Internal Control System

Basic Policy to Ensure Appropriate Financial Reporting

To maintain and earn higher social credibility of the Company, Sojitz believes one of the most important goals is to ensure appropriate financial reporting. Subsequently, Sojitz has established the following basic policy in accordance with the “Internal Control Reporting System”described in Article 24-4-4 of the Financial Instruments and Exchange Act.

1. Basic Principle for Ensuring Appropriate Financial Reporting

  • Sojitz Group always applies appropriate accounting principles and adopts them as its own principles. Therefore, all directors and employees of the Group shall be informed and understood of this policy, and carry out accounting processing in accordance with these principles.
  • All directors and employees shall understand that any false representations arising from fraud, willful act, negligence, or improper understanding of accounting standards may damage the reliability of financial reporting of the Group. This could be disastrous and harm the credibility of the entire Group. Should such a situation occur, the Company will take disciplinary actions against any individuals found to be accountable.

2. Establishment of Systems and Procedures for Ensuring Appropriate Financial Reporting

  • The Board of Directors shall understand and perform its responsibilities for proper supervision and monitoring over management, with respect to financial reporting as well as internal controls over the financial reporting.
  • In order to ensure appropriate financial reporting, a proper organizational framework shall be established that is optimal for the features of the Group’s businesses. Duties and responsibilities involved in financial reporting shall be clarified, and authorities and obligations shall be appropriately allocated.
  • Potential risks of significant false representations shall be identified and analyzed. To minimize such risks, effective internal controls shall be established and implemented in good faith.
  • A system to routinely monitor internal controls over financial reporting shall be established. Any problems detected by the constant monitoring shall be reported in a timely and appropriate manner, and a system for this process shall be established.
  • Any material information on internal controls over financial reporting shall be communicated between the levels of management, managers, and responsible staff in a timely and appropriate manner, and a system for this process shall be maintained and established.

3. Use of IT for Internal Controls over Financial Reporting

  • All directors and employees of the Group shall understand the importance of IT infrastructures in relation to internal controls over financial reporting and appropriately understand its associated risks. These risks shall be minimized to the possible extent, and IT controls shall be effectively used for the efficient internal controls.

4. Implementation of “Assessment and Reporting of Internal Controls over Financial Reporting” Pursuant to the Financial Instruments and Exchange Act

  • All directors and employees of the Group shall faithfully carry out its practice standards and procedures for the “Assessment and Reporting of Internal Controls over Financial Reporting by Management” established pursuant to the Financial Instruments and Exchange Act. Detailed guidelines and plans shall be separately determined as necessary.
  • Any insufficiency or material defects in internal controls of the Group identified in the course of implementing “Assessment and Reporting of Internal Controls over Financial Reporting by Management” shall be corrected immediately.

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