Internal Control System Policy
The TechnoPro Group defines internal control as the mechanism for controlling a business and operating an organization for the purpose of corporate governance through effective and efficient work, trustworthy financial reporting, legal compliance, and asset preservation.
To this end, we have established a control environment to instill TechnoPro Group Code of Conduct within the organization and evaluate risk on a regular basis through the formulation of a general risk management structure. Further, internal groups such as the CSR Committee and the Financial Reporting Risk Management Committee, as well as information systems, operate and adjust the various internal company rules as part of control activities based on a system whereby information is provided as appropriate. Each organization conducts daily monitoring and operation of internal auditing and reporting systems in the continuous evaluation and adjustment of control status.
TechnoPro Holdings, Inc. (“the Company”) has established the following policy based on Article 362 Paragraph 5 of the Companies Act, Article 362 Paragraph 4 Item 6 of the Companies Act, and Article 100 Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act.
1. Internal Controls Structure
- The Company is a pure holding company, responsible for strategic planning and management support functions for TechnoPro Group companies. Accordingly, the Company’s basic policy for an internal controls system applies to the Company, Company subsidiaries (“Group Companies;” “TechnoPro Group” when including the Company).
- The Company maintains and operates the following structure of internal controls for itself and creates and imposes the following structure of internal controls for Group Companies in accordance with laws and other rules and within a scope deemed rational.
1-1. Management Implementation Structure
- The Company’s board of directors makes decisions regarding the TechnoPro Group controls environment (vision, medium-term management plan, human resources, etc.). The board obtains an understanding of the performance and internal controls status of the TechnoPro Group, exercising supervision over TechnoPro Group directors to determine whether performance is conducted efficiently and appropriately.
- The board of directors implements an executive officer system that allocates authority and responsibility over daily operations to executive officers, enabling directors to focus on strategic decision making and supervisory functions, thereby increasing business efficiency and strengthening business supervisory functions.
- As a rule, TechnoPro Group executive officers serve concurrently as Group Companies directors. The Group Management Committee, consisting of TechnoPro Group executive officers and others, deliberates basic policies and important matters related to the general management of the TechnoPro Group.
- The Company manages TechnoPro Group Companies, clearly defining matters for Company approval and matters that are reported to the Company according to TechnoPro Group company management regulations.
- TechnoPro Group executives and employees follow decision-making rules according to the importance of the matter in question and subject to rules regarding the division of labor regulations, work authority regulations, decision-making standards as determined by the board of directors of each company. In this way, the TechnoPro Group ensures rapid decision-making and efficient business execution.
- The Company provides shared services (accounting, finance, human resources, legal affairs, information systems, etc.) for the TechnoPro Group to achieve operational efficiencies and ensure internal controls.
1-2. Internal Audit System
- The Company’s Internal Audit Department investigates the status and operations of the system of internal controls within the TechnoPro Group according to internal audit rules, etc., providing advice and proposals for the improvement thereof.
- To ensure the independence and objectivity of internal audits, the Company’s Internal Audit Department reports to the Company’s representative director and president directly.
- The annual internal audit policy and internal audit plan for the TechnoPro Group is reported to the Company’s board of directors after being approved by the Company’s representative director and president.
- The Company’s Internal Audit Department coordinates closely with the Company’s Audit & Supervisory Board to ensure effective and practical audits.
1-3. Audit & Supervisory Board Member Audit System
- The Company’s Audit & Supervisory board members coordinate with the Audit & Supervisory board members of each Group Company through domestic Group company audit & supervisory board member networking meetings to ensure the practicability and fairness of Group Company Audit & Supervisory board member audits. The Company’s Audit & Supervisory board members are responsible for auditing the creation and operation of internal controls systems at Group Companies.
- As a rule, the Company’s Audit & Supervisory Board members serve concurrently as Audit & Supervisory Board members of major Group Companies.
- The Company has established an Audit & Supervisory Board Office as an organization independent of the board of directors to provide dedicated support for the duties of the Company’s Audit & Supervisory Board members. Further, TechnoPro Group directors cooperate in the creation of an audit environment to ensure the practicability of TechnoPro Group Audit & Supervisory Board member audits.
- Staff assigned to the Company’s Audit & Supervisory Board Office do not serve concurrently in other departments and are not subject to the direction of personnel other than the Company’s Audit & Supervisory Board members. Further, matters related to the reassignment, HR evaluation, promotion, demotion, etc. of staff assigned to the Company’s Audit & Supervisory Board Office require the approval of the Company’s Audit & Supervisory Board.
- The Company has established a structure in which TechnoPro Group Audit & Supervisory Board members can collect information directly through attendance as major councils and committees, important decision-making documents or other important documents, regular reports from the Company’s Internal Audit Department, shared information related to internal notices, reports from TechnoPro Group executives and employees, etc.
- The Company has determined and publicized clearly rules to the effect that TechnoPro Group executives and employees shall not be treated unfairly as a result of reports or internal notices to the TechnoPro Group Audit & Supervisory Board members.
- Audit-related expenses incurred by the Company’s Audit & Supervisory Board members shall be provided in an annual fiscal budget, payable by the Company, unless such is proven to be unrelated to the execution of duties.
1-4. Information Retention Management System
- The TechnoPro Group as a whole has established a system for the appropriate retention and use of information related to the operation of the structure of internal controls described above.
- The TechnoPro Group shall properly create and retain documents based on annual general shareholders’ meeting minutes, board of directors meeting minutes, and other legally mandated documents.
- Information related to decisions made at major meetings and information related to major decisions and/or the execution of duties by directors shall be recorded, retained and/or destroyed, either in physical or electronic media, according to document management rules and document retention rules.
- The TechnoPro Group has established a system for quickly searching and viewing these documents to confirm the existence and retention status of said documents. This system consists of document digitization and entry into a database.
- The TechnoPro Group as a whole shall strengthen internal controls related to the following matters, according to the structure of internal controls described in the prior paragraphs.
2-1. Internal Controls Related to Risk Management
- TechnoPro Group executives and employees shall engage in the execution of their duties within the relevant authority and scope of responsibility according to the authority and scope of responsibility defined for the individual. Said individual is responsible for managing the risk of loss related to the duties in question (“Risk”).
- The TechnoPro Group has established risk management rules and other related rules, preparing mechanisms to communicate information and emergency measures commensurate with the risk in the event of an emergency. The TechnoPro Group responds to emergencies in a prompt and proper manner in accordance with said rules.
- The TechnoPro Group has established a risk management monitoring system to collect information within the Company related to group-wide risk, providing a prompt and effective response.
- The TechnoPro Group provides ongoing education and training related to risk management to TechnoPro Group executives and employees.
- On an annual basis, the Company’s board of directors identifies risks related to the execution of our operations, revising our corresponding risk management structure. Further, the TechnoPro Group has established an integrated risk management system for the central management of the TechnoPro Group with respect to a variety of quantitative and qualitative risks.
2-2. Internal Controls Related to Compliance
- As an entity engaged in labor dispatch, paid placement services, and other businesses, the TechnoPro Group complies with relevant laws and statutes, having established structures for strict compliance as a whole with laws, statutes, and our articles of incorporation, as well as with corporate ethics (“Compliance”).
- The Company has established a CSR Committee chaired by the Company’s representative director and president, who is the chief officer responsible for Company Compliance, and whose members consist of TechnoPro Group directors and executive officers. This committee deliberates important matters related to Compliance structure planning and operations.
- The TechnoPro Group has established the TechnoPro Group Code of Conduct, requiring compliance from TechnoPro Group executives and employees. At the same time, the TechnoPro Group conducts ongoing education and training related to Compliance.
- By setting and operating Compliance rules, we maintain our Compliance structure, identify issues, and improve issues that must be addressed.
- The TechnoPro Group has instituted an internal reporting system (internal reporting system and third-party report desk independent of management). We make this reporting system known to executives and employees for the prevention, early detection, and prompt and effective response to acts in violation of Compliance. At the same time, reports from executives and employees related to Compliance are reflected in our business management.
- In the event that an act in violation of Compliance is discovered, we strive to take appropriate response measures in cooperation with external experts and in accordance with our Compliance rules and internal reporting rules. Further, we have instituted and operated penalties for persons who violate or fail to report the violation of Compliance.
2-3. Internal Controls Related to Financial Reporting
- The TechnoPro Group has functions in place to ensure the group- and process-level internal controls related to financial reporting. These controls are based on the Financial Instruments and Exchange Act and other related laws to ensure the reliability of our financial reporting.
- The TechnoPro Group has established the Financial Reporting Risk Management Committee to strengthen internal control functions related to TechnoPro Group financial reporting. This committee is responsible for important decisions, meeting on an annual basis to assess risks, and create and operate internal controls systems related to financial reporting.
2-4. Internal Controls Related to Information Systems and Information Security
- TechnoPro Group executives and employees may have access to secret information related to customer research and development or personal information related to employment candidates or executives and employees of the TechnoPro Group. In light of these circumstances, the TechnoPro Group has implemented a strict information security management system.
- The TechnoPro Group has created and operates rules related to information systems and information security, providing education and training to executives and employees in order to instill the appropriate handling of information and information equipment.
- By strengthening the infrastructure of network security, etc., we engage in measures against data loss or leakage.
Published: August 24, 2012
Revised: January 1, 2020