NEC 2009 Annual Report Download - page 28

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INTERNAL CONTROL SYSTEM
NEC’s Board of Directors has formulated a “Basic Policy
on Implementation of Internal Control Systems” for
ensuring the properness of corporate business opera-
tions. The main points of this basic policy are as follows:
NEC shall endeavor to establish and operate its
internal control systems more effectively, through con-
tinuous evaluation of the implementation of the internal
control systems under this policy as well as taking
measures necessary for its improvement, and con-
ducting consistent reviews of this basic policy in
response to changes in the business environment.
(1) In order to ensure that Directors and employees
perform their duties in compliance with laws, regula-
tions, and the Company’s Articles of Incorporation,
Directors and corporate officers shall take the lead
in practicing and striving to make known the “NEC
Group Charter of Corporate Behavior” and the
“NEC Group Code of Conduct,” both of which were
adopted to establish business ethics standards for
the NEC Group and to ensure compliance with laws
and regulations, the Articles of Incorporation and
internal rules. If any material violation of laws, the
Articles of Incorporation or internal rules is found,
NEC shall investigate the cause of such violation
and formulate and implement preventive measures.
In addition, NEC shall encourage the use of the
NEC Helpline, a compliance hotline.
(2) NEC shall properly store and manage information in
accordance with applicable laws, regulations and
internal rules.
(3) NEC shall implement risk management systems
efficiently and comprehensively under a consistent
company-wide policy in accordance with internal
rules. Business divisions shall properly implement
risk management systems related to their opera-
tions and corporate staff divisions shall support
such business divisions’ activities. NEC shall fully
deliberate matters of importance from a risk man-
agement perspective, such as its strategy to control
important management risks. Of these, matters of
particular importance shall be reported to the Board
of Directors. The Corporate Auditing Bureau shall
conduct audits of the enterprise risk management
system and the status of risk management.
(4) In order to ensure that Directors perform their
duties efficiently, the Board of Directors shall del-
egate substantial authority to corporate officers
and promote more timely decision making and
effective performance of duties. The corporate
officers shall, under the supervision of the Board of
Directors, conduct business efficiently in accor-
dance with medium-term corporate management
goals and budgets.
(5) In order to ensure that the NEC Group conducts
operations appropriately, NEC shall send Directors
and Corporate Auditors to subsidiaries; share infor-
mation routinely with subsidiaries to conduct opera-
tions based on the “NEC Group Charter of
Corporate Behavior” and the “NEC Group Code of
Conduct”; and give instructions and assistance to
subsidiaries with respect to the establishment of
systems for ensuring compliance with laws, regula-
tions and properness of business operations. The
Corporate Auditing Bureau shall conduct audits of
subsidiaries in cooperation with their internal audit-
ing sections to ensure proper operations.
(6) Internal control over financial reporting of the NEC
Group shall be evaluated, maintained and improved
in accordance with applicable laws and regulations.
From the perspective of proper and efficient opera-
tions of the NEC Group, NEC shall endeavor to
conduct improvement and standardization of busi-
ness processes, and further strengthen its internal
control utilizing information systems.
(7) NEC shall assign full-time employees to assist
Corporate Auditors in performing their duties. The
Corporate Auditors shall approve matters concern-
ing these employees, including performance evalua-
tions, personnel changes and disciplinary action.
(8) Directors and employees shall report to the Corpo-
rate Auditors on the status of the performance of
their duties and other matters.
26 NEC CORPORATION
Annual Report 2009