Social Responsibility
About
Internal Control
Konica Minolta’s Commitment to Enhancing Internal Control
Internal Control Initiatives
Our Commitment to the Group’s Internal Control and Thorough Legal Compliance
Given the increasing number of corporate scandals in recent years, a lack of corporate ethics has become a matter of grave social concern. To prevent any misconduct by companies, there is a demand for the establishment of strong internal control systems. In this environment, the Company Act, which stipulates rules about internal control, took effect in Japan in May 2006. At Konica Minolta, the Board of Directors of Konica Minolta Holdings, Inc. adopted a resolution concerning internal control on April 27, 2006, before the Company Act took effect. The outline of this resolution has been carried in the annual security report for fiscal year 2005, ended March 2006.
Konica Minolta Holdings, the holding company of the Konica Minolta Group, has adopted what is known as a Board-with-Committees system, which basically separates supervisory functions from corporate management. This system liberates the Board of Directors from duties pertaining to daily business operations, enabling directors to concentrate their efforts in the supervision of corporate management and decision-making with regard to strategic management policies. The system, therefore, is effective in promoting both the efficiency and legal compliance of our corporate management.
Reinforcing Internal Control of Group Companies
Establishing Internal Control Systems in All Direct Subsidiaries of Konica Minolta Holdings, Including Those Not Defined as “Large Companies” Under the Japanese Company Act
Konica Minolta has decided to establish internal control systems in all direct subsidiaries of Konica Minolta Holdings, including those subsidiaries that are not applicable under the definition of “large companies” in the Japan’s Company Act. Given this decision, all direct subsidiaries of Konica Minolta Holdings and all Group companies applicable to the “large companies” as defined by the Company Act adopted resolutions pertaining to internal control at the meetings of their respective Board of Directors.
At Konica Minolta, we strive to ensure the legality, rationality, and efficiency of our business operations by reviewing and revising, as occasion demands, our supervision and operational systems pertaining to all business activities across the Group.
Responses to the Enactment of the Financial Products Transaction Law
Reinforcing Internal Control in Accounting to Meet the Requirements of the Financial Products Transaction Law
Japanese lawmakers have passed the bill of the Financial Products Transaction Law (often referred to as the “Japanese SOX Act,” as it corresponds to the Sarbanes-Oxley Act enacted in the United States in order to prevent corporate misconducts in accounting). The Japanese SOX Act, which will be applicable to financial statements for fiscal year 2008 and onwards, will necessitate the reinforcement of accounting audit systems, as well as internal control systems at individual enterprises. In response, Konica Minolta has established a project team, the activities of which will cover the entire Group, including our subsidiaries in Europe, North America, and China. The project team is taking initiatives in four phases. In the first phase (fiscal year 2006), we prepared an overall plan. Currently, we are in the second phase, the phase to document our internal control systems. In the upcoming third phase, we will evaluate the operation of our business processes; and in the fourth phase we will identify problems and take appropriate measures so as to prepare for the audit to be conducted by an audit corporation.
In carrying out these programs, we believe it essential to build a solid mechanism that will prevent any error or misconduct in the financial statement preparation processes, in addition to evaluating the validity of the completed financial statements. It is also essential that we be able to demonstrate the validity of the mechanism. With this in mind, the entire Konica Minolta Group is currently committed to strengthening our internal control systems.
