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Status of Audits

Status of audit by the Audit Committee and the Directors elected as Audit Committee Members

By resolution at the 95th Ordinary General Meeting of Shareholders held on June 24, 2021, four candidates, Mr. Norio Igarashi, Ms. Nozomi Ueda, Mr. Junichi Aoyagi, and Mr. Toru Wakinaga, were selected as Directors on the Audit & Supervisory Committee. Subsequently, the Committee is formed by four members above, including three independent Outside Directors. Also, at its session on the same date, the Audit & Supervisory Committee appointed Mr. Norio Igarashi as a chairperson and Mr. Toru Wakinaga as a full-time member. Mr. Norio Igarashi (outsider) has expertise and a rich experience in finance and accounting as a CPA and a university professor and a broad insight into management primarily based on his experience as an outside officer for listed companies. Ms. Nozomi Ueda (outsider) has a rich experience and expertise in law as a lawyer and a broad insight into corporate management primarily based on experience as an outside officer for listed companies. Mr. Junichi Aoyagi (outsider) has a rich experience and expertise in finance and accounting as a CPA. And Mr. Toru Wakinaga (insider/full-time) has held executive positions, such as Vice President and Senior Executive Officer of the Management Audit Department. Thereby, he has detailed knowledge about the Company’s businesses and audit work. And based on such experience, he made efforts to grasp internal information quickly and appropriately and conduct audits and related activities flexibly.

To maintain and improve the quality of audits conducted by the Audit & Supervisory Committee, Anritsu sets up the Management Audit Department as a team meant to support the Committee's activities and assigns fulltime personnel with experience in serving as Officers. The Committee conducts its activities in cooperation with the Management Audit Department, the Accounting Auditor, and an internal audit department (Global Audit Dept.).

Activities of the Audit & Supervisory Committee

The Audit & Supervisory Committee stipulates the “Rules of the Audit & Supervisory Committee” and its by-laws to work on many activities. At the beginning of every business year, the Committee selects its chairperson and full-time personnel, allocates audit work among its members, and determines other matters necessary for fulfilling their duties as the Committee members. Further, the members review their activities and the Committee operation and audit results for the previous term, assess risks for a new business year as one of the Company’s management challenges, discuss and draw up their audit policy, identify priority items, and prepare an annual audit plan.

The audit activities conducted during the term were as follows: attendances at meetings of the board; exchanges of opinions with the senior management (two sessions with the Representative Director and three sessions with Officers; visits to business departments and domestic or overseas subsidiaries, which were identified as the priority audit sites for field audits, interviews, and the like; hearing of reports from the Accounting Auditor; and exchanges of information at quarterly liaison meetings among three audit-related departments (the Audit & Supervisory Committee, the Accounting Auditor, and the internal audit department). At the end of the business year, it organized audit records prepared during the term, scrutinized the Business Report and Financial Statements, prepared audit working papers and an Audit Report, did related work, and gave the audit report to the shareholders at the relevant ordinary general meeting of shareholders. Besides, full-time Audit & Supervisory Committee Members worked on the following activities, together with the Management Audit Department’s staff: improvement of the audit environment and gathering of information in the Company; monitoring of the status of information provision from the senior management; attendance at monthly meetings of the Management Strategy Conference and other material meetings, such as the board meetings of domestic and overseas subsidiaries; presence at inventory audits; access to important documents, such as those submitted for managerial decisions (kessai) and written contracts; hearing of reports from both the internal audit department and the internal control department quarterly and timely; sharing of information with non-full-time Audit & Supervisory Committee Members; check up on the maintenance and operation status of the internal control system daily, and audit on its properness. While the chairperson led discussions at meetings and formulated an opinion of the Committee, all the non-full-time Committee members presented their objective thoughts on the overall business execution from the independent and neutral position by attending the board and the Audit & Supervisory Committee. They also conducted field audits as required.

For the latest business year, 14 sessions of the Audit & Supervisory Committee were held (nine sessions out of 14 were held on June 24, 2021, and subsequent dates) with perfect attendance. At the regular meetings of the Board of Directors held in May and July 2020, the Committee made reports on the results of audit activities conducted (during the year), the material matters necessary in fulfilling their duties determined by the Committee, the outline of the scheduled annual audit plan, and related issues.

Status of internal audit, etc.

As to the internal audit, the Global Audit Dept. (as of the end of the latest business year, consisting of ten fulltime staff members) conducts the operational audit and provides directions and support to each internal control department of the Group companies. In daily monitoring of business activities, for example, a trade control department controls products' export, and the Global Audit Dept. conducts an internal audit on the consequence of such control. By dividing roles and responsibilities among business departments and the related internal committees as above, the Company seeks to strengthen and enrich its control. The internal audit department reviews the results of audits conducted for the previous business year. It also prepares audit policy, annual audit plan, and the like for a new business year, considering recent scandals involving other companies, requests from the top management and the Audit & Supervisory Committee, and the issues for remedy as pointed out in the previous years. And based on the above policy and plan, the internal audit department implements its audit activity.

In the latest business year, to conduct effective and efficient audits, the internal audit department worked to strengthen cooperation with the Audit & Supervisory Committee and the Management Audit Department. Specifically, it exchanged opinions with them on the audit policy, audit plan, audit progress, and other related matters and reported to them on the implementation of audits periodically and at any time when required. Further, the liaison meetings among the Audit & Supervisory Committee, the Accounting Auditor, and the internal audit department were held periodically to raise the effectiveness of their respective audits.

By utilizing accumulated audit know-how and expertise and succeeding and developing practical efforts made for long years, we will continue to improve audits and related activities’ quality and effectiveness.

Status of accounting audit

An auditing firm appointed by the Company as its accounting auditor is KPMG AZSA LLC (“AZSA”). AZSA’s executive members who take charge of audits for Anritsu are appropriately rotated, and it is a rule that no member engages in the auditing work beyond seven consecutive fiscal terms (five out of seven as a lead executive member). The CPAs who conducted the Company’s financial audit for the latest consolidated fiscal year were Mr. Kiyoyuki Sakurai (who has been engaged for one year, including the latest business year, and acted as a lead executive member for one year) and Mr. Sinichiro Tozuka (who has been engaged for one year, including the latest business year), and both belong to AZSA. Besides, five CPAs, and six successful applicants for the CPA examination, together with 16 staff members, assisted the financial audit by AZSA. The Audit & Supervisory Committee selects an Accounting Auditor following its internal rules “Criteria for evaluation and selection of accounting auditor” (in compliance with the “Practical guidelines for Corporate Auditors, etc. regarding criteria for evaluation and selection of accounting auditor” issued by Japan Corporate Auditors Association). Accordingly, the Committee evaluated KPMG AZSA LLC, its Accounting Auditor, in the light of quality control, independence, risks of fraud, and other items and concluded that AZSA satisfied all the evaluation criteria. Besides, since the Group is expanding its businesses internationally, it is advantageous for the Company to utilize KPMG’s global network rationally for auditing the Group’s activities. Moreover, the Company’s accounting department and internal control department have maintained good communication with AZSA. Given the current situation and related factors, we re-appointed AZSA as the Accounting Auditor for Anritsu. The Company has not executed an agreement for limiting the liability for damage with the Accounting Auditor.