Internal Control System
The NYK Group maintains the Internal Control Committee, which acts as a complementary body to the Board of Directors. This committee monitors the main internal control activities of the Company and the Group and identifies and confirms internal control issues. Moreover, the committee formulates policies on internal controls to ensure the effectiveness of internal control activities, and the Board of Directors decides on the framework of the internal control system.
The Internal Control Committee monitors the activities of corporate departments that determine Companywide systems and internal committees and meetings responsible for cross-functional systems with the objective of verifying their operating status. It also deliberates and formulates policies on future internal control activities.
In fiscal 2022, the committee reexamined the structure and implementation status of internal controls in the areas deemed most important and confirmed that there were no serious deficiencies in its internal control. It also revised the documentation related to the internal control system in a succinct form covering just the important points, which was approved by the Board of Directors.
The NYK Group has established internal committees and councils regarding internal controls, the main committees being as follows.
- Internal Control Committee
- Risk Management Committee
- Compliance Committee
- Safety and Environmental Management Committee
Internal Control over Financial Reporting
In regard to internal control over financial reporting, the Group has designed and operated internal controls in conformance with the practice standards mandated in the Financial Instruments and Exchange Act. In future, the Group will work to ensure the reliability of financial reporting by continually upgrading and effectively operating the internal control system.
Internal Auditing Activities
Audit of domestic companies
Internal auditors make suggestions on the soundness, effectiveness, and efficient operation of business management. Internal auditors also follow up on the progress of improvements based on suggestions.
The Internal Audit Chamber's internal auditors perform internal audit activities for the Company and domestic group companies.
In addition, the Company continues to reform internal auditing processes. The Company is continually evolving our data auditing methods, including the detection of anomalous values by checking all data related to expenses.
Given that increasing sophistication of auditing methods requires personnel with specialist knowledge, ten Internal Audit Chamber personnel* have been seconded to the Company from Group companies Yusen Logistics Co., Ltd., and Nippon Cargo Airlines Co., Ltd. (NCA) since fiscal 2020. To enhance the quality of auditing, the Company is promoting understanding of new auditing methods, having international certifications, and providing opportunities to attend seminars.
- *Internal Audit Chamber personnel
Personnel increased from eight to ten members from April 2023.
Major auditing activities in fiscal 2022
Conducted 30 audits during the year for the NYK headquarter, its branches, and group companies
Audit of overseas companies
Internal auditors belonging to the four group regional headquarters conduct periodic internal audits of group companies overseas (implemented at 55 companies in fiscal 2022).
Findings that audits identify are reported not only to the officer responsible at the headquarter who provides direction and oversight but also to the regional heads overseas to help raise the overall level of internal control in each region.
The staff of the Internal Audit Chamber and the internal auditors overseas contribute to enhancement of the internal control of the NYK Group as a whole by conducting the audits based on the same philosophy and rules and in accordance with the Fraud Risk Assessment* programe.
- *Fraud Risk Assessment:
This assessment makes use of anonymous replies collected from employees to identify the probability of risk associated with each potential fraud case by analyzing the possible financial impact and the likelihood of occurrence. Management shares the results and supports the preparation of related fraud-prevention measures. After conducted fraud risk assessments, we amended the code of conduct, revised individual operational procedures, and had compliance officers conduct training on fraud prevention.