Internal Control Activities

In addition to the many activities that have been implemented in the past, action on compliance has been reinforced through the operations of the Internal Control Committee and the Audit Department.

Role of the Internal Control Committee

The Company Act clearly stipulates that the senior executives of a company must build an internal control system to prevent violation of the law and related damages. Based on the company’s Principles, the Internal Control Committee, which includes representatives of group member companies, has established a Code of Conduct that clearly identifies the direction that the Topre Group is to take and should be kept in mind by each individual within the organization. In order to implement the Code of Conduct and promote business efficiency, regulations, manuals, and other documentation are now in preparation.

What is an Internal Control System?

• Effective and efficient business operations
• Trustworthy financial reports
• Compliance with laws and regulations in business activities

The internal control system is a process that guarantees the above elements by integrating them into operations and into the actions of all employees. For efficient business administration and compliance with laws and regulations, “a corporate climate that discourages violation,” “systems that prevent violation” and “a system to ensure accurate accounting statements” are in place and are continuously evaluated and improved.

To build and promote this internal control system, Topre established the Internal Control Committee, with the following subcommittees under it:

1.Compliance Sub-committee

• The Compliance Sub-committee holds meetings in order to strengthen the management of compliance in the overall Group. This sub-committee works to instill greater awareness of compliance among officers and employees; investigates, reports, and monitors the implementation status of compliance activities; and makes improvements as necessary.
• Training on compliance is held regularly for different classes of employees to raise their level of understanding.
• We have established an internal reporting system and consultation service for each Group company, and we strive to make employees aware of this system and keep the user environment running properly.
• We publish information related to compliance education in the regular company newsletter to raise awareness about topics such as legal regulations and internal rules.

2.Risk Management Sub-committee

• The Risk Management Sub-committee holds meetings, studies risks such as natural disasters, accidents, and risks related to our overseas bases, and reviews the required management structure.
• The Sub-committee regularly identifies and evaluates the potential risks surrounding each division of each Group company and formulates appropriate risk management strategies.

3.Financial Reporting Control Sub-committee

• The Financial Reporting Control Sub-committee holds meetings, regularly evaluates the asset management and accounting of the whole Group, and ensures that the Group’s finances are properly managed.
• The Accounts Division Global Workshop is held to ensure accurate and consistent operations related to accounts, accounting, costs, and finances across the entire Group.

Conceptual Diagram of Topre Group Internal Control