Status of Audits
Status of audit by the Audit Committee and the Directors elected as Audit Committee Members
The Audit Committee comprises three Directors elected as Audit Committee Members, two of whom being independent Outside Directors while one being a full-time Director. Audit Committee Members in the fiscal year ended March 31, 2019 were three Directors, namely Takaya Seki (Outside Director, Chairperson), Norio Igarashi (Outside Director), and Osamu Nagata (Internal Director, full-time), all of whom attended all nine meetings of the Audit Committee held in the fiscal year. As the proposal of election of Directors elected as Audit Committee Members was approved at the 93rd Ordinary General Meeting of Shareholders held on June 26, 2019, the Audit Committee comprises three Directors, namely Norio Igarashi (re-appointed, Outside Director, Chairperson), Keiko Shimizu (newly appointed, Outside Director) and Toshisumi Taniai (newly appointed, Internal Director, full-time). Norio Igarashi has expertise and rich experience in finance and accounting as a certified public accountant and university professor, and also has broad insight regarding management mainly based on experience as an outside officer for listed companies. Keiko Shimizu has expertise and rich experience in finance and accounting as a certified public accountant and university professor, and also has broad insight as a qualified auditor for information securities, etc. Toshisumi Taniai has a track record of having served as Director as well as Vice President of the Company, and shall, based on such experience, be working hard to grasp internal information promptly and accurately, while taking measures to ensure flexible and agile audit.
The Audit Committee has established Rules for the Audit Committee along with bylaws thereof, and at the beginning of the fiscal year, decides on the matters that are necessary for the Audit Committee Members to carry out their duties, including the selection of chairperson, selection of full-time Members and allocation of duties, and conducts a review over the results of the audit for the previous fiscal year, while deliberating and formulating the audit policy and annual audit plan for the fiscal year ended March 31, 2019.
The Company has, for the purpose of maintaining and enhancing the quality of audit by the Audit Committee, established the Management Audit Department as a body that supports business operations of the Audit Committee, while the Audit Committee is working in coordination with the Management Audit Department, the Accounting Auditor and the Internal Auditing Center (the Global Audit Department). The Company has a number of subsidiaries both in Japan and overseas, and internal control in our global corporate group including such subsidiaries is a priority for the Company.
Status of internal audit, etc.
For the purpose of internal audit, the Global Audit Department conducts operational audit, while providing guidance and support to the internal audit departments in each Group company. The Global Audit Department conducts a review of the results of the audit for the previous fiscal year, formulates the audit policy along with the annual audit plan for the fiscal year ended March 31, 2019, with reference to misconduct in recent years at other companies, requests from the top management as well as the Audit Committee, etc., and the audit findings and recommendations for the previous fiscal years, and carries out their duties on such basis. The Global Audit Department has, aiming at effective and efficient audits, exchanged opinion regularly or as appropriate with the Audit Committee and Management Audit Department, on the audit policy, audit plan, progress of audit implementation, etc., while reporting on each audit, in an effort to strengthen collaboration. It also holds trilateral audit liaison meetings with the Audit Committee and the Accounting Auditor on a regular basis, with a view to enhancing effectiveness of mutual audits. Furthermore, it shares roles with responsible operational departments and committees as necessary, with a view to strengthening and enhancing corporate control, where for example, day-to-day monitoring of export management is carried out by the departments responsible for export management, while the Global Audit Department conducts internal audit based on the results of such monitoring.
We will continue to further enhance the audit quality and streamline audits and related operations through utilizing the hitherto accumulated audit knowhow and carrying on with the useful approach developed over the years.
Status of accounting audit
The audit firm currently appointed by the Company as its Accounting Auditor is KPMG AZSA LLC. The certified public accountants who executed accounting audit of the Company for the fiscal year ended March 31, 2019 were Tatsunaga Fumikura and Atsushi Nagata, who belong to KPMG AZSA LLC. Five certified public accountants, six persons who have passed the certified public accountant examination and nine other staff members assisted the accounting audit of the Company.
The Audit Committee of the Company shall appoint the Accounting Auditor, pursuant to the internal rule of the Audit Committee “Standard for the Evaluation and Appointment of the Accounting Auditor” (based on “Practical Guidelines for Audit & Supervisory Board Members in the Evaluation and Appointment of Accounting Auditors” issued by Japan Audit & Supervisory Board Members Association). As a result of the evaluation conducted by the Accounting Auditor KPMG AZSA LLC based on the aforementioned evaluation standard for evaluation items including status of quality management, independence and fraud risk, KPMG AZSA LLC is considered to meet the evaluation standard in all of these items. Moreover, audit activities to cover the Group’s global business development can reasonably benefit from utilizing the global network of KPMG AZSA LLC, while the firm is recognized to be working hard to maintain excellent communication with the accounting departments as well as internal control departments of the Company. In view of all these positive factors, we decided to continuously appoint KPMG AZSA LLC as the Accounting Auditor of the Company. For reference, our policy for determining the dismissal or non-reappointment of the Accounting Auditor is as follows.
Policy for determining dismissal or non-reappointment of the Accounting Auditor
The Audit Committee shall, based on the unanimous consent of the Audit Committee Members, dismiss the Accounting Auditor, in the event that it is found to fall under any of the items of Article 340, Paragraph 1 of the Companies Act.
The Audit Committee shall, if it is believed necessary in the case of hindrance to the execution of duties by the Accounting Auditor or other circumstances, decide the details of the proposal concerning the dismissal or non-reappointment of the Accounting Auditor, which shall then be submitted to the general meeting of shareholders from the Board of Directors.
Details, etc. of the audit fees
Transitional measures have been adopted for the provisions of i through iii of (56) d (f) of Points in Attention Concerning Preparation of Form 2 of “Cabinet Office Ordinance on Disclosure of Corporate Affairs” reflecting the revision enforced by “Cabinet Office Ordinance for Partial Revision of Cabinet Office Ordinance on Disclosure of Corporate Affairs” (Cabinet Office Ordinance No. 3, January 31, 2019).
a. Details of the fees paid to certified public accountants and others engaged in the accounting audit
|Compensation based on audit certification work (Millions of yen)
||Compensation based on non-auditing services (Millions of yen)
||Compensation based on audit certification work (Millions of yen)
||Compensation based on non-auditing services (Millions of yen)
b. Other important forms of compensation
Compensation based on audit certification work of 102 million yen has been paid to the KPMG group, which belongs to the same network as our certified public accountants, in relation to our overseas consolidated subsidiaries.
c. Nature of non-auditing services by certified public accountants for Anritsu
d. Policies to determine audit fees
The Company shall, subject to the consent of the Audit Committee, determine the amount of audit fees, after verifying whether it is deemed sufficient for fully conducting the necessary audit, in light of effectiveness and efficiency of the audit. For the fiscal year ended March 31, 2019, the amount of audit fees was appropriately determined based on the consent of the Audit Committee, and fully in consideration of the audit plan, description and scale of the audit, and the amount of time required to carry out the audit for the certified public accountants and others engaged in the accounting audit.
e. Reason for consent of the Audit Committee on the fees, etc. for the Accounting Auditor
The Audit Committee gave consent to the amount of fees, etc. for the Accounting Auditor under Article 399, Paragraph 1 and 3 of the Companies Act, after it judged that the audit plan and the estimated audit fees for the fiscal year ended March 31, 2019 were appropriate, following the verification and deliberation on the appropriateness and adequacy of the audit plan of the Accounting Auditor and the basis for calculating the estimated fees for the fiscal year, along with the review over the execution of duties by the Accounting Auditor and the actual amount of fees paid thereto in the previous fiscal years, all based on the reports with essential supporting materials regarding the fees for the Accounting Auditor received from the concerned parties within the Company, including responsible Executive Directors and accounting departments, as well as from the Accounting Auditor.