Audit structure and internal controls

Audit system

Audits conducted by the Audit & Supervisory Committee

Audits are conducted by the Audit & Supervisory Committee, which consists of one internal director and two outside directors. In addition to attendance at key meetings of the Board of Directors, directors who are Audit & Supervisory Committee members conduct individual meetings with those in charge of sales departments and the Corporate Planning Division, in order to make decisions on important management-related matters (including on the processes thereof) and audit the appropriateness of the execution of duties by each director (excluding members of the Audit & Supervisory Committee) and executive officer.

The Audit & Supervisory Committee’s main matters of consideration include the creation of audit policies, plans, and reports; the appointment and dismissal of the Audit & Supervisory Committee chair; the appointment and dismissal of internal Audit & Supervisory Committee members; the evaluation of the accounting auditor and its reappointment or non-reappointment; the approval of the accounting auditor regarding its remuneration; and the decision-making process concerning the appointment of directors and their remuneration.

Internal Audit

In regard to internal audits, the Company has established the Internal Auditing Department (consisting of seven members as of December 26, 2023) directly under the president, CEO & COO. The Internal Auditing Department conducts audits on the appropriateness and efficiency of the Company’s business activities from a fair and independent point of view. The Internal Auditing Department also evaluates the status of the implementation and operation of internal controls concerning financial reporting in accordance with the Financial Instruments and Exchange Act.

Accounting Auditor

Deloitte Touche Tohmatsu LLC

System for Joint Audits

Cooperation between the Audit & Supervisory Committee and the Accounting Auditor

The Audit & Supervisory Committee meets with the accounting auditor at the beginning of each fiscal year to discuss plans and key items for audits and receives quarterly briefings on audit results. In addition, meetings are held between both parties as necessary to exchange information and opinions. Moreover, the Audit & Supervisory Committee is present at audits conducted by the accounting auditor and subsequent review meetings to receive briefings on the status of financial reporting and internal controls, as well as proposals for improvement.

Cooperation between the Internal Auditing Department and the Audit & Supervisory Committee

As well as regularly receiving reports on audits conducted by the Internal Audit Department, the Audit & Supervisory Committee reviews the status of business execution by each department and subsidiary and notifies and exchanges opinions with the Internal Audit Department regarding the results of audits conducted by the Audit & Supervisory Committee. Moreover, the Audit & Supervisory Committee conducts efficient audits through close cooperation with the Internal Audit Department, to which it provides information and requests investigations as necessary.

Cooperation between the Internal Audit Department and the Accounting Auditor

The Internal Audit Department holds timely meetings with the Accounting Auditor to exchange information and discuss matters such as audit plans, status of audits, and audit results.

Internal Control

Our Basic Policy on Internal Control System was formulated in May 10, 2006 to serve as a set of fundamental guidelines for the establishment of a framework for ensuring the appropriate execution of business toward realizing sound corporate management and sustainable growth.
Since then, this policy has been amended to reflect changes in the Group’s business environment and business activities.