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Internal Control

Basic Policy for Constructing the Internal Control System

  1. A system that ensures that the directors and employees at the Corporation and its subsidiaries (hereafter the AUN Group) carry out their jobs in compliance with the law and the Articles of Incorporation

    Based on our Compliance Manual, we will continue to further our understanding of specific articles that must be obeyed such as laws, regulations, and corporate ethics, while constructing a system that ensures these are duly obeyed. In addition, we 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.
    We have set up a "compliance hotline" as an internal reporting system to handle incidents in which there is suspicion of a major legal violation. Operation of the hotline is based on the Compliance Manual.

  2. System for storing and managing information related to the execution of duties by directors

    We adopt a system for 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 all directors (including the Audit and Supervision Committee members).

  3. Regulations and other systems concerning information management against the risk of information loss of the AUN Group

    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 appropriate training depending on a position and assignment of the each employee according to the situation and other activities for improving risk management. 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.

  4. System for ensuring that the tasks of directors of the AUN Group 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.

  5. System for ensuring adequate execution of duties within the AUN Group
    • We aim at constructing a compliance system for the entire AUN Group, ensuring our subsidiaries companies also thoroughly practice the Compliance Manual devised based on our management principle and basic rules.
    • We established a supervision organization and Group Company Management Regulations to oversee the management of our subsidiaries 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 subsidiaries companies, the Internal Auditing Office regularly conducts internal auditing of subsidiaries companies and reports the results to the Representative Director and the Audit and Supervision Committee to ensure all duties and tasks are appropriately executed.
  6. Matters regarding the allocation of employees to assist the Audit and Supervision Committee members

    In the event that an Audit and Supervision Committee member requests to allocate assistant employee(s), the request shall be discussed in the Audit and Supervision Committee, upon acceptance an employee or employees from the Internal Auditing Office will then be assigned within reason.

  7. Matters concerning the independence of the aforementioned employee(s) from directors

    Directors cannot instruct or order an Internal Auditing Office employee in regard to tasks given by an Audit and Supervision Committee member or the Audit and Supervision Committee. Personnel changes of those employees in the Internal Auditing Office are also reported to the Audit and Supervision Committee beforehand for their approval.

  8. System to facilitate reporting to the Audit and Supervision Committee members by directors and employees of the AUN Group and system to ensure that a person who has reported to the Audit and Supervision Committee is not treated adversely based on the fact such a report has been made by the person

    Directors and employees must report to the Audit and Supervision Committee members such matter that may likely to cause or has caused damage to the company, or likely to violate or have violated laws, regulations and articles and any adverse personnel measure against a person based on the fact that such a report to the Audit and Supervision Committee has been made by the person is not invoked.

  9. Matters concerning procedures for advance payment or reimbursement of expenses incurred by a member of the Audit and Supervision Committee in the process of executing duties and any other policy for processing costs and obligations

    If Audit and Supervision Committee members request advance payment or reimbursement of expenses shall promptly pay the relevant expenses or debts, except for cases in which the relevant expenses or debts are seen as unnecessary for the execution of duties by the relevant Audit and Supervision Committee members.

  10. System for ensuring other inspections by the Audit and Supervision Committee members are effectively conducted

    The Audit and Supervision Committee members 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, the Audit and Supervision Committee members 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 Audit and Supervision Committee members work in cooperation with the Internal Auditing Office, while regularly creating opportunities to exchange opinions with the President and CEO.

  11. 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 submits 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 subsidiaries 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.

  12. System against antisocial forces

    The AUN Group stipulates to act against and refuse any connections with antisocial forces in our Compliance Manual, while keep its all directors and employees thoroughly informed to understand and practice this. We cooperate with legal advisers, the police and other external specialized agencies systematically, to solve related problems that the unreasonable requests from antisocial forces or criminal acts by organized crime syndicates.

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