The Financial Supervisory Commission (the “FSC”) announced in the Jin-Guan-Jian-Zhi-10501502583 Circular of July 21, 2016 (the “Circular”) the standard format for internal audit reports filed by insurers and other relevant matters, effective September 2016.
According to the Circular, Article 20, Paragraph 2 of the Rules for Implementing Internal Control and Audit Systems of the Insurance Industry provides that if any of the following circumstances is found in an internal audit conducted by a financial institution , the audit results shall be reported to the non-financial statement reporting system of the Single Report Portal website of the Financial Examination Bureau within two months after the completion date of the audit: 1) An item that is part of the audit in the annual audit plan and has a systematic or wide-impact irregularity or abnormality, or 2) any item that should be reported but is not part of the audit in the annual audit plan. The Financial Examination Bureau has announced on its website the required format, which is available for download and use. A FAQ for matters relating to the reporting of internal audit information is now posted in the “Audit Section” of the Financial Examination Bureau’s website for perusal.
This Circular also states that if the execution of an internal audit of a financial institution is poor, if a financial institution fails to accurately report the results of the internal audit, or if other circumstances require so, the Financial Examination Bureau will ask the chief auditor of the financial institution to make a report to the bureau. The report should include at least the following: (1) the overall execution of the annual audit plan that year, (including the major or general irregularities identified and actions taken by the internal audit unit during internal audit over a certain period of time); (2) highlights of the annual internal audit that year; (3) status of internal audit manpower allocation and training; (4) status of communication and cooperation with senior management, risk management and compliance units; (5) points in the internal control and audit system which require reform or improvements; and (6) difficulties and bottlenecks encountered in the course of internal audit.