Basic Policy on Internal Control System Building

• Based on the Compliance Manual that describes the system adopted by the Company for ensuring that the duties of the directors and employees complies with laws, regulations and articles, we will continue to further our understanding of specific laws, regulations, articles, and corporate ethics that must be obeyed, while building a system that ensures these are duly obeyed. In addition, ongoing efforts are being made to understand the actual conditions of business operations and check-and-balance through internal auditing to ensure operations follow laws, regulations, articles, and company rules.

• System related to the safekeeping and management of information as part of the tasks of the directors         

  We adopt a system of safekeeping and management of information required in the tasks of the directors by following laws, regulations, articles, company rules (such as Document Management Regulations) and policies by recording the information in writing (either on paper or electromagnetic media), which is made available for viewing by the directors and auditors.

• Regulations and other systems concerning information management against the risk of information loss             
  In order to implement risk management on our overall business management, the AUN Group has set up the Internal Control Committee transferred from the Board of Directors and the Internal Auditing Office to establish regulations and check the practice of the regulations, while providing training and other activities for all employees (including directors, executive officers, auditors, employees, and contract employees).

  Furthermore, the Internal Control Committee is held once a month to examine compliance, risk management, and information security issues, while aiming to build a prompt risk management system.

• System for ensuring that the tasks of directors are efficiently carried out
  As a basics rule, the Management Meeting is held once a week, the Regular Meeting of the Board of Directors once a month, and the Special Meeting of the Board of Directors when necessary. These meetings are held in order to allow the directors and executive officers share and communicate information and ideas, while at the same time conduct important decision-making in regard to their implementation of tasks, as well as inspecting the implementation of tasks by the directors.
  In regard to the authority and responsibilities of the execution of duties, we have established company regulations such as Board of Directors Regulations and Organization Regulations, which are revised whenever required.

• System for ensuring adequate execution of duties within AUN Consulting and the AUN Group comprising affiliated companies
  • We aim at building a compliance system for the entire AUN Group, ensuring our affiliated companies also thoroughly practice the Compliance Manual devised based on our management principle and basic rules.
  • We established an supervision organization and Group Company Management Regulations to oversee the management of our affiliated companies, making it compulsory for them to report to us about important matters beforehand, some of which are then bought to the Meeting of the Board of Directors as resolution matters as we administer the management of these companies.
  • In order to prevent improper trading or accounting between AUN Consulting and our affiliated companies, the Internal Auditing Office regularly conducts internal auditing of affiliated companies and reports the results to the Representative Director and the Board of Auditors to ensure all duties and tasks are appropriately executed.
• Matters regarding the allocation of employees to assist the auditors
  In the event that an auditor requests to allocate assistant employee(s), the request shall be discussed with the Board of Auditors, upon acceptance an employee or employees from the Internal Auditing Office will then be assigned within reason.
• Matters concerning the independence of the aforementioned employee(s) from the directors
  Directors cannot instruct or order an Internal Auditing Office employee in regard to tasks given by an auditor or the Board of Auditors. Personnel changes within the Internal Auditing Office are also reported to the Board of Auditors beforehand for their approval.
• System to facilitate reporting to auditors by director and employees and other related aspects In the event that a director or an employee may likely to cause or has caused damage to the company, or likely to violate or have violated laws, regulations and articles, such matter must be reported to the auditors.
• System for ensuring other inspections by auditors are effectively conducted
  Auditors attend the Meeting of the Board of Directors as well as other meetings such as the Management Meeting to obtain reports on important matters. Furthermore, auditors can freely view various minutes and records of the decision making and execution of duties by the directors, such as authorization memorandum. In addition, the auditors work in cooperation with the Internal Auditing Office, while regularly creating opportunities to exchange opinions with the President and CEO.
• System for ensuring the reliability of financial reports
  AUN Consulting, Inc. abides by the Financial Instruments and Exchange Law and other related laws and regulations to ensure the reliability of financial reports, as well as effectively and adequately submit the Internal Control Report stipulated by the Financial Instruments and Exchange Law. We do this by establishing and constructing an internal control system to oversee financial reports from the entire AUN Group (including affiliated companies), regularly and continuously evaluating the system to ensure that it is functioning effectively and adequately, while making certain that it complies with the Financial Instruments and Exchange Law and other related laws and regulations.
• System against antisocial forces
  The AUN Group is dedicated to act against and refuse any connections with antisocial forces as stipulated in our Compliance Manual, requiring that all directors and employees thoroughly understand and practice this. We cooperate with legal advisers, the police and other external specialized agencies, to respond to unreasonable requests from antisocial forces and criminal acts by organized crime syndicates, as well as establishing a system to solve related problems.