Internal Control
Internal Control System

NTC has set up an effective internal control system in accordance with the Regulations Governing Establishment of Internal Control Systems by Publicly Owned Corporation, giving consideration to the operation activities of Nanya Technology and its subsidiaries and compliance with laws and regulations related to the industry. We review this system whenever necessary in response to the changes in the internal and external environment to ensure the effectiveness of the design and implementation of this system.

Implementation of the internal control system is a continuous process. Through constant review of the operations and management practices, we discover any actions that deviates from the Company’s policies operating procedures , goals or expected standards and report the issues to the right management personnel through the feedback system. Targeting on the issues, we take necessary actions to ensure that the Company’s operations are set on the right path towards the direction planned by the Company. And through the internal control mechanism, we achieve the goal of check and balance to prevent malpractice.

 

Internal Auditing

NTC has established an Auditor's Office under the Board of Directors and appointed full-time internal auditors. Internal auditors are required to participate in audit-related courses organized by professional training institutions every year to continuously improve their professional capabilities. Scope of internal auditing:
•Review the reliability and integrity of financial and operational information.
•Review the existing system to ensure compliance with policies, plans, procedures, contracts and regulations.
•Review methods for safeguarding assets.
•Evaluate the efficiency and effectiveness of resource utilization.
•Review the operations or project plans to determine whether the results are consistent with the established goals.

 

In addition to preparing audit reports on internal control and abnormalities discovered during an audit, the internal auditors also file the cases for tracking and reminders to ensure that the relevant units have taken appropriate measures to rectify the situations in a timely manner. The audit reports are submitted to the independent directors by the end of the next month after the audit report is completed.
 

Internal auditing is not the sole obligation of the independent auditing department. Each department is also required to carry out independent audit on the specific items internally and independently within the specified period. The independent auditing department then reviews the results of the internal audit at each department and implements scheduled and unscheduled inspection to ensure that internal control has been thoroughly implemented at each department.

Internal auditing statistics

Note: Two abnormalities have not been fully rectified; they are scheduled
to be completed by the end of June 2018.

 
Anti-corruption

All employees at NTC are required to abide by the Company’s “Personnel Management Rules”. Anyone who is found to have engaged in malpractice, embezzlement and accepting bribery or commission, will be dismissed from the Company once the unethical acts are confirmed. And the direct supervisor may also be punished depending on the severity of the event. To prevent malpractices, anyone who holds a position in sales, procurement, finished-products warehousing, supervision and budgeting is put under job rotation and required to avoid conflict of interest. We have also compiled anti-corruption materials for employee training (training completion rate 100%). We expect that all our employees, irrespective of their work and life, will follow the code of ethics and manifest our corporate culture of "industriousness and honesty". In 2017, no cases of corruption has been reported in the Company.

 
Code of Sustainable Conduct

In addition to the Code of Conduct for Directors and Managers set out by the Board of Directors, NTC took reference of the Code of Conduct - Responsible Business Alliance (RBA), as well as publishing the Labor Ethics Management Policies and Code of Business and Ethical Conduct. Collectively, these codes and policies serve as guidelines for all employees (including managers), employees of subsidiaries, customers, suppliers and stakeholders, ensuring that all businesses are conducted in honest and ethical manners. The Code of Conduct contains a set of specific rules, covering the areas of business ethics, information disclosure, environmental control, employment of workers, safety and health, compliance and corporate governance, social engagement and whistle-blowing procedures. To implement the guidelines, the Labor Ethics Management Policy and Code of Business and Ethical Conduct are published on the internal website, and all employees are trained for the Code of Business and Ethical Conduct through the online training system to raise the awareness on business Integrity and ethics. Our target is 100 percent employee reading rate (the training system has been set up with a clocking system; those who do not read through a set period of time will not be registered for completion). All new employees are required to participate in the RBA Code of Conduct training during the on-boarding period to ensure that they understand the importance of and take responsibility to meet the guidelines. Employees are prohibited from providing (or accepting) bribery, engaging in any unethical activities, such as insider trading or behaving in ways that damages the Company's reputation. In the case of major violations or corruption (e.g. employees accepting bribery), the involved employee(s) will be dismissed immediately once the events are verified as true and pursued for legal liabilities when the events cause serious losses in the Company’s rights and interests.

In our effort to continuously optimize the business environment,
Nanya Technology sets a series of labor ethics goals and implemented relevant training courses. In 2017, we achieve all four goals set for the year - “zero corruption”, “zero sexual harassment” and “training for the Code of Employee Conduct and Ethics” and “anti-corruption education”.

Note: "Anti-corruption education training" is a newly added course in 2017. It had been implemented in the "Code of Employee Conduct and Ethics" training course before 2016.
 
Grievance and Whistle-blowing

The Company has set up an Employee Grievance Procedure to provide our employees a channel for reporting unlawful or unethical conducts. When an employee discovers an illegal or improper conduct that has compromised an individual’s or the Company’s equities, or an individual receiving unlawful gains through his/her authority, he/she can fill out the "Grievance Form" at any time and forward the form to the supervisor of the person being reported. In addition, the Company has also set up the Misconduct Reporting Guidelines in 2016 and added a dedicated hotline (02-29061001) and email box (audit@ntc.com.tw) to the Company’s official website. Dedicated personnel are staffed to handle the cases and provide a channel to the stakeholders for grievance when they find their interests compromised. To protect the whistle-blower, the staffs handling the cases are required to carry out investigations under the principles of confidentiality and strictly prohibited to disclose any details of the cases to parties of no concern. When conducting investigations, the staffs should only discuss the part of the case relevant to the person involved and, in particular, the identity of the whistle-blower shall never be disclosed.


Cases Reported

Note: In 2017, 4 cases were reported; among which, 3 cases were grievances regarding internal management issues (1 case was raised and 2 cases were dismissed). The department supervisor was requested to pay attention to employee grievances and reinforce the function of employee counseling and communication to resolve issues at the first instance. One case of suspected corruption was reported, which was dismissed after investigation.