Internal Audit
The Internal Audit department is an independent unit directly under the Board of Directors. It operates with an independent and impartial spirit, following a comprehensive internal audit system to execute audit tasks. The department regularly reports to the Board of Directors, the chairman, and the Audit Committee. Its purpose is to examine and evaluate the effectiveness of internal control systems, assess the efficiency and effectiveness of operations, and ensure the reliability, timeliness, and transparency of reporting, as well as compliance with relevant laws and regulations. The Internal Audit department provides timely recommendations for improvement to ensure the continuous and effective implementation of various systems. The Internal Audit unit prepares an annual audit plan each year based on the results of a risk assessment, which is then approved by the Board of Directors.
The audit work is primarily conducted according to this approved plan, with special audits carried out as needed. The audit unit conducts performance evaluations and operational assessments in an objective and impartial manner. Findings and conclusions from these audits are compiled into audit reports, which include recommendations for improvements to management. The department also continuously follows up on these recommendations to ensure that necessary improvements are made.
HDRE regularly conducts self-assessments of its internal control systems, with the Internal Audit department reviewing the self-assessment reports submitted by various units to ensure quality execution. The results of these assessments are compiled and reported to the Board of Directors and management, serving as a basis for evaluating the overall effectiveness of HDRE's internal control system. According to the Company's "Corporate Governance Best Practice Principles" and "Delegation of Authority Table," the appointment, performance evaluation, and remuneration of internal audit personnel must be approved by the Chairman, while the appointment or dismissal of the Chief Audit Officer must be submitted to the Board of Directors for approval.
Communication Between Independent Directors, the Chief Audit Executive, and CPAs
- 1. After submitting audit reports and follow-up reports to the chairman, the Chief Audit Officer sends them via email to each independent director for review on a monthly basis. Additionally, at least once each quarter, the Chief Audit Officer meets in person with independent directors to individually discuss internal control and audit-related matters and to address any questions raised by the independent directors.
- 2. Every six months, the CPA reports directly to each independent director in person on the results of the Company’s audits and other required communication matters according to relevant laws and regulations. Independent directors can raise any questions they may have during these meetings and receive timely responses.
Summary of Communication Between Independent Directors and the Chief Audit Officer
| Meeting Date | Key Points of Communication Between Independent Directors and the Chief Audit Officer | Actions and Implementation Results |
|---|---|---|
| March 28, 2022 - Audit Committee | 1.Report on the execution of audit activities for Q4 2021 2.Evaluation of the effectiveness of the design and implementation of the Company’s Internal Control System for 2021 | 1.After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. 2.After the Audit Committee's approval, the "Internal Control System Statement" was submitted and approved by the Board in March. |
| June 29, 2022 - Audit Committee | Report on the execution of audit activities for Q1 2022 | After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. |
| September 8, 2022 - Audit Committee | Report on the execution of audit activities for Q2 2022 | After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. |
| November 14, 2022 - Audit Committee | Report on the execution of audit activities for Q3 2022 | After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. |
| March 2, 2023 - Audit Committee | 1.Report on the execution of audit activities for Q4 2022 2.Evaluation of the effectiveness of the design and implementation of the Company’s Internal Control System for 2022 | 1.After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. 2.After the Audit Committee's approval, the "Internal Control System Statement" was submitted and approved by the Board in March. |
| May 10, 2023 - Audit Committee | Report on the execution of audit activities for Q1 2023 | After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. |
| August 8, 2023- Audit Committee | Report on the execution of audit activities for Q2 2023 | After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. |
| November 10, 2023 - Audit Committee | Report on the execution of audit activities for Q3 2023 | After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. |
| March 7, 2024 - Audit Committee | 1.Report on the execution of audit activities for Q4 2023 2.Evaluation of the effectiveness of the design and implementation of the Company’s Internal Control System for 2023 | 1.After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. 2.After the Audit Committee's approval, the "Internal Control System Statement" was submitted and approved by the Board in March. |
| May 8, 2024 - Audit Committee | Report on the execution of audit activities for Q1 2024 | After prior one-on-one communication with the Audit Committee, the independent directors had no comments on the audit execution report. |
Summary of Communication Between Independent Directors and Auditors
| Meeting Date | Key Points of Communication Between Independent Directors and the Auditors (CPAs) | Actions and Implementation Results |
|---|---|---|
| March 28, 2022 - Audit Committee | Parent company Only and Consolidated Financial Statements for FY2021 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the final audit phase," including key audit matters, materiality, related party transactions, significant accounting estimates, and a summary of the audit of the financial report and key financial information. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| June 29, 2022 - Audit Committee | Consolidated financial statements for Q1 2022 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the during the review phase," including governance matters identified during the interim financial report review, a summary of the review of the financial report and key financial information, as well as significant regulatory updates. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| September 8, 2022 - Audit Committee | Consolidated financial statements for Q2 2022 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the during the review phase," including governance matters identified during the interim financial report review, a summary of the review of the financial report and key financial information, as well as significant regulatory updates. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| November 14, 2022 - Audit Committee | Consolidated financial statements for Q3 2022 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the during the review phase," including governance matters identified during the interim financial report review, a summary of the review of the financial report and key financial information, as well as significant regulatory updates. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| March 2, 2023 - Audit Committee | Parent company Only and Consolidated Financial Statements for FY2022 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the final audit phase," including key audit matters, materiality, related party transactions, significant accounting estimates, and a summary of the audit of the financial report and key financial information. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| May 10, 2023 - Audit Committee | Consolidated financial statements for Q1 2023 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the during the review phase," including governance matters identified during the interim financial report review, a summary of the review of the financial report and key financial information, as well as significant regulatory updates. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| August 8, 2023- Audit Committee | Consolidated financial statements for Q2 2023 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the during the review phase," including governance matters identified during the interim financial report review, a summary of the review of the financial report and key financial information, as well as significant regulatory updates. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| November 10, 2023 - Audit Committee | Consolidated financial statements for Q3 2023 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the during the review phase," including governance matters identified during the interim financial report review, a summary of the review of the financial report and key financial information, as well as significant regulatory updates. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| March 7, 2024 - Audit Committee | Parent company Only and Consolidated Financial Statements for FY2023 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the final audit phase," including key audit matters, materiality, related party transactions, significant accounting estimates, and a summary of the audit of the financial report and key financial information. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |
| May 8, 2024 - Audit Committee | Consolidated financial statements for Q1 2024 | The attesting auditors (CPAs) communicated directly with the Audit Committee regarding "Matters for communication during the during the review phase," including governance matters identified during the interim financial report review, a summary of the review of the financial report and key financial information, as well as significant regulatory updates. They also responded to questions from the independent directors regarding the financial statements. After said communication, the financial statements were reviewed and approved by the Audit Committee, reported to the Board, and duly disclosed and filed with the competent regulatory authorities. |