| Legislative： |
1.Promulgated on January 28 , 2004
2. Amended on December 26, 2008
3. Amended on March 15, 2018 |
| Content： |
Article 1
These Regulations are enacted in accordance with Paragraph 2,
Article 28 of Agricultural Finance Act (referred to as the
“Act” hereunder).
Article 2
The credit departments of farmers’ and fishermen’s
associations (collectively referred to as “credit departments”
hereunder) shall establish internal control and audit systems
and draw up operating processes based on the operational manuals
for various businesses compiled by institutions commissioned by
the central competent authority as basis for operations,
management and internal audit.
Article 3
The fundamental objectives of internal controls are to promote
sound operations of the credit departments and, through joint
compliance by directors, supervisors, secretary-general,
management and all business-related personnel of credit
department to promote the efficiency of operations, maintain
security of assets and ensure the reliability and integrity of
financial and management information as well as compliance with
applicable rules and regulations.
Article 4
Credit departments should establish an internal control system
in accordance with the following provisions:
1. Management oversight and control culture: The board of
directors shall be responsible for approving and periodically
reviewing overall business strategies and major policies, and
shall ensure that an adequate and effective internal control
system is established and maintained; the secretary-general
shall be responsible for implementing business strategies and
policies approved by the board of directors, developing
processes that identify, measure, monitor, and control the
risks of the credit department, and setting an appropriate
internal control system and monitoring its effectiveness and
adequacy.
2. Risk identification and assessment: An internal control
system requires that the material risks that could adversely
affect the achievement of the overall goals of the credit
department are being identified and continually assessed.
3. Control activities and segregation of duties: Control
activities shall be an integral part of the daily operations
of a credit department. An appropriate control structure
shall be set up, with internal control processes defined at
every level. An effective internal control system requires
that there is appropriate segregation of duties and that
employees are not assigned conflicting responsibilities.
4. Information and communication: A credit department shall
maintain adequate and comprehensive financial, operational
and compliance information that are reliable, timely, easily
accessible, and provided in a uniform format. The internal
control system shall also have effective channels of
communication.
5. Monitoring activities and remediation of deficiencies: A
credit department shall continuously monitor the overall
effectiveness of its internal controls. Any internal control
deficiencies discovered in internal audits or by other
internal control personnel shall be immediately reported to
appropriate management and shall be promptly remedied.
Article 5
A credit department shall establish an internal audit system and
a self-inspection system to maintain effective and proper
operation of the internal control system.
The internal audit system should require that internal auditors
are responsible for auditing the operations of relevant units
(including the credit department and sub-departments, electronic
data processing unit and property safekeeping unit) and
periodically evaluate the performance of self-inspection
conducted by relevant units.
The purpose of an internal audit system is to assist the board
of directors, board of supervisors and secretary-general in
examining and evaluating whether the internal control system
works effectively and to provide timely suggestions for
improvement so as to ensure the ongoing and effective
implementation of internal controls.
With respect to the self-inspection system, staff of credit
business related units should check on each other the actual
implementation of business under the supervision of deputy chief
or personnel at comparable position or higher as assigned by
each unit to discover deficiencies early and take corrective
actions in a timely manner.
Article 6
Farmers’ and fishermen’s associations should assign an
appropriate number of full-time internal auditors based on the
size of business volume to perform audits of the credit
department. The internal auditors shall report the audit
business and implementation of internal controls by the credit
department to the board of directors and board of supervisors
once every half a year.
For farmers’ or fishermen’s associations with a credit
department set up for less than three years or situated in a
remote area, their internal auditors may concurrently work on
businesses other than those of the credit department, provided
it has been approved by the competent authority.
Article 7
An internal auditor shall meet the following qualification
requirements:
1. Having graduated from a senior vocational school with a major
in business or related division/section and having not less
than 3 years of experience in financial business; or having
not less than 6 years of experience in financial business
and having worked not less than 3 years as an auditor at an
accounting firm or a programmer or system analyst at a
computer firm, and during which, having received not less
than 3 months of training in financial business and
administration.
2. Free of any record of demerit or more serious disposition
from employer in the last three years, unless the demerit
record was a result of joint and several disciplinary action
on account of the violation or offense of a co-worker, and
the demerit has been offset by other merits; and
3. Having attended auditor training course or computer audit
training course offered by a professional training
institution recognized by the central competent authority and
obtained a completion certificate therefor.
If the internal auditor of a credit department that has been
established for less than three years or is situated in a remote
area does not meet the qualification requirements set out in the
preceding paragraph, the credit department shall report to the
competent authority for approval under a special case status.
Article 8
An internal auditor shall, during his/her employment, attend
finance-related training offered by a professional training
institution mentioned in Subparagraph 3, Paragraph 1 of the
preceding article every year and obtain a completion certificate
therefor.
A professional training institution under the preceding
paragraph shall, at the end of each year, submit a plan on the
contents, hours and instructors of the training courses it plans
to offer the following year to the central competent authority
for consent and submit a report on the training offered the
previous year to the central competent authority for record.
The central competent authority may, in view of the actual
business needs of a credit department, coordinate the adjustment
of contents, hours and instructors of the training courses
offered by a professional training institution under the
preceding paragraph.
Article 9
An internal auditor may not commence his/her assignment until
after obtaining approval from the competent authority. The
preceding provision applies to change of internal auditor.
An internal auditor may not be discharged (dismissed),
transferred or demoted unless he/she has committed gross
negligence. Notwithstanding the foregoing, an internal auditor
may be transferred to a different job with the consent of at
least two thirds of all directors.
In the meeting of the board of director under the preceding
paragraph, if any director has a dissenting or qualified
opinion, it shall be recorded in the meeting minutes.
Farmers’ and fishermen’s associations shall submit a report on
the qualifications and training records of their internal
auditors to the competent authority for recordation at the end
of each year.
Article 10
The duties of an internal auditor are as follows:
1. Audit of business and account books (including electronic
data and bad debt write-off).
2. Audit of assets and liabilities.
3. Audit of contracts, bills, receipts, internal rules, and
statements.
4. Taking inventory of stock and articles in custody.
5. Investigation of internal fraud cases and other material
contingencies.
6. Follow-up of improvement actions taken against deficiencies
found in financial examination and items to be rectified
under the order of the competent authority.
7. Inspection of documents handed over during handover of job.
8. Planning, supervision and audit of self-inspection operation.
9. Formulation and evaluation of and making suggestions for
internal control system.
10. Participating in the formulation or revision of operating
and management rules for respective operations.
11. Other audit related matters.
Article 11
Internal auditors should exercise due diligence required of
their profession, maintain impartiality and independence in the
performance of duties without giving advance notice and keep the
audit information confidential.
Article 12
When conducting audits, an internal auditor should use the
approaches of inventory taking, inspection, observation,
inquiry, correspondence, double check and analysis to gather
adequate and suitable evidence as basis for expressing opinions
on business
Article 13
In the performance of audit work, internal auditors shall record
the information and data obtained on their working papers. In
case spot check audit is carried out, the internal auditor shall
note the spot check method, starting and ending time period or
account numbers examined and scope of examination in the working
papers to delineate responsibility.
Article 14
When an internal auditor conducts audit work, staff of the
audited unit should cooperate closely and provide necessary data
and documents to facilitate the audit work. In addition, if
deemed necessary, an internal auditor may, together with
managing personnel, ask the audited staff to open the cabinet
and drawer under their care for inspection.
Article 15
For the performance of audit work, an internal auditor may, if
deemed necessary and after obtaining the approval of
secretary-general, request the staff of other units or staff in
the audited unit but not handling the audited business to assist
in the calculation work. The assisting staff shall sign their
name on the working papers to take responsibility for the
accuracy of dollar amounts (balance) they calculated.
Article 16
Internal auditors shall draw up an audit plan for the following
year in accordance with the requirements of the central
competent authority and based on the operational and management
needs of the credit business and past work experience. The
audit plan shall be submitted to the secretary-general in a
confidential manner for approval and implemented accordingly.
Internal auditors shall conduct at least one general audit and
one special audit of the credit business related units every
year. For business units with deficiencies in business
operation, the internal auditor should conduct review at least
once every three months. If deemed necessary, the competent
authority may order a farmers’ or fishermen’s association to
conduct a special audit.
When the duties performed by the board of supervisors of a
farmers’ or fishermen’s association according to law involves
credit business, the internal auditor should provide assistance.
Article 17
An internal auditor should produce a written report for each
audit work performed and submit the report to the board of
directors and the board of supervisors through the
secretary-general. If the report mentions deficiencies in
regulatory compliance, the board of directors will discuss
concrete improvement measures, which, once decided by the board,
will be immediately implemented under the supervision of the
board of supervisors.
An internal auditor shall produce an accurate and detailed audit
report. A report on general audit shall disclose at least the
following information:
1. The scope of audit, financial status, business performance,
asset quality, operational control and internal management
for respective business, information management, status of
self-inspection; and deficiencies in regulatory compliance,
and evaluation thereof.
2. A status report on improvement actions taken by each business
unit in response to the examination opinions of or
deficiencies found by financial supervisory agency or
financial examination agency commissioned by the central
competent authority, or Agricultural Bank of Taiwan, or
internal auditor or self-inspection personnel.
Farmers’ and fishermen’s associations shall submit written
reports under Paragraph 1 hereof to the competent authority
with a copy sent to the Agricultural Bank of Taiwan.
Internal audit reports and related working papers shall be
retained for at least five years.
Article 18
Internal auditors shall pay attention to ethics and be free of
the following situations:
1. Engaging in conduct exceeding the bounds of audit authority
or other illicit activities.
2. Disclosing privileged information to others, or disclosing
privileged information for personal gain or damaging the
interests of the credit department.
3. Not withdrawing from audit cases involving business he or
she used to perform or is having an interest in.
4. Accepting unjustified entertainment or gratuity or other
illicit benefits from employees or customers.
Article 19
For internal auditors who have a breach of duty or violate the
provisions of the Act, the competent authority may, in view of
the severity of the situation, order the farmers’ or
fishermen’s association to transfer the auditor to a different
job or take disciplinary action against the auditor in
accordance with the Regulations Governing Personnel Management
of Farmers’ or Fishermen’s Associations.
Article 20
When an internal auditor learns any material omission, violation
of rules or regulations or other situations that may lead to
significant loss of the credit department, he or she should
promptly report to the secretary-general, executive supervisor
and chairman for further actions. If the aforementioned officers
fail to take any action, the internal auditor should immediately
file a report with the competent authority with a copy sent to
the financial supervisory agency or financial examination agency
commissioned by the central competent authority, the
Agricultural Bank of Taiwan and the Central Deposit
Insurance Corporation.
Farmers’ and fishermen’s associations should commend internal
auditors who discovered fraud.
When a credit department is found to have a material omission
or fraud, it shall make full disclosure in its internal audit
report personnel responsible for the major omission.
Article 21
A credit department should establish a self-inspection system to
step up internal controls and thereby prevent the occurrence of
fraud.
Credit business related units shall conduct at least a general
self-inspection semiannually; at least a special
self-inspection every month. The head of the unit should assign
a person other than the original handling staff to conduct the
inspection and keep the inspection activity confidential
beforehand. In the month where general self-inspection or
general audit by the internal auditor has been conducted, the
special self-inspection may be exempted in that month.
The self-inspection report shall be stamped with the seal of the
unit head and then submitted to the internal auditor for report
to the secretary-general. In case of regulatory violation or
other deficiencies revealed in the self-inspection report, the
secretary-general should report to the board of directors for
discussion of concrete improvement measures, which, once decided
by the board, will be immediately implemented by the board under
the supervision of the board of supervisors.
Farmers’ and fishermen’s associations should provide the
self-inspection personnel with proper training. The internal
auditor will supervise the self-inspection work conducted by
respective unit.
Article 22
Internal auditors shall, before the end of January and July each
year, submit a report on the types, frequency and contents of
self-inspection conducted in the previous half year to the
competent authority for record, with a copy sent to the
Agricultural Bank of Taiwan.
Article 23
If a credit department conceals the fact about its poor internal
management or lack of internal controls, inadequate
implementation of its internal audit system by internal
auditors, or its internal auditor conceals the audit findings
that results in material fraud, relevant personnel involved
shall take the responsibility for negligence of duties.
Article 24
These Regulations shall be implemented on the date of
promulgation. |