Corporate Governance

Chapter 7: Ex-post Verification System

Ongoing monitoring

The Compliance Department will check and verify the compliance status of laws, regulations, rules and guidelines and the accuracy, solidness and appropriateness of procedures, accounting treatment and reports on an ongoing basis through participation in internal meetings and the inspection of documents, etc. for the purpose of preventing misconduct and violations of laws and regulations from occurring.

Self-inspection

A self-inspection means an inspection conducted by an overseen department for the purpose of verifying internal control, grasping the risk management status, the prevention and early discovery of financial accidents and internal fraud, and confirming the embedded nature and normalization of rules and regulations, etc. in its own department.

The overseen department will make efforts to improve the risk management level in its own department by working to grasp risk management issues and potential risks in a timely and appropriate manner and proactively improving problematic aspects in its own department through self-inspection.

The overseen department will conduct the self-inspection on a monthly basis based on the Self-Inspection Annual Plan that the department formulates every fiscal year and report the inspection result to the Representative Director and the Compliance Officer.

Internal audits

The internal audit department will be independent from all the departments that conduct operations of the financial instruments business, and the Compliance Officer and the Compliance Department will take charge of the internal audit department. However, the general manager of the Business Administration Department has the power and duty to conduct internal audits of operations of the Compliance Officer and the Compliance Department.

The Compliance Officer and the Compliance Department will verify the appropriateness and effectiveness of the internal management system in audited departments by conducting internal audits and will make proposals on the improvement methods (however, internal audits of operations of the Compliance Officer and the Compliance Department will be conducted by the general manager of the Business Administration Department).

The Company has established the Internal Audit Regulations and other internal rules to conduct appropriate internal audits.

The Compliance Department will conduct internal audits on a monthly basis and report their results to the Board of Directors based on the Internal Audit Annual Plan formulated every fiscal year by the Compliance Officer who concurrently serves as a responsible officer for internal audits.

External audits

Deloitte Touche Tohmatsu LLC will conduct an accounting audit every fiscal year for the purpose of expressing opinions on the financial statements of the Company (balance sheets, statements of income, statements of changes in net assets, notes to non-consolidated financial statements and annexed detailed statements) from an independent position in accordance with the audits pursuant to the provisions of Article 436, Paragraph 2, Item 1 of the Companies Act based on delegation by the Company.