The Nikon Group is establishing the basic policy in internal control system as well as improving and enhancing its internal control system - in areas including the compliance framework, the internal audits, the information management, and the risk management - in order to ensure effective and efficient operations, reliable financial reporting, and preservation of assets, in addition to compliance with relevant laws and regulations.
Measures to Enhance the Internal Control System
- Strengthened System for Deliberation, Resolution, Communication and Reporting
- In 2005, Nikon further overhauled the structure of the management committees engaged in the deliberation, resolution, communication and reporting of business matters and revised rules related to the delegation of authority in divisions in order to further enhance the Group's internal controls.
- Internal Auditing
- The Internal Audit Department is under the direct control of the President and operates independently of other operational departments. Based on annual auditing plans, it examines the operations of each department in the Group to see if they are being appropriately conducted in compliance with laws, company regulations and standards. It also makes recommendations for improvement.
In the year ended March 31, 2008, in addition to looking into issues that affect the corporate culture and organizational environment, an internal audit was performed throughout the Nikon Group in order to check planning and operations in place at each company to ensure the company-level internal controls stipulated by the Companies Act and the J-SOX* law. In future, as well as the auditing duties already being performed, the Internal Audit Department will take on the job of conducting an independent assessment of J-SOX compliance while enhancing internal auditing for overseas subsidiaries.
* J-SOX law: Informal name given to the Japanese version of the US Sarbanes-Oxley Act (SOX). The importance of internal controls had been highlighted following a series of fraudulent financial reports and other incidents of corporate misconduct in recent years. In order to secure the reliability of financial reporting by companies, Japan's Financial Instruments and Exchange Law of June 2006 requires management assessment and audit concerning internal controls over financial reporting. Known as J-SOX, this legislation came into force in April 2008.
- Information Resources Management
- Based on the Information Security Improvement Plan, information management is being further strengthened, while access control and security pertaining to the Group's internal network was further tightened as of April 2007.
Also, Guidelines for Confidentiality Classifications were instituted in February 2006 to thoroughly specify and clarify different types of restricted data. These guidelines have been used as a basis for continued efforts to increase the effectiveness of Nikon's information management.
