To ensure transparency and reliability of financial reporting
As is evident from the May 2006 enforcement of the Company Law of Japan and the requirement placed on businesses to submit reports of their internal controls from the fiscal year ending March 2009, society is demanding that businesses be more transparent and reliable about that financial reporting. The Brother Group has seen this situation as an opportunity to make operations more efficient, strengthen our position against risks, promote group management and, thereby, improve corporate value, and has thus been building a reporting system.
Under such circumstances, group companies implement self-checks using a check list to examine whether their internal control systems are functioning effectively, and internal auditing departments conduct audits from an independent viewpoint. After making the necessary improvements, an internal control report that includes the description, "We determine that the internal control concerning the financial reporting of the Group is effective" was submitted to the Financial Services Agency.
Moreover, the Group is developing constructive activities to raise the awareness of employees about internal controls, including the opening of a site on the intranet to share information on the purpose and significance of internal controls, activities within the Group, etc. and the start of an e-learning system to deepen the understanding of internal controls.
Internal controls, which serve as an important framework for supporting management, will continue to be maintained and upgraded to ensure the "transparency and reliability of financial reporting" as demanded by society, and also to continue to be highly trusted by many stakeholders.
Conducting Internal Audits in Collaboration with Regional Headquarters
To establish and enhance the PDCA cycle of internal control
In FY 2010, in collaboration among regional headquarters in the Americas, Europe, and Asia/Oceania, the Brother Group conducted internal audits of four group companies in Japan and 16 group companies outside Japan. Internal audits are intended to ensure the PDCA cycle of internal control, increase the transparency and efficiency of business activities, and upgrade risk response capabilities.
The auditing departments of Brother Industries and its regional headquarters worked closely with one another, which enabled to facilitate audits that properly reflected the situation of local companies much more. In the third year after the internal control report system was introduced, each auditee department of the group companies has made voluntary efforts, driven by a growing awareness of internal control significantly. Through self-checks and internal audits, a large number of issues were found to require improvement.
We will maintain and improve the internal control functions by: (i) establishing an autonomous PDCA cycle for the internal control of the departments by means of self-checks, (ii) implementing improvement measures on an organizational/company-wide basis to raise the activity levels of the entire group, and (iii) ensuring coordination among Brother Industries, regional headquarters, group companies, and respective departments, while increasing the efficiency of audits through information-sharing.
