Arrangement of internal control system and risk management system
As of June 26, 2019
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.
- Basic Policy for Establishing Internal Control System (Amended: April 1, 2018) (PDF:101KB)
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, 2019, 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.
Status of initiatives relating to compliance
- The Corporate Ethics Promotion Committee of the Company takes a pivotal role to plan, formulate and implement entire compliance promotion measures. In the fiscal year ended March 31, 2019, continuous measures included the mandatory submission of the “Anritsu Group Code of Conduct Confirmation Statement” by employees; educational and awareness activities through training according to positions and compliance promotion events; and implementation of a “Corporate Ethics Questionnaire” with feedback to divisions for checking familiarity with the compliance system, and the level of awareness of employees concerning ethics. The Corporate Ethics Committee also used the web education system to conduct WBT (Web Based Training) for domestic employees on the Anti-Monopoly Act, the Subcontract Act, export control, and other matters.
- 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 operated “Helplines,” which accept reports, whistleblowing 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, 2018, the Company conducted WBT on information security for all Group employees world-wide.
- In order to ensure proper transfer of personal data within the Group pursuant to the EU’s General Data Protection Regulation (GDPR), the Company has concluded Standard Contractual Clauses (SCCs) with all the Group companies and other concerned parties as appropriate.
- Materials related to the General Meeting of Shareholders, meetings of the Board of Directors and Management Strategy Conference are appropriately managed in accordance with laws and regulations as well as internal rules (Trade Secret Management Rules).
Status of initiatives relating to internal audits
- Pursuant to the Internal Control System Basic Rules, the internal audit divisions 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 internal audit divisions 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 Group CEO 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 thirteen times during the fiscal year ended March 31, 2019. 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, recommendations were made on the challenges to be addressed for further enhancing the effectiveness of the Board of Directors, including still more effort for securing enough time for Outside Directors to be prepared for each Board meeting, agendas to be materialized by the Board of Directors such as periodic reviews over the ESG-related issues, and the expertise to be expected of Outside Directors.
- A corporate governance promotion department has been newly established, as a unit providing assistance to Outside Directors.
- To ensure sufficient deliberation at the Board of Directors meetings, the Company took measures including early presentation of relevant materials for the meetings and distribution of reference materials utilizing a Web-based information system, and prior briefing on the matters to be proposed at the meetings given to Outside Directors by the corporate governance promotion department. Furthermore, external technical advisors were invited to join “free discussions” for the purpose of helping Outside Directors to understand the Company’s business.
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, 2019, the Audit Committee was convened nine times to determine audit policies and audit plans, 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 Management Audit Department engaged daily 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.
- Trilateral audit liaison meeting comprising the three auditing parties, namely the Audit Committee, the Accounting Auditor and the internal audit divisions, was held with a view to enhancing audit effectiveness.
- Periodic meetings and exchange of opinions were organized between Audit Committee Members and the Representative Director, along with an exchange of opinions between Audit Committee Members and the Accounting Auditor as appropriate.
- 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 as members 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.