Chapter 1 General Principles |
| Article 1 |
These regulations are enacted in accordance with Article 51 of Financial Holding Company Act; Paragraph 1, Article 45-1 of Banking Act; Paragraph 1, Article 21 of Credit Cooperatives Act; Article 43 of Act Governing Bills Finance Business; Paragraph 3, Article 42 of Trust Enterprise Act. |
| Article 2 |
The "banking business" referred to in these regulations include banking institutions, credit cooperatives, bills and trust business.
Unless otherwise regulated, the internal control and internal audit system for financial and bills and trust business other than banking business shall also be governed by these regulations. |
| Article 3 |
A financial holding companies or banking business shall establish internal control and internal audit systems and ensure the on-going and effective operation of the system to promote the sound business operation of financial holding companies (including its subsidiary companies) and the banking business.
Financial holding companies (including its subsidiary companies) and banking business shall organize overall operation strategies, risk management policies and guidelines, draft operation plans, risk management procedure and execution guidelines. |
| Article 4 |
The basic objectives of internal controls of a financial holding company or banking business are to promote sound operations and, through joint compliance by the board of directors, management, and all personnel, to reasonably ensure that the following objectives are achieved:
A. Effectiveness and efficiency of operations;
B. Reliability, timeliness, transparency and compliance of reporting; and
C. Compliance with applicable rules and regulations.
The objective of effectiveness and efficiency of operations referred to in subparagraph 1 of the preceding paragraph includes objectives such as profits, performance, and safeguarding asset security.
The "reporting" referred to in subparagraph 2, paragraph 1 includes internal and external financial reporting and non-financial reporting of a financial holding company or banking business. The objective of external financial reporting includes ensuring that financial reports presented to external users are prepared in accordance with the generally accepted accounting principles and that all transactions are properly approved. |
| Article 5 |
The internal control system of a financial holding company or a banking business should be supported by the board of directors. If the board has opposite opinions or retain their opinions, these opinions and reasons should be notified clearly in meeting minute and sent, together with the internal control system passed by the board, to the auditor (supervisors or the board of supervisors) or to the audit committee. The same procedure should be applied if any revisions are needed. |
| Article 5- 1 |
The board of directors (or the council) of a financial holding company or a banking business should be aware of the operational risks faced by the company or business, supervise its operating results and bears the ultimate responsibility for ensuring the establishment and maintenance of appropriate and effective internal control system. |