include checking if the process is completed and inspecting the documents to ensure the quality of execution. Self-assessment results, used in combination with internal control defects identified by the audit unit and improvement made to irregularities, provide a basis for making recommendations to the board of directors and the CEO when they issue the statement of internal control system.

The internal audit unit consists of a full-time audit staff. All TWSE/TPEx listed and public subsidiaries of LITE-ON are equipped with their own full-time auditors, who are responsible for conducting audits for the corresponding subsidiaries as required by law. LITE-ON's internal audit unit supervises subsidiaries’ audit management. According to Article 3 of the Corporate Governance Best Practice Principles, appointment, dismissal, evaluation and review, salary and compensation of internal auditors of LITE-ON shall be submitted by the chief auditor to the board chairperson for approval. The Corporate Governance Best Practice Principles are disclosed under the Corporate Governance section on the company website.

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