Chapter 3 Operations for Follow-Up, Assessment, and Guidance With Respect to Audited Deficiencies
Article 11 |
When a deficiency in a securities firm's or leverage transaction merchant's finances or business operations is found in a routine audit, follow-up, assessment, and guidance operations shall be conducted as follows:
- The TPEx may dispatch personnel to provide on-site guidance as it deems appropriate in view of the seriousness of the deficiency.
- After a securities firm or leverage transaction merchant receives a letter of sanction from the TPEx, it shall, within the designated deadline, compile a report on its corrective and preventive measures taken with respect to the deficiencies found. It shall also list those deficiencies as additional audit items for daily tracking by its internal audit department for the next 10 consecutive business days and prepare a comprehensive internal audit report, to include an audit report, an itemized audit statement, and audit working papers, and submit it with the aforementioned report by letter to the TPEx for recordation. If the deficiencies of a securities firm involve central custody operations, it shall send a copy the Taiwan Depository & Clearing Corporation.
- The TPEx shall review the itemized statement and evidence submitted by letter by the securities firm or leverage transaction merchant under the preceding subparagraph and ascertain the status of the firm's remediation of the deficiencies. If any matter has not been carried out in accordance with the preceding subparagraph or the itemized statement and evidence are insufficiently detailed and accurate, the TPEx shall dispatch personnel to conduct on-site guidance.
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Article 12 |
For securities firms that have also entered into a contract with the TWSE for use of the centralized securities market, the TPEx shall compile the deficiencies found in routine audits and the results of follow-up, assessment, and guidance with respect thereto, and notify the TWSE of them.
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Article 13 |
When a securities firm's or leverage transaction merchant's internal audit operations have received an unsatisfactory rating, the TPEx shall carry out follow-up, assessment, and guidance operations as follows:
- The TPEx may notify the securities firm or leverage transaction merchant to issue a warning disposition to its internal auditors or self-auditing personnel (the managerial officers at a branch office of a securities firm conducting self-audits and the internal auditors of the firm's head office responsible for their supervision shall also bear responsibility for inadequacies in supervision), and in addition, shall require that the securities firm or leverage transaction merchant submit within a prescribed deadline a self-review report on its internal audit operations. The content shall include a specific remediation plan, which shall be submitted by letter to the TPEx for recordation after being signed by the securities firm's or leverage transaction merchant's responsible person and internal auditors.
- The TPEx shall review the report submitted by the securities firm or leverage transaction merchant under the preceding subparagraph and gain an understanding of the status of its corrections. If any matter has not been carried out in accordance with the preceding subparagraph or the report is insufficiently detailed and accurate, the TPEx shall dispatch personnel to conduct on-site guidance.
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Article 14 |
After performing an audit, the TPEx shall take the following measures:
- Report any violation of laws or regulations discovered to the competent authority for handling.
- If there has been any violation of the rules or bylaws of the TPEx, impose sanctions in accordance with applicable provisions.
- Provide guidance for the securities firm or leverage transaction merchant in drafting a remediation or resolution plan for its finances, business operations, or internal control system with respect to any event listed in Article 7 and oversee the exact implementation of the plan.
- Other necessary measures.
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Article 15 |
After performing a special audit, the TPEx may perform follow-up, assessment, and guidance operations for a securities firm or leverage transaction merchant in accordance with Article 11 and the following provisions:
- Request the securities firm or leverage transaction merchant to adopt a remediation plan in accordance with subparagraph 3 of the preceding article, submit the plan by letter to the TPEx for recordation, and periodically report to the TPEx on its progress on implementing the plan.
- According to the results of the securities firm's or leverage transaction merchant's implementation of the remediation plan, request at any time that the securities or leverage transaction merchant firm reexamine its plan and formulate improvements.
- Based on the results of the securities firm's or leverage transaction merchant's implementation of the plan, whenever necessary, invite the responsible person and chief officers of relevant departments of the securities firm or leverage transaction merchant to discuss improvement measures.
- Other necessary guidance measures.
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Article 16 |
The TPEx may appoint disinterested lawyers, certified public accountants, or other persons who are familiar with the operation of securities business or leverage contract trading business as assistants, to the extent necessary for performing a special audit and guidance, to assist with the audit, guidance, and other necessary measures. All remuneration and expenses incurred therefrom shall be borne by the audited securities firm or leverage transaction merchant.
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Article 17 |
The securities firm or leverage transaction merchant may appeal to the TPEx, specifying the reasons, in the event it finds it difficult to comply with, or disagrees with, guidance and relevant measures imposed by the TPEx.
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