Arrangement of internal control system and risk management system
As of June 28, 2018
The Company engages in activities to enhance the internal control system in order to exhaustively understand and evaluate obstructive factors (business risks) concerning corporate growth and achievement of management targets, and in order to manage the same in a company-wide manner. The establishment of a system to ensure proper business operations in accordance with laws and regulations has been resolved by the Board of Directors and disclosed in the “Basic Policy for Establishing Internal Control System.” The Group, in accordance with this basic policy, will develop and appropriately operate an effective system of internal controls.
The Company undertakes activities focused on raising organizational awareness and fostering a corporate climate mainly through the Internal Control Committee and the Global Audit Department so that the maintenance of the internal control system may be linked to the enhancement of corporate value.
Following the establishment of the internal control system, the Group companies have also established internal audit divisions and assigned staff to the posts, embarking on assessment and auditing of their operations principally performed by these divisions.
In the event that the Company identifies inadequacies in its process of assessment and audit of the control of the management philosophy and ethics, accounting policies and procedures, IT infrastructure and business process in connection with the financial reporting operations, it takes appropriate measures to remedy the problems. As of March 31, 2017, the Company confirmed that the Group’s internal control system was functioning effectively, with respect to the control of company-wide management philosophy and ethics, accounting policies and procedures, IT infrastructure and business process in connection with the financial reporting operations. The Company attaches importance to fostering a progressively robust autonomous corporate culture. To this end, it concentrates on the enhancement of communication across the Group to increase awareness of this goal by all levels of staff.
The status of operations of the internal control system is reported each year to the Board of Directors. An outline of the status for the fiscal year ended March 31, 2017 is as follows.
- Status of initiatives relating to compliance
- As a core organization to promote company-wide compliance, the Corporate Ethics Promotion Committee plans, formulates and implements compliance measures. In the fiscal year ended March 31, 2017, specific measures included the mandatory submission of the “Anritsu Group Code of Conduct Confirmation Statement” by employees; educational and cultural activities through training according to positions and compliance promotion events; and implementation of a “Corporate Ethics Questionnaire” with division feedback for checking familiarity with the established compliance system, the level of awareness of employees concerning ethics, and the like. The Corporate Ethics Promotion Committee has also enhanced the web-based educational system and conducted WBT (Web Based Training) on human rights for all Group employees world-wide, as well as WBT on the Subcontract Act (the Act Against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors) and product liability for domestic employees.
- Departments and committees involved in compliance conducted regular audits on departments involved in fair trade and trade control, and confirmed that each operation has been performed appropriately.
- To prevent violations of laws and regulations, the Company, pursuant to the Rules for Whistleblowing, has established and operates “Helplines,” which accept internal reports and requests for consultation both from within and outside of the Company.
- The status of initiatives relating to compliance including the operations of the Helplines is reported regularly to the Board of Directors.
- Status of initiatives relating to the preservation and management of information
- The Company, pursuant to the Basic Policy on Information Management, has established and implements internal rules including the Information Management Basic Rules and the Information Security Manual in order to appropriately handle and protect information. In the fiscal year ended March 31, 2017, the Company conducted WBT on information security for all Group employees world-wide.
- The Company, pursuant to laws and regulations and internal rules (Trade Secret Management Rules), appropriately manages the minutes and other related materials of the general meetings of shareholders, meetings of the Board of Directors and the Management Strategy Conference.
- Status of initiatives relating to internal audits
- Pursuant to the Internal Control System Basic Rules, the Global Audit Department, which is involved in internal audits, coordinated with the Audit Committee and the Management Audit Department, which supports the Audit Committee, confirmed the status of internal controls of the Company, and coordinated with the internal audit divisions of the subsidiaries to conduct audits on the proper business operations of the subsidiaries. Additionally, the results of such audits were reported regularly to the Board of Directors.
- To ensure the appropriateness and reliability of financial reporting of the Anritsu Group, the Global Audit Department conducted internal control assessments based on implementation plans and confirmed the effectiveness of controls.
- Status of initiatives relating to risk management
- The Company clearly identifies who is responsible for the control of each type of risk and carries out risk analysis and evaluation. The Management Strategy Conference discusses risks when necessary and reports to the Board of Directors. When preparing the budget, risks and obstructive factors were identified, selected and analyzed, and then discussed by the Management Strategy Conference and the Board of Directors.
- Additionally, should an event occur with the likelihood of causing adverse effects on company management, the President shall gather the relevant parties, comprehend the situation thereof, and undertake relevant measures in accordance with the Basic Policy for Risk Management. At the same time, such matters shall be promptly reported to the Board of Directors and the Audit Committee.
- In addition to routine risk management activities, the Company has established a disaster response system including a recovery plan to respond swiftly and appropriately in the event of a disaster, and conducts training and drills on a regular basis.
- Status of initiatives to ensure the efficient execution of duties
- The Board of Directors was convened twenty times during the fiscal year ended March 31, 2017. It deliberated and reported on matters required by laws, regulations and the Board of Directors Rules and confirmed the progress of the medium-term management plan and the budget, as well as supervising the execution of business by Directors. Additionally, Directors, including Outside Directors, together with Executive Officers held free discussions on a regular basis to discuss the Group’s management issues. Furthermore, Outside Directors accompanied Audit Committee Members to conduct the audits and confirmed the status of business execution.
- At the Management Strategy Conference, Executive Officers in charge of subsidiaries give reports when necessary on the business results, financial condition and other important matters regarding the subsidiaries, in addition to discussing specific matters relating to Group strategies.
- Evaluation of the effectiveness of the Board of Directors was conducted by questionnaire for each member of the Board, and the results were deliberated at the Board of Directors meeting. Consequently, it was confirmed that the Board of Directors was composed of appropriate managerial personnel from inside and outside the Company, and had the appropriate number of members; that a system necessary for supervising the constructive discussions and decision-making and the conduct of duties by the Board had been established; and that each of the Directors sufficiently understood the role he or she should play, and engaged in active discussions based on his or her diverse experience and expertise. On the other hand, for measures to improve the effectiveness of the Board of Directors, recommendations were made to further improve the discussions and deliberations of the Board and the ways of reporting and deliberating medium- to long-term issues.
- In order to enhance the deliberations of the Board, matters to be discussed by the Board were reviewed, matters to be discussed by the Board of Directors were narrowed down, and efforts were made to provide documents of the Board meetings in a flexible manner by means of the Web system.
- Status of initiatives to ensure the effectiveness of audits conducted by the Audit Committee
- The Audit Committee Members participated in the resolution of the Board of Directors as Directors. In addition, full-time Audit Committee Members attended the Management Strategy Conference, the strategy conferences of business divisions and other meetings. They also inspected important documents relating to business execution, including a request for approval, in order to monitor important decision-making processes and the status of business execution.
- During the fiscal year ended March 31, 2017, the Audit Committee was convened nine times to determine audit policies and audit plans, revise audit standards, audit the execution of business by Directors and the status of compliance with laws and regulations and the Articles of Incorporation, and conduct reviews of financial statements.
- The Management Audit Department was established as an organization for supporting the duties of the Audit Committee. The head of the Management Audit Department, who is an assigned staff to the post, engaged in the Company’s audit activities together with full-time Audit Committee Members.
- To ensure the execution of effective audits by the Audit Committee, rules on reporting to the Audit Committee and on communicating information were set forth. The system for reporting to the Audit Committee and the channels for communicating information were also clarified.
- Regular meetings of Audit Committee Members and Representative Directors were held to exchange opinions. Meetings with the accounting auditor were held to exchange opinions when necessary.
- To form an opinion on the selection and compensation of Directors, Audit Committee Members (Outside Directors) participated in the Nomination Committee and the Compensation Committee and gathered information.
The Company is fully aware that dealing with antisocial forces with a resolute attitude is requisite for sound corporate growth. In this light, the basic policy for the establishment of its internal control system clearly defines its basic stance; the Anritsu Group Code of Conduct clearly states how it will respond to antisocial forces, as follows.
“We take a firm stance and act resolutely against antisocial forces that threaten the order and safety of civil society. We will have no relationship therewith and will not commit acts that encourage their activities.”
Moreover, in order to block relationships with antisocial forces, the General Affairs Department, as a controlling department, responds to undue requests and other matters firmly in collaboration with specialized external institutions, such as the police and corporate lawyers.