Audit Overview

Audit Status by the Audit and Supervisory Committee

In fiscal year 2025, the Audit and Supervisory Committee conducted an audit based on the annual audit plan, with one internal director and four outside directors. In conducting the Audit and Supervisory Committee audit, we also maintained cooperation with the external auditor by regularly exchanging information and receiving reports and hearings from the internal audit department.

Director (Full-time Audit and Supervisory Committee Member) Minoru Kusama possesses considerable knowledge of finance and accounting, gained from his many years of experience at a bank. Furthermore, Outside Director (Audit and Supervisory Committee Member) Michio Iwabuchi is a certified public accountant and possesses considerable knowledge of finance and accounting.

During this fiscal year, our company has held Audit and Supervisory Committee meetings at least once a month, and the attendance records of individual Audit and Supervisory Committee members are as follows:

The specific items considered by the Audit and Supervisory Committee are as follows:

• Development of audit policies and audit plans
• Status of the group's internal control system development and operation
• Appropriateness of the assessment of the accounting auditor and the audit results

The priority items for fiscal year 2025 are as follows:

• Audit of compliance with laws, regulations, articles of incorporation, rules, etc.
• Audit of consolidated financial statements
• Audit of the risk management systems and internal control systems of four subsidiaries.
• Appropriate collaboration with auditors regarding "Key Audit Matters" (KAMs), etc.
• Audit of safety and health management status
• Audit of the progress of the Fourth Medium-Term Management Plan

Activities of the Audit and Supervisory Committee

　Based on the audit policies and plans established by the Audit and Supervisory Committee, the full-time members of the Audit and Supervisory Committee primarily attended important meetings such as business plan review meetings, exchanged opinions with the representative director, and received regular reports from Audit Office. The committee also communicated with the external auditor to receive reports on the status and results of the audit, to confirm the contents, and to exchange opinions and share accounting-related information.

The audit committee members receive reports on the results of their activities from the full-time audit committee members and offer opinions based on their professional knowledge. They also attend meetings such as the audit plan explanation and audit results report from the accounting auditors, and request explanations and express opinions as needed.

Status of internal audits

We have established Audit Office directly under the president, independent of the business divisions. Two full-time auditors systematically evaluate and improve the effectiveness of risk management, internal control, and governance processes in the business divisions of our company and its subsidiaries, using professional auditing methods. We exchange information and collaborate with the Audit and Supervisory Committee and the external auditors regarding the status of internal and external audits. We also compile findings and improvement suggestions from internal audits into reports and submit them to the President and CEO and the Board of Directors.

Status of financial audit

1. Name of the auditing firm

   Deloitte Touche Tohmatsu LLC

2. Continuous audit period

   Since 1999

3. Certified public accountant who performed the duties

   Designated Limited Liability Partner, Managing Partner: Akio Kimura

   Designated Limited Liability Partner Executive Partner Norio Aminaka

4. Composition of assistants involved in audit work

   Our accounting audit support staff consists of four certified public accountants and twelve other individuals.

5. Selection policy and reasons for audit firm

   In selecting an auditing firm, we comprehensively considered factors such as independence, expertise, and quality control. As a result of our review, we determined that this firm is suitable to serve as our accounting auditor.

   The Audit and Supervisory Committee will decide on the content of a proposal to be submitted to the general meeting of shareholders regarding the dismissal or non-reappointment of the accounting auditor if it determines that it is necessary, such as when there is an impediment to the performance of the accounting auditor's duties. Furthermore, if it is determined that the accounting auditor falls under any of the matters specified in each item of Article 340, Paragraph 1 of the Companies Act, the Audit and Supervisory Committee will dismiss the accounting auditor based on the consent of all members of the Audit and Supervisory Committee. In this case, the Audit and Supervisory Committee members selected by the Audit and Supervisory Committee will report the fact that the accounting auditor has been dismissed and the reasons therefor at the first general meeting of shareholders convened after the dissolution.

6. Evaluation of the auditing firm by the audit and supervisory committee

   Our Audit and Supervisory Committee evaluates audit firms, and in doing so, we base our evaluations on the "Practical Guidelines for Corporate Auditors Regarding the Evaluation and Selection Criteria for Accounting Auditors" published by the Japan Association of Corporate Auditors. As a result, we have concluded that there are no problems with the audit system of Deloitte Touche Tohmatsu LLC.