Epson 2011 Annual Report Download - page 35

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for the Epson Group as a whole.
Moreover, the engagement of outside auditors and the high degree of independence they bring ensures sufficient
oversight of management not only from a compliance perspective but also in terms of advice on the broader
aspects of management.
Internal control system and risk management improvements
Epson considers Epson’s Management Philosophy to be its most important business concept, and to realize the
mission stated in the Management Philosophy, the Company established “Principles of Corporate Behavior,”
rules for proper business conduct that are shared across the Group, worldwide. Departments within Epson pursue
improvements to internal controls based on the Principles of Corporate Behavior. These improvements are
reported to the Trust-Based Management Council, which is attended by all directors and auditors. By doing this,
Epson is taking action to steadily improve the level of internal control for the entire Group.
Business execution system
Epson is instituting a system that will ensure the appropriate and efficient execution of business. To that end,
Epson has established regulations governing each job function, the division of operational duties, and the
management of affiliated companies while distributing power and authority across the entire Group.
To ensure the appropriateness of corporate activities, affiliated companies must report or receive prior approval
from the parent company for changes in management regulations. Regulations at affiliates that meet certain
criteria are put on the agenda for discussion at the parent company’s board meetings, thereby creating a system
of business oversight for the Group.
Responsibility for the business execution systems of affiliates lies with the person responsible at the relevant
operations division, and support for cross-organizational projects and the like is provided by the respective Head
Office supervisory departments.
Personnel responsible for business operations must report to the board of directors on the items below at least
once every three months.
• Current business performance and performance outlook
• Risk management responses
• Status of key business operations
Safeguarding and management of work-related information
Information on business operations is safeguarded and managed under regulations governing, among other
things, document control, management approval, and contracts, with directors and statutory auditors reviewing
these and other relevant documents on an ongoing basis.
Regulations include the Basic Information Security Regulation, which helps to prevent leaks by providing
Group-wide rules for managing information according to the level of sensitivity.
Compliance-based management
Epson has established Principles of Corporate Behavior for putting its Management Philosophy into practice, as
well as regulations that spell out the compliance-based management requirements that underpin the principles,
and an organizational compliance framework.
The president holds overall responsibility for management’s legal compliance, with the persons responsible at
each operations division in charge of compliance management at their respective businesses and subsidiaries.
Head Office supervisory departments cooperate with the divisions to drive cross-organizational projects.
Epson has installed a legal compliance hotline and other counseling services for reporting any violations.
There is also web-based and other in-house compliance training for employees, including those at subsidiaries.
The Trust-Based Management Council was established to deliberate legal compliance issues under the leadership
of the president. The Trust-Based Management Council manages the overall state of compliance at Epson,
including compliance with laws, internal regulations, and corporate ethics, as well as approaches to key areas of
compliance. Auditors also take seats on the council to verify the details of legal compliance programs.
The president periodically reports to the board of directors on compliance management issues and formulates
appropriate measures to respond to these issues.
Epson’s Principles of Corporate Behavior categorically state that the Company will not be involved with
anti-social elements in any way.