Global English
It is the responsibility of Audit & Supervisory Board Members to audit Directors' execution of duties from an independent position with the aim of establishing governance that ensures the Kao Group's sound and sustainable growth and trust. Audit & Supervisory Board Members frankly exchange opinions with each other and discuss, determine, and resolve audit policies, plans, and issues at meetings of Audit & Supervisory Board.
In order to improve the effectiveness of audits, Audit & Supervisory Board Members attend meetings of the Board of Directors and other important meetings, conduct on-site visits and interviews on business divisions and group companies, verify the establishment and operation status of its internal control systems, and work closely with the Department of Internal Audit, which is an internal audit department, and auditors of group companies and the Accounting Auditor.
Kao's Audit & Supervisory Board consists of 5 members: 3 Outside Audit & Supervisory Board Members and 2 Full-time Audit & Supervisory Board Members. Audit & Supervisory Board Members frankly exchange their opinions from their diverse perspectives to improve the effectiveness of audits. Each Member's details are shown below. In order to assist Audit & Supervisory Board Members in the performance of their duties, 2 staff, who have a considerable knowledge of finance, accounting, legal affairs, and audit, have been assigned. The Office of the Audit & Supervisory Board was established directly under the Audit & Supervisory Board as of January 1, 2022 and the number of staff has increased to 5.
Audit & Supervisory Board held 10 meetings in the FY2021. In addition, Audit & Supervisory Board Members had opportunities to exchange opinions by email and at online meetings, as and when necessary.
Attendance of each Audit & Supervisory Board Member at meetings of the Audit & Supervisory Board and the Board of Directors is as follows:
Title | Name | Meetings of Audit & Supervisory Board |
Meetings of Board of Directors |
---|---|---|---|
Audit & Supervisory Board Chairperson Full-time Audit & Supervisory Board Member |
Hideko Aoki | 100% (10 / 10 meetings) | 100% (15 / 15 meetings) |
Full-time Audit & Supervisory Board Member |
Sadanao Kawashima*1 | 100% (8 / 8 meetings) | 100% (13 / 13 meetings) |
Full-time Audit & Supervisory Board Member |
Katsuya Fujii*1 | 100% (2 / 2 meetings) | 100% (2 / 2 meetings) |
Outside Audit & Supervisory Board Member |
Hideki Amano | 100% (10 / 10 meetings) | 100% (15 / 15 meetings) |
Outside Audit & Supervisory Board Member |
Nobuhiro Oka | 100% (10 / 10 meetings) | 100% (15 / 15 meetings) |
Outside Audit & Supervisory Board Member |
Takahiro Nakazawa | 100% (10 / 10 meetings) | 100% (15 / 15 meetings) |
Major resolutions and other matters reported and considered by Audit & Supervisory Board in this FY2021 are as follows:
- Resolutions (16 items)
Resolutions regarding Audit & Supervisory Board and its Members: Appointment of Chairperson and Full-time Audit & Supervisory Board Members; revision of the Rules of the Audit & Supervisory Board etc.
Resolutions regarding audits: Audit policies and plans and assignment of roles; identifying key audit items; Audit Report of the Audit & Supervisory Board at the end of the fiscal year
Resolutions regarding Accounting Auditor: Reappointment of Accounting Auditor; consent of Accounting Auditor's compensation etc.
- Other reports and considerations (36 items)
Group governance; internal control; dealing with whistleblowing; issues identified at on-site visits and interviews; evaluation of the effectiveness of the Audit & Supervisory Board
Audit & Supervisory Board conduct its duties in accordance with its audit policies which reflects management policies and strategies based on the Kao Group Mid-term Plan 2025 ("K25"), changes in the social environment and stakeholders' requirements, summarize its activities through effectiveness evaluations, and review and identify issues which should be dealt with in the following fiscal year as key audit items.
The method and description of Audit & Supervisory Board Members' audits and the assignment of audit roles for FY2021 are as follows:
Main audit | itemMethod and description of Audit & Supervisory Board Members' audit |
Audit role | |
---|---|---|---|
Full- time |
Outside | ||
Directors' duties |
execution of ✓ | ✓ | |
✓ | N/A | ||
✓ | At any time |
||
N/A | ✓ | ||
Internal control | ✓ | At any time |
|
✓ | N/A | ||
Group governance | ✓ | At any time |
|
✓ | At any time |
||
✓ | ✓ |
Audit & Supervisory Board conducts an annual effectiveness evaluation to improve the effectiveness of audit activities every year. It determines evaluation items mainly focused on main audit items, each Audit & Supervisory Board Member makes evaluation by him/herself and they discuss the result of the evaluation and identify issues at the Audit & Supervisory Board. The Audit & Supervisory Board reflects the results in its next plan and strive to continuously improve effectiveness.
The Audit & Supervisory Board deliberated on the results of the evaluation of the effectiveness of audit activities for FY2021 and concluded that it was functioning effectively. The main evaluation items and the key assessments and issues are as follows:
Main evaluation | itemsKey assessments and issues |
---|---|
Effectiveness of | the composition and operation of the Audit & Supervisory Board|
Effectiveness of | the system for supervising Directors|
Verification of the | status of development and operation of internal control system|
Group governance |
The Department of Internal Audit reports directly to the President and Chief Executive Officer. It conducts internal audits on management activities of Kao and Kao Group companies in general from the perspective of complying with laws and regulations, the appropriateness of financial reporting and administrative effectiveness and efficiency. Besides providing reasonable assurance as to the effectiveness of the company's internal controls, the department also aims to further enhance the internal controls system by proposing improvements. The results of internal audit activities are reported to the Management Board and the Board of Directors at regular intervals.
Regarding management of subsidiaries, the Group Company Policy Manual stipulates which items subsidiaries are required to obtain approval for from Kao in advance, and which items they are required to report to Kao. In accordance with the policy manual, the findings of internal audits conducted by the Department of Internal Audit, as well as initiatives implemented in response and the outcomes of such initiatives, are shared with the board of subsidiaries.
The Department of Internal Audit exchanges information and opinions regarding the current state of internal audit activities with Audit & Supervisory Board Members on a regular basis and as needed. In addition, with regard to the development or evaluation of internal controls relating to financial reporting and the current state of related internal audit activities, the Department of Internal Audit shares information as appropriate with the Accounting Auditor, and strives for effective mutual coordination with the Accounting Auditor.