Canon is striving to strengthen its corporate governance structure by creating an auditing framework and establishing various specialized committees in order to promote sound and transparent corporate management.
Canon’s basic governance structure consists of an Executive Committee, in which all executive officers participate, special management committees dedicated to key issues, as well as the General Meeting of Shareholders, the Board of Directors, and the Board of Corporate Auditors, which are required under the Company Law of Japan. All these bodies work together to ensure the appropriate management of the Company through an independent internal auditing structure, and information disclosure.
Corporate Governance Structure (As of April 1, 2007)
Canon Inc.’s Board of Directors comprises 27 members, all of them inside directors. The Directors aim for a rational and efficient decision-making process whereby important matters are decided at regular meetings of the Board of Directors, which they all attend, and meetings of the Executive Committee. The Executive Committee convenes as necessary to take up important matters tabled by the Management Strategy Committee. All corporate officers attend Executive Committee meetings together with division personnel with responsibility for the matters under deliberation to determine specific action plans.
Various special cross-divisional management committees have also been established to address important management themes. Each committee works to accelerate and rationalize the decisionmaking process while supporting product group operations and fulfilling a checking function.
Corporate Auditors
The Board of Corporate Auditors of Canon Inc. is made up of five auditors, three of whom are external auditors with no personal, capital or business affiliations with Canon or other interests of any kind in the Canon Group. The auditors conduct strict audits in accordance with established auditing policies and their assigned duties. These involve attending meetings of the Board of Directors, Executive Committee, and various special management committees; receiving business reports from the directors and others; carefully examining documents related to important decisions; and examining the company’s business and assets.
External Auditing
We are introducing a pre-approval system for the content of external audit contracts and the amounts involved. To this end, regulations related to the pre-approval of policies and procedures for both auditing and non-auditing services are being established to promote the segregation of audit operations from other outsourced operations, thus reinforcing the independence of accounting firms.
Internal Auditing
The Corporate Audit Center is responsible for Canon’s internal auditing. It monitors risk management and internal control systems, provides evaluations, and makes recommendations. The Corporate Audit Center and various administrative divisions also work closely together to monitor product quality, environmental conservation, security, personal information protection, security export control management, and other areas.
In line with our objective of strengthening governance, in 2006 we increased to 48 the number of personnel involved with the internal auditing system. Moreover, we set up a special division, which is also subject to audit, to handle the IT system that forms the backbone for all of our business.
| Corporate Audit Center | Auditing of management functions, operations, accounting, internal control over financial reporting for response to the Sarbanes-Oxley Act, and compliance (focusing on compliance with laws, internal regulations, social customs and morals), etc. |
|---|---|
| Quality Management Headquarters | Quality assurance |
| Global Environment Promotion Headquarters | Environmentally conscious management and its results |
| Information & Communication Systems Headquarters | Information security in IT, etc. |
| General Affairs Headquarters | Physical security |
| Global Manufacturing & Logistics Headquarters | Security assurance for export management |
| Global Procurement Headquarters | Compliance with procurement rules |
