Internal Control System／Audit : Audit

The Audit & Supervisory Committee has five Members. Of the 2 In-house Audit & Supervisory Committee Members, Mitsumasa Icho has experience in the corporate management, and finance and accounting departments, and Akira Murakoshi has experience in the corporate management. Of the 3 Independent Audit & Supervisory Committee Members, Tsuneyoshi Tatsuoka possesses the deep knowledge of the industry as a whole as well as the deep insight into sustainability, including environmental and energy policies. Rieko Sato and Takeshi Nakao have extensive experience as an attorney (corporate law) and a certified public accountant respectively. Of the 5 Audit & Supervisory Committee Members, Mitsumasa Icho, In-house Audit & Supervisory Committee Member, and Takeshi Nakao, Independent Audit & Supervisory Committee Member, have a considerable degree of knowledge and experience concerning finance and accounting. One of the Full-time Audit & Supervisory Committee Members heads the Audit & Supervisory Committee and is also the specified Audit & Supervisory Committee Member stipulated by the law. Audit & Supervisory Committee Members are assisted as needed by the 12-members of Audit & Supervisory Committee Member's Office (as of April 1, 2024), which is an independent organizational body.

＜The following description relates to the status of activities in FY 2023, so it is based on a company with an Audit & Supervisory Borad before the transition to an Audit & Supervisory Committee.＞

In FY2023 (ended March 31, 2024), as part of their activities based on the audit plan, Audit & Supervisory Board Members attended important meetings of major internal management bodies (129 meetings including Executive Committee and Business Strategy Meeting, etc.) and held discussions with internal departments, including important offices in Japan and overseas (70 dialogues with executive officers (Chairman of the Board, etc.), dialogues with CEOs and other executive officers at 12 overseas business subsidiaries/affiliates and 16 domestic ones, as well as with the regional chiefs of 7 overseas and domestic offices). At the same time, Audit & Supervisory Board Members hed regular meetings with MC’s independent auditors and Internal Audit Department, to accurately and in a timely manner grasp MC’s situation through close cooperation. The Audit & Supervisory Board provided a forum for lively discussion, where the Audit & Supervisory Board Members reported and shared their audit activities as well as making decisions on statutory matters and so forth. In FY2023 (ended March 31, 2024), Audit & Supervisory Board were held 12 times, and all Audit & Supervisory Board Members were in attendance at every meetings. At the Audit & Supervisory Board meeting implemented in the end of the last fiscal year or in the beginning of the fiscal year, the audit plan for that fiscal year is decided upon and a review of the previous fiscal year’s audit activities was carried out. These matters were 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 discusse major investment and finance projects and issues identified through audit activities such as on-site audits, tours and dialogues, etc.

Regarding internal audits, the Internal Audit Department (which had 83 members as of April 1, 2024) 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. Under a dual reporting system, the audit results are reported each time to the President and CEO, Audit & Supervisory Board Members(which was converted to the Audit & Supervisory Committee on June 21, 2024) and other concerned parties. They are also reported regularly to the Board of Directors and the Executive Committee.

MC conducts regular audits throughout the year of MC and MC Group companies in accordance with the International Standards for Internal Auditing every three to five years, taking into factors such as accounting risks and business scale. In addition to legal compliance, the MC Group also considers social norms and business ethics in verifying and evaluating each process of governance, risk management and internal controls. MC has also been conducting thematic audits annually. In FY2023 (ended March 31, 2024), we focused on the status of audit function at major subsidiaries.

The three certified public accountants who carried out the accounting audit of MC were Yuki Higashikawa, Hirofumi Otani and Sogo Ito of Deloitte Touche Tohmatsu LLC. They were assisted by 30 certified public accountants, 22 junior accountants and 121 other staff.

Continuing from the previous year, the Audit & Supervisory Board Members, Corporate Accounting Department, and independent auditors held regular meetings at the time of quarterly financial results, and provided opportunities for exchanging opinions.
In addition, the Internal Audit Department makes regular audit reports to the Audit & Supervisory Board, the Audit & Supervisory Board Members had monthly meetings with the Internal Audit Department, and the Audit & Supervisory Board Member and the Internal Audit Department held liaison meetings with the Audit & Supervisory Board Members and internal audit departments of MC's subsidiaries and affiliates, and so forth. In addition, the Audit Department also participated in the regular meetings for exchanging information and opinions with Audit & Supervisory Board Members and Independent Auditors in FY2023 (ended March 31, 2024).

After the transition to the Audit & Supervisory Committee, this cooperation has been continued to strengthen the linkages supporting tripartite audits (Audit & Supervisory Committee Audits, Internal Audits and Accounting Audits).

Fees paid to MC’s independent auditors Deloitte Touche Tohmatsu LLC for FY2023 were as follows: