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Corporate Governance

Risk Management and Internal Audit

Status of Risk Management System

In order to prevent risks that may have a significant impact on management, the status of business execution is regularly reported at the Board of Directors and Board of Officers meetings, and the Internal Audit Office checks and monitors business processes. In addition, through the Compliance Committee, the Company continuously implements various activities to ensure compliance with laws and regulations, and has established an internal reporting system to prevent and detect violations at an early stage, as well as to ensure fair implementation of awards and punishments to ensure sound management.


Status of Audits

Effective June 27, 2023, the Company transitioned from a Company with Audit and Supervisory Board to a Company with Audit and Supervisory Committee Member.


The Company's Audit and Supervisory Committee consists of Director Yoshio Kondo, a full-time Audit and Supervisory Committee Member, Outside Director Akira Mito, an Audit and Supervisory Committee Member, and Outside Director Yoshiharu Sagami, an Audit and Supervisory Committee Member, to ensure independent and fair auditing. Yoshio Kondo, a full-time Audit and Supervisory Committee Member, was elected as a Director because he is expected to utilize his experience and knowledge in auditing and supervising the Company's management. Therefore, he has been appointed as a member of the Audit and Supervisory Committee. Outside Director Akira Mito, an Audit and Supervisory Committee Member, is expected to utilize his professional knowledge and experience as a certified tax accountant, and Outside Director Yoshiharu Sagami, also an Audit and Supervisory Committee Member, is expected to utilize his professional knowledge and experience as a certified public accountant in auditing and supervising the Company's management.


(1) Status of Audits by Corporate Auditors


Specific matters considered by the Audit and Supervisory Board include the formulation of audit plans, preparation of audit reports, selection of the Chairman of the Audit and Supervisory Board, selection of full-time Audit and Supervisory Board members, evaluation, selection, dismissal, reappointment and agreement on compensation of the accounting auditor, exchange of opinions with the accounting auditor, information sharing with the Internal Audit Office, and sharing and discussion of audit results of our Group companies.


The activities of full-time corporate auditors include attending important meetings and stating their opinions, inspecting important approval documents, contracts, etc., hearing reports on the execution of duties and status from directors and senior management, inspecting, examining, and hearing the status of financial statements and accounting books, attending accounting audits and internal control audits and exchanging opinions with the accounting auditors, collaborating with the Internal Audit Office, and sharing and discussing the results of audits of the Company's group companies. The Company conducts on-site inventory inspections, visits to the Company's group companies, etc., in cooperation with the Internal Audit Office.


(2) Status of Internal Audits


Internal Audit Office (4 full-time employees) conducts internal audits in accordance with the audit plan in order to verify, evaluate, and improve the compliance, appropriateness, and efficiency of all business processes in accordance with various regulations, and periodically reports the status of implementation to the Board of Directors and Supervisory Board (or Audit and Supervisory Committee after the transition to the institutional design). The Internal Audit Office reports regularly to the Board of Directors and the Board of Corporate Auditors (or the Audit Committee after the transition to the new organizational design).


The Internal Audit Office, in cooperation with the Audit and Supervisory Board (or the Audit and Supervisory Committee after the transition to the institutional design), conducts on-site inspections of domestic offices and overseas affiliated companies, and also exchanges opinions and information with the Accounting Auditor, and holds discussions with the Accounting Auditor. The Company also works closely with the accounting auditors through exchanges of opinions, information, discussions, etc., so that the internal audit office, corporate auditors (or the Audit Committee after the transition to the new organizational design), and accounting auditors can enhance their respective audit operations and increase their effectiveness.