Internal Controls
Basic Concept
Nisshinbo Holdings Inc. has established the “Basic Policy on the Establishment and Operation of Internal Control Systems” based on the Companies Act. The policy sets basic matters concerning the establishment and operation of an internal control system to ensure the soundness and appropriateness of operations and to enhance corporate value in accordance with the Group's corporate philosophy.
Promotion System
Under a system in which the director and the chief of the Corporate Strategy Center of Nisshinbo Holdings, Inc. is in charge, the Corporate Governance Department of the Corporate Strategy Center is in charge of internal control, and reports to the Board of Directors in January of each year on the internal control initiatives of the entire group. In addition, as a detailed review of activities in the execution of individual operations, the Internal Control Management Review Report is regularly reported to the Board of Directors based on the results of internal audits, etc., to confirm the soundness and appropriateness of operations in the following areas.
| January: | Occupational Safety and Health |
|---|---|
| March: | Public Relations/Advertising |
| April: | Personal Information Protection and Trade Secret Management |
| May: | Human Rights Awareness |
| June: | Promotion of Environmental Management |
| August: | Export Control |
| September: | Quality Assurance |
| October: | Investor Relations, Corporate Legal Affairs |
| November: | Information Security, Corporate Ethics |
| December: | Internal Audit and Assessment of Internal Control over Financial Reporting |
In the “Internal Control Management Review Report,” the group reports on the purpose of its activities, information on the external environment including information on revisions to laws and regulations and the environment surrounding the company, the status of Key performance indicators (KPIs) and other management indicators, a review of the year's activities (including progress on countermeasures and other measures to address issues from the previous year), and new issues and measures to address them, thereby implementing the PDCA cycle. The revised “Fifth Sustainability Promotion Plan” also focuses on strengthen internal controls as key action items, with the goal of “Continuously developing and operating internal control systems” as a monitoring target.
Specific Initiatives of the Nisshinbo Group
Internal Audits
Among the items to be reported in the Internal Control Management Review Report listed in the promotion system, there are items for which internal rules stipulate the implementation of periodic internal audits.
Items for which internal audit implementation is regulated by rules
| Item | Frequency of Implementation, etc. |
|---|---|
| Occupational Health and Safety | In the event of a death or serious accident (in Japan, expected the grade of disability 7 or higher, specified by the Ordinance for Enforcement of Industrial Accident Compensation Insurance Act), or when instructed by the general manager |
| Personal Information Protection and Trade Secret Management | At least once a year |
| Promotion of Environmental Management | At least once a year |
| Export Control | At least once a year |
| Information Security | At least once a year |
| Assessment of internal control over financial reporting | At least once a year |
| Other Business Audits | Implemented as needed |
In internal audits, the group audits the confirmation of the management system, status of education and awareness of relevant laws and regulations, internal rules, etc., the maintenance and operation of management documents, etc., the confirmation of the existence or non-existence of cases of violation, and the progress of measures to address issues from the previous year, and confirms whether any items requiring improvement or non-conformity exist. The results of the audit are reported to the president of Nisshinbo Holdings Inc. and the Board of Directors through the “Internal Control Management Review Report” and elsewhere. Items pointed out by the Board of Directors, etc., are fed back to the department in charge, and if necessary, are taken up as issues as well as items requiring improvement, and countermeasures are examined and deployed to each group company for improvement.