Murata considers corporate governance one of the highest priorities in management, and its efforts include improved management transparency, more effective auditing and reinforced internal control systems.
Murata's Board of Directors comprises six directors, with two from outside the Company, and five statutory auditors (three from outside). Ensuring this outside viewpoint improves management transparency.
Murata has also introduced a system of vice presidents to separate making decisions on management policies and critical business operations and managing day-to-day business operations. This system has strengthened supervisory and operational functions since it allows the Board of Directors to concentrate on making decisions on management policies and critical business operations, and on the supervision of Board members' activities.
In addition Murata has also established the Management Executive Committee, which is composed of statutory representative directors and other directors who occupy senior vice president positions or above. This is a deliberative body to assist the Board of Directors and statutory representative directors in their decision-making, and members discuss and receive reports regarding items specified by in-house regulations.
Murata has also established a Board of Statutory Auditors, which formulates auditing policies and auditing plans, and monitors the legality and the adequacy of Board members' activities.
The internal auditing department evaluates risks in coordination with each head office department (such as General Administration, Personnel and Accounting Departments). The department also evaluates and carries out monitoring to make sure that business within the Group is carried out in an efficient, appropriate manner in accordance with relevant laws, ordinances and internal regulations.
In addition, in order to ensure that auditing is effective, statutory auditors and the Board of Statutory Auditors maintain a close and regular relationship with the internal auditing department by indicating to the department the Board's auditing policies and auditing plans, and receiving from the department reports regarding internal audit plans, their status of implementation, and items related to the internal auditing system, and discussing the adequacy of these.
Murata has established a number of committees, such as the Internal Control Committee, to advise the statutory representative directors. These committees promote the maintenance of, and ongoing improvements to, internal control systems aimed at assuring the appropriateness of operations throughout the Group. The committees promote the development of systems for the prevention of illegal conduct, and systems for appropriate responses, risk management and timely, pertinent, information disclosure in the event that such conduct occurs. They also specify frameworks, procedures and evaluation criteria for each business and offer appropriate guidance to affiliates as required. In support for the Japan SOX Law regarding internal control reporting systems (referred to as J-SOX), which is based on the Financial Instruments and Exchange Law, we have started developing internal control improvements and operating projects; these are aimed at preventing fraudulent entry in financial statements and assuring the reliability of financial reporting. We are also continuing with documentation of regulations and manuals throughout the Group, and are striving for standardization, visibility and improvements to business.
As an original initiative of Murata's, in addition to the internal control system that focuses on the appropriateness of operations, we are continuously working to standardize our operations and make them more visible, and to reform and improve them. We are also working to establish internal controls intended to boost the effectiveness and efficiency of compliance. We are enhancing monitoring functions to ensure the appropriateness of operations, and increasing the transparency and practicality of our system of corporate governance.
Murata Electronics Trading (Shanghai) Co., Ltd.
Administration Department Accounting/Finance Section
Fan Li Ying
Establishment of the Internal Control System
Murata Electronics Trading stresses self-assessment and testing, and while this may at times have been burdensome, it has also represented an excellent opportunity for managers and workers to come together in reexamining work operations. Exchanging opinions with the staff of the Office of Internal Audit has also offered a variety of insights, and these have fed back into improved operations. I hope that we can all continue to work together to reexamine our jobs and to make improvements.