Internal Control

We have established the Internal Control Policy in compliance with the basic framework for internal control set forth in the Business Accounting Council’s Standards and Practice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting (Council Opinions). As specified by this policy, we have made designing and implementing an internal control system and handle risk management and compliance work one of the company’s top priority areas.
The system’s operation is led by the Internal Audit Department, which serves as an independent audit organization to audit business execution throughout the NTN Group.
Outside Japan, an Office of the General Manager has been established at each of our various regions outside Japan to oversee and monitor operations. Each has an Internal Control Section within it. The Internal Control Sections work with the Internal Audit Department and CSR (Corporate Social Responsibility) Headquarters to implement policies for the local region or country tailored to local needs and characteristics. The CSR Global Meeting is also held periodically to exchange information on local policies and discuss issues. The purpose of the meeting is to strengthen global group-wide internal control and promote CSR activities.

Collaborating System with Internal Control Sections

Strengthening internal control worldwide

The list of group business units subjected to our company-level control assessments has grown by 2 since the fiscal year ended march 31, 2017, expanding the total to 51 worldwide (including the headquarters).10 of the business units for assessment are ranked as significant, and we have assessed Process-level control for these 10.
The audits on regular operations had been conducted in the fiscal year ended March 31, 2017 by the Internal Audit Department for subsidiaries in the ASEAN region and South Korea. Also the same audits were conducted for 3 subsidiaries in the China region in the fiscal year ended March 31, 2018. These audits have prevented risks posed by local accounting fraud and legal violations.
In addition to these audits, 1,500 employees in 46 group subsidiaries throughout the world evaluated their president’s attitude to compliance through a questionnaire survey conducted in 2017. The findings will be used in audits for purposes such as quantifying the corporate cultures or environments that might lead to misconduct or legal violations at companies in the fiscal year ended march 31, 2018.

CSR Global Meeting

The CSR Global Meeting is an event held periodically to guide group-wide CSR activities through worldwide information and personal exchanges.
The latest (fourth) meeting was attended by representatives of the Internal Control Section of the Office of the General Manager for each of the five overseas regions, along with outside Directors, in-house and outside Audit & Supervisory Board Members, and representatives of the CSR (Corporate Social Responsibility) Headquarters and Internal Audit Department. The meeting’s central theme was risk management. Participants exchanged information on specific risks and response measures tailored to each region’s needs and characteristics. Other topics discussed included compliance, internal control and spreading awareness of the corporate philosophy. Country- and region-specific approaches to these topics were examined and discussed in detail, helping guide CSR activities throughout the world. The input gained from these discussions will be used to help create rules and assist in-house education and awareness-raising activities in the future, ultimately leading to more robust governance by helping augment our global organization.

■First meeting: Creating a platform for implementing CSR activities worldwide

■Second meeting: Creating more robust lateral connections spanning countries

■Third meeting (entitled Step Together for Transformation):
Working together on solutions affecting each region