Internal Controle System

Internal Controle System

1. In order to ensure that directors perform their duties in accordance with laws and regulations and the Articles of Incorporation, and to ensure the adequacy of other operations, we adhere to the "Basic Policy on Internal Control System" adopted by the Board of Directors.
   Based on this, we have established an internal control system and strive to adequately function it. Regarding the operating status of the internal control system in the fiscal year ending March 31, 2023, we reported to the Board of Directors in April 2023 that it is being properly developed and operated.

   Basic Policy on Internal Control System

2. In order to ensure the appropriateness of financial reporting, the Company has established the "Our Approach to Corporate Governance", "Basic Policy on Corporate Governance", and "Basic Policy on Information Disclosure Control".
   A system for the appropriate disclosure of financial information has been established. In May 2023, the Board of Directors assessed that the internal control over financial reporting is effective.

   Internal Control Report(Japanese only)

Audit Function

1. We have adopted the "Policy on Internal Audits" and established the "Internal Auditing Group" and the "Operational Auditing Committee". The "Internal Auditing Group" shall objectively and comprehensively evaluate the effectiveness of each process related to governance, risk management and control of our company and our subsidiaries, and provide assurance and advice from a standpoint independent of business operations, among other matters.
   The annual internal audit plan is approved by the Audit and Supervisory Committee after deliberation by the Operational Auditing Committee and adopted by the Board of Directors. In order to ensure the effectiveness of internal audits, a dual reporting line has been established for audit results, and the results are reported to the President and Representative Director, the Audit and Supervisory Committee, and the Board of Directors.
2. Our Audit and Superviory Committee audits the legality and appropriateness of business execution through close cooperation with the Internal Auditing Group, Risk Management Group, Corporate Compliance Group, among others, as well as operational reports from the business execution divisions. It also audits the establishment and operation of internal control systems and the appropriateness of the auditing methods and results of the accounting auditors.

• The operating partner's involvement is carefully regulated. Their engagement is limited to seven accounting periods, and they are not allowed to be involved in our company's audit until an interval of five accounting periods or more has elapsed.
• The lead operating partner shall be involved for no more than five consecutive accounting periods and shall not be permitted to be involved again after that (no return).