AcBel Polytech Inc. 康舒科技

Integrity & Risk Management

Internal Control and Audit System

In order to achieve sustainable business goals, AcBel has implemented corporate governance systems and measures to prevent fraud and corruption incidents. Following the guidelines outlined in the "Regulations Governing Establishment of Internal Control Systems by Public Companies," the company has established an internal control system that serves as the basis for annual audit plans and inspections. The auditing tasks are carried out by the Auditing Office, which includes qualified internal auditors with international certifications. The scope of the audits covers all global production bases of AcBel.

In 2022, a total of 55 internal audit reports were executed, identifying 14 instances of internal control deficiencies and anomalies. These included 6 cases where operational guidelines were not implemented as known by the responsible personnel, 3 cases where actual operations did not align with the described procedures, 1 case of personnel unfamiliarity with operational guidelines/regulations, and 4 cases requiring system optimization.

Communication with the respective operational units was conducted to address these issues, and notifications regarding necessary actions or improvement plans were issued. All audit tracking items were completed, achieving a 100% accomplishment rate for the annual report and a 100% progress tracking rate for improvements. The results were reported to the Board of Directors for their awareness. Furthermore, it was verified that no ethical violations occurred in 2022 that resulted in operational or reputational losses. The external auditors provided unqualified opinions on the effectiveness of internal design and execution for the year 2022, which were disclosed simultaneously in the annual report and the public information platform. AcBel's Corporate Governance Section: https://www.acbel.com.tw/en/governance 

Ethical Management and Legal Compliance

"Integrity Management" is the core value of business operation, and AcBel governs with the highest ethical standard. The Board of Directors has resolved to establish a number of integrity management regulations, standards, operating procedures, conduct guidelines and grievance systems to complement the implementation of management programs and the improvement of internal control systems for the sake of preventing dishonest behavior from occurring. All of the rules and regulations as mentioned above that were stipulated for the sake of integrity management apply to the board of directors at the highest level of governance, senior managers at all operating branch offices as well as all employees at AcBel.

AcBel promotes enterprise integrity through cross-functional cooperation, and has established dedicated department, "Corporate Sustainable Development Office," with the purpose of contact to promote sustainable development and integrity management. Moreover, we consolidate "Human Resource Department" with "Auditing Office" to assist the Board of Directors and management in formulating and supervising the implementation of integrity management policies and prevention schemes based on scopes and duties of work for each division and report to the BOD regularly on a yearly basis. The latest report date is the 20th meeting of the 20th board of directors (December 22, 2023).

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Notes|
1. All members of the company, including the board of directors, senior and middle management, employees, and business partners, have received training on integrity and business ethics or have signed the Letter of Commitment to Ethical Corporate Management/Letter of Commitment to Employee Code of Ethics/Self-Declaration Statement.
2. According to statistics, in 2022, a total of 5,162 employees received physical training courses on integrity and business ethics. Among them, 56.32% were direct employees (who are directly engaged in production), and 43.68% were indirect employees (those who other than direct employees). The total training hours amounted to 12,260 hours, with direct employees accounting for 71.70% and indirect employees accounting for 28.30%.
3. In 2022, a total of 6 members of the Board participated in the courses organized by the institution in accordance with the "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies." These courses were related to integrity and business ethics, and the total training hours amounted to 19.5 hours. For the specific names and durations of the courses, please refer to pages 46-47 of the 2022 Annual Report.

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AcBel has established an online reporting portal on its official website in accordance with its self-defined "Procedures for Ethical Management and Guidelines for Conduct." This portal is available for internal and external stakeholders such as employees, customers, and suppliers to make reports. To ensure the protection of whistleblowers from retaliation, all cases are assigned to dedicated audit departments and personnel who conduct investigations and handle the matters in accordance with strict confidentiality principles. The investigation results will be submitted to the senior management of the company, who will decide on the final course of action. Only with the explicit consent of the parties involved can disciplinary measures be implemented. If the individuals are not satisfied with the outcome, they can utilize the company's formal grievance channels to file an appeal and ensure that their rights are protected. The dedicated audit department will also report the reported incidents, their handling procedures, and subsequent review and improvement measures to the Board of Directors, thus mitigating the risk of unlawful activities. Online Reporting: https://www.acbel.com.tw/en/report-mailbox

Risk Assessment and Management

AcBel's Board of Directors serves as the highest decision-making body for risk management. They are responsible for approving the risk management policy and framework based on the company's business strategy and changing environment. This ensures the effectiveness of risk management within the organization. The "Risk Management Policy and Procedure" are established as the guiding principles for risk management. The Risk Management Committee is formed by combining relevant departments and units within the company, along with the executive team. The committee is responsible for identifying, analyzing, assessing, monitoring, responding to, and reporting on risks related to the company's operations. It focuses on recognizing the characteristics and impact of potential risks and improving response measures. The committee regularly reports its execution progress to the Board. This ensures that risks are managed effectively, reduces the impact of potential risks, and enables the company to capitalize on opportunities associated with risks.

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The company conducts regular risk identification and analysis based on the "Risk Management Policy and Procedure," considering the probability of risk occurrence and the severity of its impact on operational outcomes. Risks are prioritized, and feasible solutions are developed to actively monitor and manage significant risks. The objective is to control risks within acceptable limits or eliminate them directly, aiming to achieve effective risk management and rationalize operational performance.

Various risk issues are included in the monthly internal regular meetings of the company for discussion. This allows for real-time tracking and response to management measures. Annually, risk reports are submitted to the board, communicating the risk management policy and demonstrating its effectiveness. These reports serve as a basis for future business operational decision-making and management.

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Information Security Management Mechanism

AcBel has established an "Information Security Management Committee" and formulated an "Information Security Policy" to ensure comprehensive information security governance. Regular information security risk assessments are conducted to enhance the company's IT risk defense capability, resilience, and response capability. We adopt a proactive approach by actively engaging in joint defense efforts, utilizing compartmentalization and integration for rapid response, and defending against internal and external security attacks to mitigate information security threats and risks. The results of information security governance are reported to the Board of Directors on an annual basis. The information security governance status report for the year 2022 was presented to the Board of Directors in November of the same year by the collaboration of the Chief Information Officer and the Cyber Security Director, highlighting the achievements in information security governance.

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Disaster Response Process

AcBel has established the "Disaster Recovery Management Procedure" as guidelines for disaster prevention and response. Each production site has developed corresponding emergency response drill plans based on their geographic location, climate conditions, and supply chain distribution. Through familiarizing themselves with the emergency response procedures during drills, the company aims to minimize operational losses in the event of a disaster. In 2022, all production sites have completed two emergency response drills, and there have been no significant disasters reported across the global production sites.

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