Honda 2007 Annual Report Download - page 48

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46
Corporate Governance
the Board of Directors. Candidates for corporate
auditors are decided by resolution of the Board of
Directors, subject to agreement of the Board of
Corporate Auditors.
Accounting Audits
To ensure proper auditing of the Company’s
accounts, the Board of Corporate Auditors and the
Board of Directors receive auditing reports based on
the Company Law, the Securities and Exchange Law
and the U.S. Securities Exchange Act. In addition,
they supervise the election of independent auditors,
their remuneration and their non-audit services.
In the fiscal year under review, the Company
elected KPMG AZSA & Co. as its independent auditor
under the Company Law, the Securities and
Exchange Law and the U.S. Securities Exchange Act.
A total of 48 people from KPMG AZSA & Co. pro-
vided auditing services for Honda: three Japanese
certified public accountants (Masanori Sato, Kensuke
Sodegawa and Shuji Ohtsu ) and 45 assistants (eight
certified public accountants, 16 assistant accoun-
tants, three U.S. certified public accountants and
18 others).
In fiscal 2007, the Company and its consolidated
subsidiaries paid a total of ¥2,708 million in fees to
KPMG AZSA & Co. and its affiliated accounting firm,
KPMG, for audit certification services under the
Company Law, the Securities and Exchange Law
and the U.S. Securities Exchange Act. In fiscal 2007,
the Company’s overseas consolidated subsidiaries
paid a total of ¥214 million in fees to KPMG AZSA &
Co. and its affiliated accounting firm, KPMG, for
non-auditing services.
Policy and Procedures for Obtaining Board of
Auditors’ Prior Consent
To ensure that the independent auditor and its affiliate
involved in audit certification services under the U.S.
Securities Exchange Act behave in accordance with
all applicable laws and regulations and maintain com-
plete independence from the Company, they must
obtain the prior consent of the Company’s Board of
Auditors before they carry out auditing services,
auditing related services, tax services and other
services for Honda.
The Company’s initial policy required that each
contractual agreement have a separate prior consent
from the Board of Auditors. In order to make the
decision-making process more efficient, however, we
are enhancing procedural efficiency by establishing
categories of matters requiring comprehensive prior
consent. These categories are reviewed regularly by
the Board of Auditors.
Any matter that does not fall under one of these
categories still requires separate consent of the Board
of Auditors.
(2) Business Execution System
Organization
As for execution of business, the Company has six
regional operations around the world to develop busi-
ness based on its fundamental corporate philosophy.
These operations adopt long-term perspectives and
maintain close ties with local communities.
The Company’s four business operations—
motorcycles, automobiles, power products and
service parts—formulate the medium- and long-term
plans for their business development, and each
operation aims to maximize its business performance
on a global basis. Each functional operation—such as
Customer Service Operations, Production Opera-
tions, Purchasing Operations, Business Management
Operations and Business Support Operations—
supports the other functional operations, with the aim
of increasing Honda’s effectiveness and efficiencies.
Research and development activities are con-
ducted principally at the independent subsidiaries
of the Company.
Honda R&D Co., Ltd., is responsible for
research and development on products, while Honda
Engineering Co., Ltd., handles research and develop-
ment in the area of production technology. The
Company actively carries out research and develop-
ment in advanced technologies with the aim of creat-
ing products that are distinctive and internationally
competitive.
Business Execution Officer System
The Company has assigned a general manager from
the Board of Directors or an operating officer to each
regional, business and functional division, as well as
to each research and development subsidiary. By
ensuring swift, optimal decision-making in each region
and workplace, the Company is building a highly
effective and efficient business execution system.