6.Strengthening Corporate Governance and Compliance
Basic Approach and Policies
Canon has Group companies and employees in many locations around the world, so strengthening corporate governance and compliance is essential to gaining the trust of the community and to conducting our business. Canon believes in making a definite response not only in situations where our reputation may be instantly tarnished, such as corporate scandals, legal infractions or product quality issues, but also to address the needs and desires of the community and our customers. For that purpose, we are strengthening both individual and organizational efforts through such measures as reinforcing internal control structure procedures and conducting compliance training for employees to meet our responsibilities as a global corporation.
Strengthening the Internal Control Structure
—Bolstering the internal control structure for the entire Group
Renewed Demand for Emphasis on Internal Audits
Society is demanding the establishment of strict internal controls as concern about improprieties in management and financial reporting by companies has been growing.
One pillar of Canon's corporate governance is the early construction of an internal auditing system. Part of Canon Inc.'s internal auditing division, the Corporate Audit Center was founded over a half-century ago, in 1951. There is no area that is “sacred” or exempt from auditing by this organization, which reports directly to the president, and it has the authority to audit every aspect of our domestic and overseas Group companies.
The knowledgeable members of the Corporate Audit Center are drawn from a broad range of fields, from planning and development through production and marketing. As of April 1, 2012, the center had 69 employees in total. The Corporate Audit Center is steadily expanding, and plans to bring the number of staff to 100.
Wide-Ranging Audits for Effective Operational Improvements
In its bid to link internal auditing with increased corporate value, Canon Inc.'s Corporate Audit Center conducts an array of audits, including management audits, business audits, accounting audits, IT system audits and compliance audits. It offers improvement advice based on its findings to resolve issues and improve business quality. To confirm the actual implementation of these improvements, a series of rolling follow-ups are carried out, using a combination of document- and field-auditing methods aimed at realizing even more effective auditing.
During 2011, the center put 128 auditing themes, including new themes, into practice and issued more than 1,800 improvement recommendations. All auditing results are reported to management, and are implemented in companywide improvements.
Improving the Reliability of Financial Reports
Internal control auditing in compliance with the Sarbanes-Oxley Act is conducted annually by the Corporate Audit Center to ensure the reliability of financial reporting. The first step toward achieving “self-contained internal control” is for each division to conduct a self-assessment. This is followed by a supplementary audit by the Corporate Audit Center, which verifies the conclusions of the self-assessment.
In 2009, the Corporate Audit Center also began conducting expanded audits beyond confirmation of the reliability of financial reports. These Expanded Range Internal Control Audits cover the overall condition and application of the internal control structure from the perspective of the effectiveness and efficiency of work and legal compliance, as well as the reliability of financial reporting.
Canon will continue to meet the expectations of society and maintain its trust by working to strengthen our auditing system, including the internal control structure for the entire Group.
| Corporate Audit Center | Auditing of management functions, operations, accounting, IT systems, compliance, internal controls to comply with the Sarbanes-Oxley Act, and so forth |
|---|---|
| Global Logistics Management Center | On-site diagnosis of security trade control at Canon Group companies located in Japan and overseas |
| Facilities Management Headquarters | Auditing of safety management systems for dangerous objects, chemical substances, etc. |
| Human Resources Management & Organization Headquarters | Auditing of the implementation and operation of the occupational safety and health management system |
| Information & Communication Systems Headquarters | Internal checks to ensure security of information, including internal IT |
| Environment & Quality Headquarters | Auditing of the management and operation of the environmental management system, auditing of quality assurance activities based on the quality management system |
| Global Procurement Headquarters | Internal auditing of compliance as well as effectiveness and efficiency in procurement processes |
