The Audit & Supervisory Board Members are entrusted by shareholders to audit Directors' execution of duties from an independent standpoint, aiming to achieve the sound and sustainable growth of Kao Group and establish governance that meets the trust of stakeholders. We provide in a detailed explanation of the activities of the Audit & Supervisory Board in FY2022 under review to enhance the transparency of audits and the effectiveness of dialogue with stakeholders as below
In FY2022, we conducted auditing activities with a shared sense of urgency and the necessity of reforms recognized by management with regard to the status of implementation of corporate strategy and the status of response to management environmental risks. We adopted a policy which recognizes that stakeholders are demanding a higher level of effective governance and an active disclosure of information.
The Audit & Supervisory Board Members attend important meetings and put emphasis on decision-making process for reaching resolutions, and express their opinions as appropriate.
In addition, the Audit & Supervisory Board Members conduct on-site audits and interviews of each division and subsidiary and affiliates. By placing importance on dialogue with people at the Genba, they confirm the degree of how well corporate strategy is being shared and whether proactive efforts are being made. They also identify any issues that occur at Genba. At least one Outside Audit & Supervisory Board Member has participated in approximately 70% of the interviews.
The Audit & Supervisory Board consists of two Full-time Audit & Supervisory Board Members with internal execution experience and diverse knowledge and three Outside Audit & Supervisory Board Members with respective expertise and abundant experience.
In January 2022, the Office of the Audit & Supervisory Board (with five members) was newly established, to assist the Audit & Supervisory Board Members with their duties and to allow the members to serve concurrently as Auditors of subsidiaries.
Please find the link below for Audit & Supervisory Board Members.
Number of meetings held: 9 / Attendance rate: 100%
Duration: Average of 2 hours and 14 minutes
17 resolutions: Audit policy, division of duties, critical auditing items, annual plan, audit report, internal control matters, Accounting Auditor matters (including agreement on compensation, deliberation on reappointment, and non-assurance services), appointment and compensation of Audit & Supervisory Board Members, evaluation of effectiveness, etc.
38 matters considered: Audit findings on critical auditing items, group governance (the Group's structure of Auditors and the direction of future governance), closely monitoring issues concerning internal control, non-assurance services by the Accounting Auditor, exchange of opinions with Representative Directors and Outside Directors, etc.
Evaluation of the effectiveness of the Audit & Supervisory Board: The evaluation is made once a year. Discussions at the Audit & Supervisory Board based on the results of the questionnaire led to the conclusion that the system at the Board as a whole was functioning effectively during FY2022.
Going forward, we hope to deepen discussions on the skill matrix of the Audit & Supervisory Board, which aims for greater diversity
|Key audit items||Audit method||Activity results and evaluation of effectiveness||Audit role|
|Attend meetings of the Board of Directors
to confirm the status of deliberations
|All Audit & Supervisory Board Members attended all
meetings. All of them actively expressed their opinions
|Attend important meetings such as the
Management Board to confirm decision-
making process and request explanations
|Attendance rate was 100%, reviewed decision-making
process and commented on matters to be considered.
|Exchange opinions with Management||Representative Directors of Kao (5 times); Outside
Directors (2 times); Executive Officers with titles (6 times),
Representative Directors of important subsidiaries (3
times); Recognition of management issues and future
governance were shared through frank exchanges of
|Conduct On-site audits and interviews of
worksites, divisions, domestic and
overseas subsidiaries and affiliates
(including confirmation of priority audit
items such as internal control.)
|Attend the Committee for the Examination
of the Nominees for Directors and Audit &
Supervisory Board Members and
Compensation Advisory Committee for
Directors and Executive Officers
||✓||At any time|
||Exchanged opinions (21 times); Reported to Meetings of
Board of Directors (2 times)
|On-site audits and interviews of worksites,
divisions, domestic and overseas
subsidiaries and affiliates
|Confirmed results of self-inspections and external audit,
and also the status of
development and operation of internal control systems
|✓||At any time|
||Conducted quarterly or semi-annually
||✓||At any time|
|Exchange information with the Department
of Internal Audit which is the division
responsible for internal auditing
|4 times||✓||At any time|
|Evaluate the construction and operation
status of the internal control system using a
|Evaluated the Company's disclosure status
by investigating external requests and