9. Internal Control

The company values the internal control system. Its internal control has
been ensured to be sufficient and suitable in order to facilitate the
corporate potential in terms of finance, operations, risk management,
and corporate governance. The principle and summary of evaluation of
adequacy of the corporate internal control are presented in five
aspects:

1. Organizational Control and Environment Measure

The company has defined in written its policies, organizational
structures, and business goals that are clear, measurable, and practical
to maximize effectiveness of its operations.

For the corporate long-term benefit, policies and procedures have been
written to prevent misconduct in financial activities, purchasing, and
general administration, as well as to ensure fairness towards the
company’s business parties.

In addition, the company has written codes of conduct allowing all
levels of its personnel to put those guidelines into practice with
emphasis on integrity of corporate operations.

2. Risk Management Measure

The corporate risk assessment involved analysis of internal and external
risk factors that affect the company’s operations. The risk factors are
informed to related employees in order to develop practical solutions to
reduce such risks.

3. Management Control Activities

The company has specified scopes of authorities and duties, as well as
amounts of money that managements of each level are authorized to
approve. Responsibilities are clearly defined and differentiated. The
company’s activities with its major shareholders, directors, or persons
related to those individuals are undertaken in line with approval
procedures for the particular activities with the corporate maximum
benefit as the main concern. The consideration is done in the same way
as transactions the company does with outsiders.

The company has regular operational control over its subsidiaries and
associates. There are directions for individuals appointed as directors
or managements in the subsidiaries to ensure consistency and coherence
of operations. The corporate operational control is monitored for
compliance with applicable laws to minimize risks and retain the
company’s good reputation.

4. Information and Communication Measure

The company has provided sufficient information for the Board’s
decision-making. A written notice announcing a board meeting or document
used in a meeting with adequate information is given to a director for
consideration at least seven days before the meeting.

Minutes of a meeting include details that corporate shareholders can use
to examine the work of the management. All documents used in accounting
and corporate accounts are retained and categorized. They are always
ready for the auditor’s review. The management has applied accounting
policies that conform to recognized accounting standards and suit
characteristics of the company’s businesses to ensure that accurate
operating results are reflected.

5. Monitoring

The company has monitored its operations to be in the directions
specified in the corporate goals. Operations that do not conform to
specified goals are suitably amended without delay.

The company undertakes internal audits regularly. The audit results are
reported directly to the Audit Committee to allow them to work
independently and present the audit results in a straightforward manner.
Any significant defects are reported to the Board of Directors or the
Audit Committee for prompt consideration and correction. Progress of the
correction is reported to the Committee.

The Audit Committee reviewed internal audit results concerning internal
control of assets, bad debt reserve, production material purchasing,
inventory system, payments, tax withholding, and personnel. The internal
control is considered effective. The internal auditors made
recommendations on improvement needed on the internal control of assets,
inventory system, and accounting system of new projects to ensure
suitability and thoroughness.