System of Corporate Governance System
Fuji Xerox, undertook a reform of the Board of Directors in fiscal 1999, limiting the Board's functions to the determination of basic management policies and oversight of the execution of operations and introducing a system of corporate officers who would be directly responsible for the execution of operations. We also established the Executive Nomination and Compensation Committee under the Board of Directors in order to strengthen the oversight of the execution of operations. In addition, we set up the Corporate Executive Committee, which consists of the corporate officers, to allow speedy decision-making in the execution of daily operations.
Furthermore, to secure a favorable environment for increasing the effectiveness of audits and build a collaborative relationship between operations and auditing, the Corporate Auditors and the President sign the Agreement on Auditing by the Corporate Auditors.
The Internal Audit and Analysis, a department reporting directly to the President, is charged with the task of carrying out internal audit and analysis as an independent body existing outside the company's operations. The department examines and assesses the management and execution of the company's general operations from the viewpoints of legal compliance, effectiveness and efficiency of operations, and reliability of financial reports, and submits its opinions. Through these activities, it reinforces the company's internal control system and assists in the efficient achievement of our corporate goals.
In addition to the audits by the Corporate Auditors and the system of internal audit and analysis, the company is also subject to accounting audits. While these different types of audits have distinct objectives and functions in strengthening corporate governance, they also complement each other. For this reason, the auditors cooperate with each other by coordinating audit plans and sharing audit results and other information in an effort to improve the overall effectiveness and efficiency of the audits.
Development and Maintenance of Internal Control Systems
The Companies Act, which came into effect in 2006, requires companies in Japan to have a system in place to ensure proper execution of company operations. At Fuji Xerox and our affiliated companies, we have been building, from before the promulgation of the Act, a mechanism whereby the Internal Audit and Analysis promotes the implementation of the internal control system and the Corporate Auditors examine the effective of the system. As for the requirement of the Financial Instruments and Exchange Act for internal control in financial reporting, the departments responsible for operations implement and maintain a system for internal control, and the Internal Audit and Analysis assesses the systems.
Implementing an internal control system is necessary not only to meet regulatory requirements. It is for the overall risk management of the entire business and we believe it will contribute to increasing our corporate value.
Going forward, we will make sure to embed these activities on-site and strengthen our internal control systems at Fuji Xerox, which includes domestic and overseas affiliates, as a mechanism that will help us meet our business objectives.