Since 2021, the Independent Directors have been communicating with the Internal Auditor and CPA in a separate manner.
(1) Communication with the CPA: The Independent Directors and the CPA will communicate before the issuance of the financial report on significant investments or financing matters.
| Date/Nature | Item | Result |
|---|---|---|
| 2023.05.10 Pre-Audit Meeting | Self-compilation of the consolidated financial report for the first quarter of 2023 | 1.The company has the ability to self-compile the consolidated financial statements, and continues to adjust the content of the reporting package prepared by each subsidiary, in order to improve the quality of the information it sends to the parent company (Ennoconn) for the preparation of consolidated financial statements. 2.It is recommended to strengthen the supervision of the schedule management of the reporting package submitted by the overseas subsidiary Ennoconn Hungary KFT to the parent company and reviewed by local certified accountants to ensure that the consolidated financial statements can be prepared as planned. |
| 2023.11.02 Pre-Audit Meeting | Recent tax regulations and ESG developments and compliance | 1. In order to promote the international anti-tax avoidance system, China has officially implemented the "Applicable Measures for the Recognition of Profit-Profit Enterprises as Controlled Foreign Enterprise Income" (referred to as the CFC Measures) from 2023. Companies should carefully evaluate the taxation of group operating transaction models under the CFC Measures. If there is a negative impact, CFC investment income shall be recognized and profit-making enterprise income tax shall be paid in accordance with regulations. 2. In order to solve the problem of multinational enterprises taking advantage of the differences between the tax systems of different countries, resulting in domestic tax base erosion and profit shifting, resulting in malicious tax competition in various countries and affecting the tax revenue of various countries, the Organization for Economic Cooperation and Development (OECD) announced on December 20, 2022 According to the legislative model of the second pillar of the global minimum tax system, if the group's consolidated revenue exceeds 750 million euros and the effective tax rate in the tax jurisdiction where the group operates is less than 15%, supplementary tax should be calculated and paid. It is expected that various countries will gradually introduce this requirement into domestic laws. It is recommended that companies should understand the legislative timetable and relevant requirements of each tax jurisdiction in the group, review the effective tax rate of each member, and formulate countermeasures as early as possible. 3. The International Sustainability Standards Board (ISSB) officially released IFRS Sustainable Disclosure Standards No. S1 "General Requirements for Disclosure of Sustainability-related Financial Information" and No. S2 "Climate-related Disclosures" on June 26, 2023. China's competent authorities immediately announced China's blueprint for integrating IFRS sustainable disclosure standards in mid-August of the same year, planning to apply it in three phases starting from the 2026 fiscal year based on the capital size of listed companies. According to this plan, the company should apply the IFRS sustainable disclosure standards for the first time from the 2028 fiscal year at the latest. When preparing the annual report, relevant information should be disclosed in a special chapter on sustainable information in accordance with the standards, and should be announced simultaneously with the financial report. It is recommended that companies should understand the provisions of the sustainable disclosure standards as early as possible and evaluate the impact on the company, so as to plan relevant response strategies and measures in advance. 4. The European Council has officially announced the phased implementation of the Corporate Sustainability Reporting Directive (CSRD) on November 28, 2022. Kontron AG, an important subsidiary of Huahan Technology, is the first wave of applicable objects. Starting from the 2024 reporting year, sustainable reporting information that complies with CSRD standards will be compiled in accordance with regulations and published in 2025. As a non-EU company with significant business in Europe, Huahan Technology is also subject to CSRD and should compile sustainable reporting information in accordance with regulations starting from 2028. It is recommended that companies should assess the impact of CSRD on the group's ESG strategies, plans and operations as early as possible to propose countermeasures and ensure compliance with CSRD norms. |
(2) Individual communication with internal auditor:
Ennoconn’s Independent Directors communicate with the head of Internal Auditor in the following ways:
I. In the Audit Committee and the Board of Directors’ meeting, to discuss important audit findings and improvements.
II. Performing special audits or further analysis of previous audit as directed by the Independent Directors.
III. Communicate directly by phone or email.
The key contents of communication between independent directors and the head of internal audit aThe key of the communication between the Independent Directors and the Internal Auditors and the follow-up actions are listed below:
| Date/Nature | Item | Result |
|---|---|---|
| 1/13/2023 The first communication meeting with designate auditor | The first communication meeting with designate auditor | 1. Communicate the suggestions and expectations for future audit work with designate auditor. 2. The company should control the subsidiaries and affilated companies requested by independent directors. Resolution: The tasks have been finished as the independent directors' request and have been arranged to audit. |
| 3/8/2023 Pre-Audit Meeting | Audit Report Progress Report for Q4 2022 | 1. The closing report on prevention and improvent of cashier fraud cases. 2. The independent directors request to review the credit control and management operational procedure. Resolution: The company is now proceeding to establish the credit control and management operational procedure. |
| 3/30/2023 Pre-Audit Meeting | Audit Report Progress Report for Jan & Feb 2023 | 1.The internal control has been assessed as effective for the year 2023. 2. Post-investment management should be listed as a core of internal control requested by independent directors. Resolution: Post-investment management reports have been conducted as of April 2023. |
| 5/10/2023 Pre-Audit Meeting | Audit Report Progress Report for Feb to Apr 2023 | The request from independent directors: 1. The result of tracking credit operation procedures' amendment. Resolution: The management department has held an interdepartmental meeting to discuss credit operations and proceeded to evaluate the feasibility. 2. The company are obligated to implement what investment laws require. Resolution: Reinforce the internal control of investment products. |
| 7/6/2023 Pre-Audit Meeting | Audit Report Progress Report for May to Jun 2023 | The request from independent directors: Auditors should expand audit scope and the audit report should include subsidiaries. Resolution:The audit of subsidiary companies has already been planned. |
| 8/14/2023 Pre-Audit Meeting | Audit Report Progress Report for July 2023 | The company has reviewed and revised the credit control and management operational procedure as Independent directors suggested. |
| 11/14/2023 Pre-Audit Meeting | Audit Report Progress Report for Aug. to Oct. 2023 | Independent directors requested that company should present the amendment of subsidiary's audit plan in the latest board meeting. Resolution:Improved as requested. |
| 5/13/2022 Pre-Audit Meeting | Audit Report Progress Report for Q1 2022 | 1.Report on the prevention and improvement of cashier fraud cases. 2.The Company need to improve the process of preparing financial ststements suggested by Independent directors. Resolution: The Finanical Department are hiring more experienced employees and set to make improve the process of preparing financial statements |
| 8/11/2022 Pre-Audit Meeting | Audit Report Progress Report for Q2 2022 | 1.Report on the prevention and improvement of cashier fraud cases. 2.The Company need to improve the subsidiary governance framework suggested by Independent directors. Resolution: All related Departments are coordinating to make improvement on subsidiary governance framework |
| 11/9/2022 Pre-Audit Meeting | Audit Report Progress Report for Q3 2022 | 1.Report on the prevention and improvement of cashier fraud cases. 2.The Company need to improve the subsidiary governance framework suggested by Independent directors. Resolution:All related Departments are coordinating to make improvement on subsidiary governance framework. |