Epson 2014 Annual Report Download - page 36

consolidated responsibility for that business. Meanwhile, supervisory functions within the Head Office
assume global responsibility. Responsibility for providing the framework for business operations at
subsidiaries is assigned to the head of each business. Groupwide corporate functions are the
responsibility of the heads of Head Office supervisory departments.
(2) The Company has business processes that enable business to be controlled on a Group level. This is
accomplished by internal regulations that require subsidiaries to report or acquire pre-approval for
certain business operations from the parent company, Seiko Epson, and by requiring issues that meet
certain criteria to be submitted to Epson’s board of directors for resolution.
Management of work-related information
(1) 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.
(2) The Company strives to prevent the leak and loss of Epson Group internal information by managing
confidential information according to the level of sensitivity, in accordance with internal information
security regulations.
Audit system
(1) Statutory auditors have the authority to conduct interviews with directors and other personnel
whenever they deem such interviews necessary based on corporate regulations governing auditors and
audit procedures.
(2) Statutory auditors are also authorized to attend Corporate Strategy Council sessions, corporate
management meetings, and other important business meetings, which enable the auditors to conduct
audits based on the same information as that available to directors. Statutory auditors also routinely
review important documents related to management’s decisions.
(3) Epson has established a Corporate Auditors Office with a full-time staff to assist the statutory auditors
in their duties. The views of statutory auditors are given a great deal of weight in the evaluation and
transfer of personnel assigned to this office.
(4) Statutory auditors strive to improve audit effectiveness by consulting on a regular basis with the
internal audit organization and independent public accountants.
(5) Statutory auditors hold regular meetings with representative directors to directly assess business
operations.
(2) Internal audits
Epson’s internal compliance system guards against potential legal and internal regulatory violations in
departmental operations, and the internal audit organization, with a staff of 18, directly reports to the
president the results of routine internal audits, including those conducted at Epson subsidiaries. The audit
organization evaluates the effectiveness of the governance process and requests improvements where
needed.
(3) Outside directors and outside statutory auditors
View on independence
The Epson board of directors has established criteria concerning the independence of outside directors. In
compliance with these criteria, it selects candidates for outside directors and outside statutory auditors who
do not have potential conflicts of interest with general shareholders. The outside directors and the outside
auditors that are currently engaged all meet the independence criteria.
The criteria concerning the independence of outside directors are listed below.
Outside director independence criteria
Epson does not select as candidates for outside director persons to whom any of the following apply:
(1) A person who receives significant business1 from Epson or a person who has within the last five years
been employed as an executive officer2 of a company that receives significant business from Epson
(2) A person who is a major business partner3 of Epson or a person who has within the last five years been
employed as an executive officer of a company that is a major business partner of Epson
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