Internal Controls and Internal Audit Activities

Internal controls

Companies must have the systems and structures in place to perform their business in an appropriate manner if they are to sustainably grow. Internal controls are continually developed and reinforced. At NYK, the Internal Control Committee is chaired by the president and regularly reviews the entire internal control system, providing findings that are used to make improvements. Functions of the internal control systems are performed by specialist organizations like the Information Disclosure Committee, Financial Strategy Meeting, and Safety and Environmental Management Committee, and also by group companies and individual units.

The board of directors determines the basic guidelines for the enhancement of internal control systems in compliance with the Japanese Companies Act.

We also build, enhance, and regularly evaluate internal control systems to ensure the reliability of our financial reporting as mandated under the Financial Instruments and Exchange Act.

Internal audit activities

Internal audit activities confirm the soundness, effectiveness, and efficiency of management, provide recommendations on improvements, and follow up on progress. The internal audit chamber conducts audits of the NYK headquarters as well as operational audits for approximately 130 Japan-based group companies. Internal audits of NYK's approximately 190 international group companies are conducted by the internal auditors assigned to regional management companies at four locations overseas^* and are reported to the internal audit chamber and the heads of regional management companies. NYK also considers sub-subsidiaries in which it has management rights and affiliates in which its holdings are less than 50 percent to be within the scope of its auditing activities. The company conducts on-site audits on a roughly three-year cycle, including international group companies, supplementing them with annual questionnaires for all Japan-based and international group companies.