Governance
Basic stance and policy
In accordance with our Basic Policy on Internal Control as resolved by the Board of Directors, we verify each year how the individual functional policies that underpin our management activities are being implemented and, when necessary, review the Basic Policy. Thus, we consistently strive to strengthen our internal control regime. To confirm that our internal controls are functioning appropriately, we have established a dedicated internal function to audit our operations to complement audits by the Audit & Supervisory Board Members and by our accounting auditor.
Promotion Structure
To guarantee the independence of our internal audits, our audit departments operate directly under the President. Our audit departments work on-site to assess the overall establishment and operation of our internal control processes, including the compliance of our operations with laws and regulation and the appropriateness of business management at the Company and its domestic and overseas subsidiaries. Audit findings are reported to the President, who is the Group’s top executive, and are also regularly reported to the Board of Directors and Audit & Supervisory Board, which provide oversight, so as to further strengthen governance. To enhance audit quality and effectiveness, we mutually share information and cooperate with Audit & Supervisory Board Members and accounting auditors.
Key Initiatives
Our audits run every year in accordance with our Internal Audit Regulations and annual audit plan. We apply audit results to not only point out deficiencies but also, from a fair and objective standpoint, offer recommendations for improvement and verify the status of any remediation measures that are in place. Furthermore, to promote evolutionary measures within each department and Group company, we share audit results and risk assessments with our various internal control organizations. Through our internal audit process, we aim to maintain an organization in which each department and Group company autonomously implements the PDCA cycle for advancement, thereby strengthening our internal controls.
Internal Control Audits
In addition to audits conducted each year against standards common to the entire Group, we perform audits tailored to each company's risk level through a risk-based approach that draws on employee awareness surveys, the results of ethics questionnaires, and the priority risks selected by the Risk Management Committee. We provide recommendations to audited entities for improvement based on audit results and enhance the effectiveness of our audits by verifying the status of any improvement plans implemented and remediation measures taken. (In FY2026, conducted at 13 internal departments and 66 affiliated companies)
Audits based on the Financial Instruments and Exchange Act
Our audit process internally evaluates internal controls based on the Financial Services Agency's Implementation Standards for Evaluation and Audit of Internal Controls over Financial Reporting. Audit targets are selected from among the parent and Group companies based on their significance to the reliability of financial reporting and consultation with the audit firm. Every year, we evaluate all operations concerning internal controls across the enterprise, the closing process, sales, purchasing, and inventory management and other business activities, and IT controls. We also enhance effectiveness through written and face-to-face audits. As of FY2026, we determined that the internal controls over financial reporting for our Group were effective and submitted an internal control report in June of that year. Furthermore, the audit firm submitted an audit report stating that this assessment was accurate.