Basic Policy on Financial Reporting

Basic Policy on Financial Reporting

In recognition of the importance of financial reports as a key source of information for stakeholders to learn about Group activities as well as the need to ensure their reliability to maintain and strengthen society’s trust in the Group, this Basic Policy on Financial Reporting has been established to develop and maintain structures and systems for reliable, timely, and appropriate financial reporting.

1．Objectives of internal controls related to financial reporting

Internal controls related to financial reporting are intended to increase corporate value by enhancing the propriety and reliability of the information provided in financial reports by maintaining and operating the internal controls system.

2．Initiatives for internal controls related to financial reporting

(1) To ensure appropriate financial reporting, the organizational structures and human resources needed to prepare reliable financial reports based on the Company’s management philosophy will be secured and appointed.

(2) In addition to ascertaining and analyzing risks that could lead to material misstatements in financial reports, we will establish Companywide internal controls to reduce risks and internal controls related to business processes.

(3) To reduce the risk of material misstatements in financial reports, we will strive to clarify authority and division of responsibilities and maintain job rules, related business manuals, and other documents.

(4) We will strive to maintain and operate internal structures to allow appropriate response to reports from inside or outside the Company by identifying, ascertaining, and processing factual and fair information and communicating it appropriately to the appropriate parties.

(5) To maintain and operate regular and independent monitoring of financial reports, we will strive to establish structures for the regular assessment of the efficacy of internal controls.

(6) We will grasp and make efficient and effective use of IT environments related to internal controls for financial reports. We will also strive to maintain general controls and business process controls related to IT.

3．Policies related to assessments of internal controls of financial reports

As the individuals responsible for maintaining and operating effective internal control systems, members of management will assess internal controls related to financial reporting as follows:

(1) Assessments of Companywide internal controls
Companywide management systems supporting or affecting activities in business processes related to the reliability of financial reports will be assessed from the perspective of their fundamental elements.

(2) Assessments of internal controls in business processes
Based on the above assessments of Companywide internal controls, business processes related to accounts having a material impact on Company financial statements will be assessed to determine whether the fundamental elements of their internal controls are maintained and applied.

(3) Assessments of internal controls in settlements of accounts and financial reporting processes
Business processes related to settlements of accounts and financial reporting for which assessment from a Companywide perspective is deemed appropriate will be assessed from an overall perspective in accordance with the above assessments of Companywide internal controls. Other processes will be assessed as specific business processes, in accordance with the above assessments of internal controls in business processes.