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Internal Control

Last Updated: 2018.12.10
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Basic policy on internal control systems

In order to ensure healthy, effective organizational management, the Fast Retailing Group compiled a document outlining its Basic Approach on Establishing Effective Internal Control Systems, and used this document to establish and operate internal control systems covering compliance, operational efficiency, reliable financial reporting, and asset preservation.

Internal audits and operational systems to ensure healthy organizational management

Fast Retailing and each individual Group company have determined several rules based on the Group's corporate philosophy and the Fast Retailing Group Code of Conduct. In terms of business management, the Auditing Department, which conducts audits of internal control systems, investigates whether business is being executed appropriately and effectively. The Legal Department has set up a compliance team to oversee group wide compliance management. Regarding internal control of financial reporting, the company has also established a system and ongoing monitoring procedure to ensure appropriate reporting. If they discover any significant legal violations or compliance issues, the head of each Fast Retailing Group company is required to report the infringement to statutory auditors, the Fast Retailing CEO, and the compliance officer.

Risk management systems

The Risk Management Committee, which is under the direct jurisdiction of the Board of Directors (the Board), conducts cross-sectional risk management for the whole Fast Retailing Group. The Committee analyzes and evaluates the impact and frequency of any potential risk on operations, discusses counteractive measures in the order of risk priority, and seeks to contain risks before they occur. In the event of a major natural disaster or scandal, an emergency response headquarters is established, chaired by the CEO, to form an appropriate response framework.

Systems for ensuring effective auditing by statutory auditors

Statutory auditors attend Board meetings, management conferences and other important gatherings to directly witness the discussions or reports on important items, and confirm the maintenance and appropriate operation of internal control systems. Statutory auditors improve auditing efficiency by creating opportunities for the regular exchange of information between departments responsible for internal auditing, external auditors and other relevant persons. The president also attends regular discussions with statutory auditors, and seeks their opinion on problems the company needs to address or any other important issues.

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