Internal Control System

The NYK Group maintains an Internal Control Committee that acts as a complementary body to the Board of Directors. This committee is chaired by the president and monitors the status of internal control in four areas: reliability of financial reporting, legal compliance, operating effectiveness and efficiency, and protection of assets. In the event an issue is found, the committee implements corrective measures to ensure the relevant department performs appropriate and effective internal control operations.
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 objectives of verifying the operating status and strengthening the internal control systems.
In fiscal 2021, the Company responded to changes in the external environment and efforts to ensure the effectiveness of internal controls for the NYK Group and reports finding to the Board of Directors on the operational status of internal controls.

Committees Dedicated to the Four Objectives

  • Internal Control Committee
  • Risk Management Committee

1. Committees related to the reliability of financial reporting

  • Internal Control Committee (JSOX)
  • Information Disclosure Committee

2. Committees related to law compliance

  • Executive Committee Overseeing Thorough Law Compliance
  • Compliance Committee
  • Safety and Environmental Management Committee

3. Committees related to operating effectiveness and efficiency

  • Human Resources Planning Committee
  • Investment Management Conference
  • Management Meeting
  • Financial Policy Conference
  • Group IT Policy Meeting
  • Save Bunker Committee

4. Committees related to safeguarding assets

  • Disaster Measures Headquarters
  • Information Security 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 140 domestic group companies.

In addition, as part of a project to strengthen internal auditing, the Company continues to reform internal auditing processes. Having verified data analysis methods that check all expenses-related data and flag abnormalities, the Company is introducing new data-based auditing methods.
Given that increasing the project’s capabilities requires personnel with specialist knowledge, eight 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 duties and providing opportunities to attend seminars hosted by audit firms.

  • *Internal Audit Chamber personnel
    Personnel increased from seven to eight members from September 2022.

Major auditing activities in fiscal 2021

  1. 130 domestic group companies were audited during the year.
  2. 2A specific theme was selected and emphasized for the audit of the NYK headquarter and its branches.
  3. 3An audit of payment control at both NYK and domestic group companies was made to check whether cash flow is adequately controlled.

Audit of overseas companies

Internal auditors belonging to the four group regional headquarters conduct periodic internal audits of approximately 240 group companies overseas (implemented at 51 companies in fiscal 2021).

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.