Internal Control System
Responsibility and Structure
Our Group maintains the Internal Control Committee, which acts as a complementary body to the Board of Directors. This committee confirms the status of internal control for the four purposes of reliability of reporting, compliance with laws and regulations, effectiveness and efficiency of operations, and preservation of assets, and if any problems are found, takes corrective measures to ensure that the relevant departments operate internal control appropriately and efficiently.
(Major committees related to internal control)
- Internal Control Committee
- Risk Management Committee
- Compliance Committee
- Safety and Environmental Management Committee
Internal Control Committee
The Internal Control 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 2023, the committee examined 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.
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, and has established policies and operational rules for appropriate accounting and financial reporting, and the internal control reporting system, and the Committee for information disclosure to ensure the appropriateness of financial reporting.
Internal Auditing Activities
The committee reviews and evaluates the status of management and operational systems and business execution at the Company and its Group companies from the perspective of legality and rationality, and seeks to preserve corporate assets and improve the effectiveness and efficiency of business management by providing advice and recommendations for improvement. The internal audit plan is approved by the President and the Audit & Supervisory Committee. In conducting audits, the committee regularly exchanges opinions with Audit & Supervisory Committee members and confirm issues with related departments in advance, thereby enhancing the efficiency and usefulness of audits. In addition, the committee has established a system whereby the internal audit department provides appropriate direct reports on the status of internal audits to internal and outside directors, ensuring collaboration with the directors and reporting to the Board of Directors.
Audit of domestic companies
The Internal Audit Chamber regularly conducts business audits of the Company and each of its domestic Group companies, and continuously evolves its data auditing methods, such as analyzing expense, accounting, and attendance data to detect outliers.
Given that auditing methods requires personnel with specialist knowledge, Internal Audit Chamber personnel have been seconded to the Company from Group companies Yusen Logistics Co. Ltd., and we also actively promote external personnel to improve audit quality by utilizing multifaceted knowledge and having internal auditors mutually share and promote understanding of new audit methods.
In fiscal 2023, we conducted 24 audits for the NYK headquarters, its branches, and Group companies. We also work with relevant internal departments to deepen the audit scope and improve the effectiveness of follow-up.
Audit of overseas companies
Internal auditors belonging to the four group regional headquarters conduct periodic internal audits of group companies overseas (implemented at 65 companies in fiscal 2023).
Findings that audits identify are reported not only to the officer responsible at the headquarters that 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 accounting data analysis.