General Thoughts Concerning the Internal Control System and Status of Development
A system in which information regarding professional duties performed by board members will be stored and maintained.
The Board of Directors will appoint a delegate to be responsible for overseeing all functions of the company regarding the storage and management of information regarding professional duties performed by board members. This includes abiding by the regulations regarding the handling of documents, confidential information, protection of personal information and management of insider information. They will record any information concerning the board members’ business actions in written documents or electronically and keep it in storage.
Regulation and system concerning management of risk of loss.
According to the emergency response regulation, we should expect certain risks and categorize them. In times of emergency, we should be prepared to send information and carry out the emergency protocols promptly and accurately. In addition, the internal auditing department must abide by the internal auditing regulations, understand the cross-departmental risks, carry out inspections and give a report on management risks at the board meeting on a regular basis.
A system to ensure that board members’ professional duties are carried out efficiently.
We establish company-wide goals for efficient businesses to be shared by both board members and employees. In order to complete these goals, board members should ensure that they are thoroughly understood and set concrete targets for individual departments to aim towards. Managerial accounting methods should be used on a regular basis to review goal achievements, and through feedback from our results, we will be able to guarantee the efficiency of our work.
A system to ensure that the professional duties of board members and employees are carried out according to law and articles of incorporation.
The management office will monitor the professional duties of board members and employees, and will carry out company training as deemed necessary. In addition, the internal auditing department will cooperate with the Board of Auditors, understand the professional duties of board members and employees, carry out regular inspections, and make reports to the Board of Directors.
A system to ensure that business carried out in a corporate group composed of a parent company, subsidiaries and our own are suitable.
The Board of Directors will give the management director a set of goals that the company group (our company and subsidiaries) must achieve. They will also be given responsibilities in which they will be expected to build a system of laws and compliance to assist with risk management. The management office will promote and manage this in a cross-sectional way. In addition, we will set up a regulation concerning the management of affiliated companies in order for them to work towards improving their results and contribute to the overall success of the group. In this regulation, subsidiary companies will be expected to create a system where they will regularly report their results. They are also obligated to report to the Board of Directors in advance on a fixed set of important matters and risks. Among which, some of these will be on the agenda. Furthermore, the internal auditing department will regularly carry out inspections on the subsidiary companies, and report to the Board of Directors.
Matter concerning requests by auditors for assistance from employees.
The Board of Auditors may request assistance from employees in the internal auditing department when deemed necessary.
Matters concerning the independence of employees from board members and the effectiveness of instructions given to employees in the auditing department.
Employees that are expected to assist in the affairs of the auditing department must follow the orders of their superiors without question. In addition, employees who have been moved due to personnel changes must respect the opinion of the Board of Auditors.
System regarding reports made to the auditing department.
Board members, the management office and internal auditing department must report the following matters to full-time auditors on a regular basis. The auditors will then submit the report to the Board of Auditors.
1) Matters relating to important decision making.
2) Important matters regarding the financial state of the business.
3) Matters concerning instances that may cause considerable harm to the company.
4) Important matters relating to the state of the internal auditing department and risk management.
5) Violations of the articles of incorporation or law.
6) Other important matters.
People who make reports to the auditing department must not use the report as a reason for disadvantageous dealings.
A system to ensure that the auditing of other companies is carried out efficiently.
The Board of Auditors may request a hearing regarding the business matters of board members or important employees, and have other privileges including their right to exchange opinions with the CEO, auditors and legal advisors. In addition, auditors must abide by article 388 of the Companies Act when requesting prepayments of expenses. In such cases, the person in charge of the department must make deliberations and promptly deal with the request in question, unless deemed that the request is unnecessary.