AcBel Polytech Inc. 康舒科技

Integrity & Risk Management

Internal Control and Audit System

AcBel has established an internal control system in accordance with the "Guidelines for Handling the Establishment of Internal Control System in Public Company," which was approved by the Board of Directors to serve as the basis for audits under the proposed annual audit program. The internal control covers corporate and operational level control practices and standards, with the audit scope covering all the production bases in the world. In the meantime, we have set up an internal audit unit affiliated to the BOD, the "Auditing Office," which is executed by international qualified internal auditors to carry out internal audits so as to improve corporate governance and achieve operational goals.

In 2021, we analyzed the top 3 high-risk items through the nine cycles of internal control and risk identification: subsidiary supervision, raw material procurement procedures, and management of related party transactions integrating the audit items required by laws and regulations according to the internal audit plan which is formulated and implemented. Meanwhile, the audit office is in charge of reporting to the independent directors monthly regarding the audit results, follow up on subsequent improvements and submit reports to the Audit Committee and the Board of Directors for review on a quarterly basis, which overall serve as foundation for the release of internal control system statement at AcBel.

In 2021, we have completed 61 internal audit reports and found 13 internal control deficiencies and anomalies, including 5 discrepancies between approval authority and execution, 8 discrepancies between actual operations and the description of each operation procedure. Notification of treatment measures or improvement plans were issued; we also have negotiated with operation divisions and completed the audit tracking matters achieving the dual targets of 100% achievement of annual reports and 100% tracking of improvement progress. By so doing, we ensured that there was no occurrence of cases that violated ethics or caused operational loss or damage to business reputation in 2021. In 2021, the certified accountant issued an unqualified report on the internal design and effectiveness of implementation measure of the audit system at AcBel. In addition, the report is simultaneously disclosed in the annual report of AcBel as well as submitted on the MOPS (Market Observation Post System). AcBel's Corporate Governance Section: 

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.

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Risk Assessment and Management

The Risk Management Committee of AcBel comprises three parts: the Board of Directors, Administration Department, and related corresponding departments. The Committee follows the "Risk Management Policies and Procedures," which was approved by the Board of Directors as the primary guidelines for implementing risk management at AcBel. Specifically, the Committee considers various risk factors in the areas of corporate strategy, operation, finance, disaster, etc. and adopts qualitative and quantitative methods in evaluating the possibility of occurrences and the severity of the impacts in the aspects of financial performance, personnel safety, and company brand image, etc. AcBel prepares and adopts corresponding risk management plans based on a balance of reasonable risks that the company can bear and prevention costs, regularly reviews the effectiveness of the plan management, requests timely correction, and grasps the opportunities that may be brought in by the risks. The Committee regularly communicates with the Board of Directors on the effectiveness of the company's risk management on an annual basis to facilitate tracking and decision management by the Company's top management.

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The company follows the "Risk Management Policies and Procedures" and regularly identifies possible risks in its operations each year, analyzing them according to their "probability of occurrence" and "severity of impact or influence on operational results." Through systematic evaluation, we rank the risks, develop optimal action plans, and continuously and actively monitor and manage all important risks to keep the possible risks within the company's tolerable range in order to achieve the goal of rationalizing risk management and operational performance.

The company discusses risk issues including management, operation, energy saving, etc. through regular monthly internal meetings, and immediately tracks and responds to each management plan. In addition, we annually submit risk reports to the BOD to communicate risk management policies and risk management effectiveness descriptions for future corporate operation decision management.

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Information Security Management Mechanism

AcBel has established an "Information Security Management Committee" and formulated an "Information Security Policy" to conduct information security risk assessment in accordance with laws and regulations and operational objectives, supervise the stability of the company's information security operations, communicate and coordinate internal and external technical resources, and strengthen the functions of information security personnel to enhance the company's information security protection and reduce information security threats and risks, and the results of its information security governance implementation must be reported to the Board of Directors on a regular basis each year. The periodic report on the status of information security governance for fiscal year 2021 was presented to the BOD in November of that year by the Chief Information Officer, in conjunction with the Chief Information Security Officer, on the results of information security governance.

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Contingency Measures to COVID-19

As the COVID-19 pandemic continues to spread in 2021, AcBel is following the government's "Guidelines for Continuing Operations of Companies in Response to COVID-19" to promote the following measures to ensure continued operational momentum.

• Pandemic Prevention Task Forcee: The headquarters will be responsible for the pandemic prevention policy and continuous operation guidelines, and the top supervisor of each production base will be responsible for the implementation.

• In addition to maintaining body temperature measurement in the company, strengthening environmental disinfection, personnel access control and registration, the following rules are to be abided:
(1) Employees are exempted from unnecessary business trips and meetings, and remote office software and hardware equipment are optimized to reduce physical contact. In case of urgent business travel, the company will take the initiative to dispense the "pandemic prevention package."
(2) The company adopts triage, home-based and off-site office to reduce the risk of staff cross-contamination and to maintain normal company operations. Providing there are employees unable to work with diversion, the company provides free fast screening reagents for employees to use regularly to ensure the safety of the workplace. (Taiwan plant)
(3) The company provides "Family Care Leave" (2 days of which are paid), "Vaccination Isolation Leave, Vaccination Leave, Vaccination Leave" (paid), and "Vaccination Care Leave, Fast Screening Isolation Leave" (unpaid) for employees to use when necessary. (Taiwan plant)
(4) The company provides foreign employees with free isolation, equipment and meal delivery services to reduce the risk of cross-infection.
(5) New employees or those who may be at risk of contracting the disease must first pass a quick screening test or provide a health code before they can report to work at the factory.
(6) A one-time subsidy of $500 will be provided to employees to buy rapid antigen tests, reducing the economic burden of employees and fulfilling rapid test needs. (Taiwan plant)
(7) Visitors must have PCR or negative rapid test certificate before they can enter the plant during the pandemic.
(8) Real-name system and meeting attendance limit are apply for physical meetings.

• For the production process, daily cross-factory senior executive prevention meetings will be held to reduce operational losses by discussing issues such as effective and flexible scheduling of the supply of parts and materials, strict monitoring of product shipments, effective deployment of vehicles or ships with early or concentrated shipments to avoid local closures that result in no shipments. Disinfection is carried out for materials or products entering and leaving to reduce the risk of virus transmission.

• Through immediate cross-factory senior management epidemic prevention meetings to discuss the epidemic prevention measures of each production site and local government regulations, roll adjustments will be made to reduce the risk of epidemic infection of personnel.

Disaster Management & Response

To ensure that the company's operations can continue to operate with minimal impact in the event of a natural disaster or human error, AcBel follows the Business Continuity Management Framework and performs internal capacity and disaster risk assessments. Through the three stages of operational impact analysis, assessment of minimum resource requirements for sustainable operations, and testing exercises, we plan contingency and recovery operations to increase the resilience of our operations.

When a disaster occurs, we take four stages of measures, Response, Mitigation, Preparedness and Recovery, to ensure that we can resume operations in the shortest possible time and achieve the goal of sustainable operations when a disaster occurs.

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AcBel has formulated a "Disaster Recovery Management Procedure" as the primary guidelines for company's disaster prevention and post-disaster recovery, considering the types and impacts of potential disasters according to the geographical location, climatic conditions and supply chain distribution of each operating site. Each plant site stresses implementation of daily drills so that when disasters occur, the loss to the company's operation can be mitigated. In 2021, there were 2 emergency response drills in each plant site. There have been no major disasters at our global manufacturing sites, except for a number of plant personnel nucleic acid testing (RT-PCR) emergencies at the sites in China in response to the local government's policy on COVID-19 prevention.