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Governance

Audit & Supervisory Board and Audit

Audit & Supervisory Board Members /Audit & Supervisory Board

The Audit & Supervisory Board comprises all of the Audit & Supervisory Board Members responsible for auditing the decision-making processes and management performances of Directors in compliance with the Companies Act, and other laws and regulations as well as Mitsubishi Corporation’s Articles of Incorporation and internal rules/regulations.
Full-time Audit & Supervisory Board Members ensure the soundness of the management by executing audits from a perspective based on abundant working experience at MC, while Outside Audit & Supervisory Board Members execute audits with a background of abundant working experience in their particular fields as well as neutral and objective perspectives. In addition to resolutions of matters required by law and other important issues, the Audit & Supervisory Board strives to enhance information-sharing among the members through briefings on key matters and reporting the status of auditing activities for each of the members.

Structure of the Audit & Supervisory Board (As of July 1, 2021)
Shuma Uchino 2019 Full-time Audit & Supervisory Board Member (present position)
2018 Senior Audit & Supervisory Board Member (full-time)
1978 Joined MC
Hajime Hirano 2019 Full-time Audit & Supervisory Board Member (present position)
1979 Joined MC
Yasuko Takayama 2016 Audit & Supervisory Board Member, MC (present position)
2011 Audit & Supervisory Board Member, Shiseido Company, Limited (resigned in June 2015)
1980 Joined Shiseido Company, Limited
Rieko Sato 2020 Audit & Supervisory Board Member, MC (present position)
1998 Partner, ISHII LAW OFFICE (present position)
1989 Shearman & Sterling LLP (resigned in 1990)
1984 Admitted to the Japan Bar (Attorney-at-Law)
Takeshi Nakao

2020 Audit & Supervisory Board Member, MC (present position)
2006 CEO, PARTNERS HOLDINGS, Co. Ltd. (present position)
1993 Admitted to Certified Public Accountant of Japan
1989 Joined KPMG Minato Audit Corporation (currently KPMG AZSA LLC) (resigned in 1996)

* Indicates the fulfillment of the conditions for Outside Audit & Supervisory Board Members as provided for in Article 2, Item 16 of the Companies Act. Also indicates the fulfillment of the conditions for Independent Directors / Auditors as specified by Tokyo Stock Exchange, Inc. and other stock exchanges in Japan as well as selection criteria for Outside Audit & Supervisory Board Members specified by MC.

Reference:Please refer to “Selection Criteria for Outside Directors and Outside Audit & Supervisory Members” on the MC website for thoughts regarding independence in selection criteria for Outside Directors.(https://www.mitsubishicorp.com/jp/en/about/governance/corporategovernance.html

Percentage of Independent Outside Audit & Supervisory Board Members among Total Audit & Supervisory Board Members

Percentage of Female Audit & Supervisory Board Members among Total Audit & Supervisory Board Members

* Based on the status as of July 1, 2021

MC SIM事務局, 監査役・監査役室(PK)

Audit Plans

Prior to the start of each fiscal year, the Audit & Supervisory Board formulates audit plans with key areas. In the fiscal year ended March 31, 2021, the following three key audit areas were selected for the monitoring of specific progress in management and execution.

1.Related Measures for Midterm Corporate Strategy 2021:

  • Initiatives towards realizing digital transformation (DX)
  • Progress in exiting and restructuring certain existing businesses
  • Practical implementation of human resource training and development measures

2.Enhancing MC Group Management:

  • Delegation of authority and development/implementation of a governing structure that reflects the current business management model
  • Proactive efforts by MC representative offices based on a review of the regional office system
  • Addressing the Key Sustainability Issues for MC (Materiality)

3.Initiatives to Strengthen Group Corporate Governance:

  • Enhancement of deliberations at Board of Directors’ meetings
  • Strengthening the effectiveness of Company-wide controls
  • Proactive governance through dispatching Full-time Audit & Supervisory Board Member to subsidiaries and affiliates.
MC SIM事務局, 監査役・監査役室(PK)

Audits of Management Performance

  1. 1Dialogue with Executive Officers

    Audit & Supervisory Board Members engage in dialogues with the Chairman of the Board, President and CEO, Corporate Functional Officers, Business Group CEOs, Business Division COOs, Administrative Department General Managers and the General Managers of the Corporate Staff Section. In the fiscal year ended March 31, 2021, 71 dialogues were held, and at least one Outside Audit & Supervisory Board Member participated in 69 of these dialogues.

  2. 2Attendance at important meetings

    Besides the Audit & Supervisory Board, the Full-time Audit & Supervisory Board Members attend meetings of major internal management bodies, including the Board of Directors; the Governance, Nomination and Compensation Committee; the Executive Committee and the Business Strategy Committee; and provide necessary opinions (163 times in the fiscal year ended March 31, 2021). Besides the Audit & Supervisory Board, the Outside Audit & Supervisory Board Members attend meetings of the Board of Directors after being briefed of discussions in the Executive Committee and lower conference bodies, and provide necessary opinions (25 times in the fiscal year ended March 31, 2021).

  3. 3On-site audits and observations

    Audit & Supervisory Board Members proactively conduct on-site audits and visits of overseas and domestic MC Group companies in an effort to grasp the local circumstances. In selecting the locations of the on-site audits and visits for the Audit & Supervisory Board Members, besides quantitative aspects such as investment amount and net income, qualitative aspects such as the business environment and compliance cases are also taken into account.
    In the fiscal year ended March 31, 2021, due to COVID-19-related travel restrictions, particularly those around overseas travel, in addition to enhancing the domestic on-site audits, remote audit methods using a variety of tools were also adopted for overseas locations, taking into account the local situation.
    In the fiscal year ended March 31, 2021, dialogues were held with the CEOs and executive officers of 4 companies in 4 countries overseas and 24 domestic MC Group companies, as well as the regional heads of 3 overseas and domestic offices. The Audit & Supervisory Board Members reported on the results of their on-site audits and visits to the Chairman of the Board, the President and CEO, and relevant executive officers.
    At least one Outside Audit & Supervisory Board Member participated in on-site audits and visits with 2 companies in 2 countries overseas and 21 domestic MC Group companies, as well as 3 overseas and domestic offices.

    * Numbers for the fiscal year ended March 31, 2021

    ** Indicates the number of cases
    in which more than one outside Audit &
    Supervisory Board Member joined

Enhancing the Effectiveness and Auditing Activities of the Audit & Supervisory Board (Members)

MC conducts annual evaluations of the Board of Directors in order to make continuous improvements to the effectiveness of its corporate governance. The Audit & Supervisory Board (Members) focused on the following matters, referring to the issues reviewed in the effectiveness evaluation. 

  1. Improving the scope of information sharing on important investment and loan projects

    For matters to be submitted for approval or reported to the Board of Directors, preliminary briefings are held for Outside Directors and Outside Audit & Supervisory Board Members by management on the executive side prior to deliberation by the Board of Directors. For the Audit & Supervisory Board, in addition to these preliminary briefings, members also receive explanations from Audit & Supervisory Board staff related to Board of Directors matters of especially high importance as well as matters that are not quantitatively applicable to the Board of Directors but that are still qualitatively important. Audit & Supervisory Board Members then exchange opinions and share their awareness of risks in relation to the loan and investment projects.

  2. Enhancing the provision of Information to Outside Directors and Audit & Supervisory Board Members through various dialogues hosted by the Audit & Supervisory Board Member's office

    As an activity of the Audit & Supervisory Board Members, MC has traditionally provided opportunities for discussion between all Audit & Supervisory Board Members and management executives such as the Chairman, President, Corporate Officers and Group CEOs. As in the previous fiscal year, Outside Directors also actively participate. In addition, since the fiscal year ended March 2021, we have incorporated Business Reports from senior management, which used to be held at meetings of the Board of Directors, into this dialogue, allowing sufficient time for the provision of information, including questions and answers. Outside Audit & Supervisory Board Members also participate in dialogues with the Division Chief Operating Officer to ensure opportunities to hear the opinions of employees on the ground.

  3. Improving the system for overseeing the businesses of subsidiaries/COVID-19 response

    As an activity for Audit & Supervisory Board Members, MC actively conducts onsite audits and observations to MC Group companies in Japan and overseas in an effort to grasp the situation on the frontlines. In selecting priority companies for the Audit & Supervisory Board Members to visit, in addition to quantitative aspects such as total assets and net income, the selection criteria also include qualitative aspects such as the surrounding business environment and cases of compliance-related incidents. In response to the increasing severity of COVID-19 since the beginning of 2020, we have adopted a remote visit method using a variety of tools, and in addition, taking into account restrictions on overseas visits, we have taken appropriate measures, such as enhancing domestic visits.

    Furthermore, in the audits conducted by the Internal Audit Dept., audit targets are selected with consideration to quantitative and qualitative aspects, and the department regularly reports the results to the Audit & Supervisory Board, where the two parties share audit information and exchange opinions. Additionally, once every quarter meetings are held with the Audit & Supervisory Board Members of 40 major Group companies in Japan, to deepen the cooperation among those companies.

Enhancement of Three-Way Audits
Collaboration with accounting auditors/evaluation of accounting auditors

We work with accounting auditors through their outline briefings on accounting audit plans, audit reports for quarterly results and monthly meetings. During on-site audits and visits, we also exchange opinions with the accounting auditors
of MC Group companies in Japan and overseas if necessary.

With regard to performance evaluations of accounting auditors, we keep track of evaluation data during the fiscal year from regular audit reports and other sources, and hold an accounting auditor evaluation conference at the end of the fiscal year. As a result, we have concluded that the current accounting auditors performed appropriate audits in a professional manner, and accordingly, the Audit & Supervisory Board resolved to reappoint the accounting auditors.

Collaboration with the Internal Audit Department

The Internal Audit Department and Full-time Audit & Supervisory Board Members hold monthly meetings where exchange of opinions are made concerning reports on internal audit results. Also at Audit & Supervisory Board meetings,
the Internal Audit Department reports their quarterly audit results that are also reported to the President and CEO.
In addition, Audit & Supervisory Board Members attend the internal auditor liaison meetings of 48 major MC Group companies in Japan held by the Internal Audit Department, while the General Manager of the Internal Audit Department attends liaison meetings held by MC’s Audit & Supervisory Board Members with the audit & supervisory board members
of the MC Group companies mentioned above, and all parties collect audit information and exchange opinions. 

MC SIM事務局, 監査役・監査役室(PK)

Audit

Audit & Supervisory Board Member Audits

The 2 In-house Audit & Supervisory Board Members each have experience in the corporate management, and finance and accounting departments, and they are appointed as Full-time Audit & Supervisory Board Members, respectively. The 3 Outside Audit & Supervisory Board Members each have many years’ experience as an attorney (corporate law) and certified public accountant, and experience as Full-time Audit & Supervisory Board Member at a listed company, respectively. Of the 5 Audit & Supervisory Board Members, Shuma Uchino, Full-time Audit & Supervisory Board Member, and Takeshi Nakao, Outside Audit & Supervisory Board Member, have a considerable degree of knowledge and experience concerning finance and accounting. One of the Full-time Audit & Supervisory Board Members heads the Audit & Supervisory Board and is also the specified Audit & Supervisory Board Member stipulated by the law. Audit & Supervisory Board Members are assisted as needed by the 9-member Audit & Supervisory Board Members Office (as of April 1, 2021), which is an independent organizational body. As part of their activities based on the audit plan, Audit & Supervisory Board Members attend important in-house meetings (163 meetings including meetings of the Executive Committee and the Business Strategy Meeting) and hold discussions with internal departments, including important offices in Japan and overseas (71 dialogues with management execution departments under the Chairman of the Board, dialogues with management execution personnel at 4 overseas business investees and 24 in Japan, as well as with office heads at 3 offices in and outside Japan). At the same time, Audit & Supervisory Board Members hold regular meetings with Mitsubishi Corporation’s independent auditors and Internal Audit Department, to accurately and in a timely manner grasp Mitsubishi Corporation’s situation through close cooperation. The Audit & Supervisory Board provides a forum for lively discussion, where the Audit & Supervisory Board Members report and share their audit activities as well as making decisions on statutory matters and so forth. In the fiscal year ended March 31, 2020, Audit & Supervisory Board were held 12 times, and all Audit & Supervisory Board Members were in attendance at every meeting. At the first Audit & Supervisory Board for the fiscal year, the audit plan for that fiscal year is decided upon and a review of the previous fiscal year’s audit activities is carried out. These matters are also reported to the Board of Directors. Furthermore, in addition to statutory matters such as the audit report and the selection and dismissal, and remuneration of the independent auditors, the Audit & Supervisory Board also discusses major investment and finance projects and issues identified through audit activities such as on-site audits, tours and dialogues, etc.

Internal Audits

Regarding internal audits, the Internal Audit Department (which had 82 members as of April 1, 2020) conducts audits of MC and its overseas regional subsidiaries and affiliated companies from a Company-wide perspective. In addition, each Business Group has established its own internal audit organization, which audits the operations that fall under its Group organization on a consolidated basis. These internal audits are based on annual audit plans and are conducted after selecting audit targets. The audit results are reported each time to the President and CEO, Audit & Supervisory Board Members and other concerned parties. They are also reported regularly to the Board of Directors and the Executive Committee.
Furthermore, in response to the COVID-19 pandemic that began in early 2020, we have conducted audits both in Japan and overseas remotely. Although there were some delays to the audit schedule at the beginning of the fiscal year, we were able to carry out the planned internal audits without any major changes.

Accounting Audits

The four certified public accountants who carried out the accounting audit of Mitsubishi Corporation were Yoshiaki Kitamura, Kazuaki Furuuchi, Noriaki Kobayashi and Sogo Ito of Deloitte Touche Tohmatsu LLC. They were assisted by 31 certified public accountants, 24 junior accountants and 49 other staff.

Mutual Cooperation among Audit & Supervisory Board Member Audits, Internal Audits and Accounting Audits, and their Relationship with Internal Control Departments

The Audit & Supervisory Board Members, Corporate Accounting Department, and independent auditors hold regular meetings at the time of quarterly financial results and monthly, and provide opportunities for exchanging opinions with subsidiaries and affiliates as necessary.
In addition, the Internal Audit Department makes regular audit reports to the Audit & Supervisory Board, the Audit & Supervisory Board Members have monthly meetings with the Internal Audit Department, and the Audit & Supervisory Board Member and the Internal Audit Department hold liaison meetings with the Audit & Supervisory Board Members and internal audit departments of subsidiaries and affiliates, and so forth.
This cooperation is intended to strengthen the linkages supporting three-way audits (Audit & Supervisory Board Member Audits, Internal Audits and Accounting Audits).

Fees paid to Mitsubishi Corporation’s independent auditors Deloitte Touche Tohmatsu LLC for the fiscal year ended March 31, 2020 were as follows:

  1. (a)Amount of fees for services in accordance with the first clause of Article 2 of the Certified Public Accountant Law of Japan (Law No. 103, 1948) *1 ¥796 million
  2. (b)Amount of fees for services other than those prescribed in the first clause of Article 2 of the Certified Public Accountant Law of Japan *2 ¥43 million
  3. (c)Total amount of fees to be paid by Mitsubishi Corporation and consolidated subsidiaries *3 ¥2,629 million
  1. *1 Fees for services prescribed in the first clause of Article 2 of the Certified Public Accountant Law of Japan (Law No. 103, 1948) are fees, etc. for audit certification services relating to English language financial statements prepared based on International Financial Reporting Standards (IFRS) and audit certification based on the Companies Act and the Financial Instruments and Exchange Act.
  2. *2 Fees for services other than those prescribed in the first clause of Article 2 of the Certified Public Accountant Law of Japan are fees for advice and guidance on the introduction of Mitsubishi Corporation’s new system, training, overseas tax filing services, etc.
  3. *3 Some subsidiaries are audited by certified public accountants or independent auditors (including persons with qualifications equivalent to these qualifications in overseas countries) other than Mitsubishi Corporation’s independent auditors.
MC SIM事務局, 主計部 予・決算管理チーム(PC-B), 主計部 リスク管理チーム(PC-U), 監査部 企画チーム(PB-D), 監査役・監査役室(PK), 税務チーム