Implementation Regulations of Internal Control and Audit Systems for the Credit Departments of Farmers' and Fishermen's Associations Article 4

Credit departments should establish an internal control system in accordance with the following provisions:1. Management oversight and control culture: The board of directors shall be responsible for approving and periodically reviewing overall business strategies and major policies, and shall ensure that an adequate and effective internal control system is established and maintained; the secretary-general shall be responsible for implementing business strategies and policies approved by the board of directors, developing processes that identify, measure, monitor, and control the risks of the credit department, and setting an appropriate internal control system and monitoring its effectiveness and adequacy.2. Risk identification and assessment: An internal control system requires that the material risks that could adversely affect the achievement of the overall goals of the credit department are being identified and continually assessed.3. Control activities and segregation of duties: Control activities shall be an integral part of the daily operations of a credit department. An appropriate control structure shall be set up, with internal control processes defined at every level. An effective internal control system requires that there is appropriate segregation of duties and that employees are not assigned conflicting responsibilities.4. Information and communication: A credit department shall maintain adequate and comprehensive financial, operational and compliance information that are reliable, timely, easily accessible, and provided in a uniform format. The internal control system shall also have effective channels of communication.5. Monitoring activities and remediation of deficiencies: A credit department shall continuously monitor the overall effectiveness of its internal controls. Any internal control deficiencies discovered in internal audits or by other internal control personnel shall be immediately reported to appropriate management and shall be promptly remedied.