JVC 2011 Annual Report Download - page 31

JVC KENWOOD Corporation 29
Reform of accounting system and structures
1. Establishment of a committee for preventing recurrence, formulation and promotion of recurrence prevention measures and
implementation of continued monitoring
In association with the inappropriate accounting treatment, a committee for preventing recurrence was established as an entity
under the Compliance Committee of JVC KENWOOD. By September 2010 the meeting had been held 11 times in total. After that
the committee meeting has been held every quarter.
2. Assignment of directors responsible for compliance
JVC KENWOOD has assigned a director responsible for compliance at each Group company to strengthen the internal control
system of every company.
3. Establishment of compliance-related rules
As part of the reexamination of the human resources system, JVC KENWOOD has established working rules, disciplinary regulations
and other compliance-related rules as the rules of JVC KENWOOD. It applies these rules uniformly throughout the entire Group.
4. Reexamination of overseas sales companies and the accounting function of business department
To prevent recurrence of inappropriate accounting treatment, JVC KENWOOD has established a double-checking system between
overseas sales subsidiaries and the accounting function of business departments (that is, a system under which a senior checks the
administrative work of the responsible person). It has also established a cross-checking system (that is, a system under which checks
are made again in different lines) with the accounting department of the head office.
Reinforcement of Monitoring
1. Enhancement of the management audit office and increase in its staff
JVC KENWOOD has enhanced its management audit office by staffing a person who also serves in a supervisory company overseas.
The said person, as a contact point at the time of conducting internal audits, gathers materials, adjusts audit schedules, and
functions as a representative connecting JVC KENWOOD and local units. The person also collects and follows the results of a
business operation investigation that is conducted every six months.
2. Collection and analysis of data on general ledgers sent monthly from all related companies of the Group
The management audit office collects accounting, financial and other relevant data monthly from all related companies of the
Group, samples items randomly, and analyzes them. Through those practices, we check the activities of sales companies and detect
abnormal figures at an early stage.
In addition to the above improvement measures, JVC KENWOOD takes the following measures, among others, to further enhance
internal control.
・ JVC KENWOOD aims to further promote integrated management by centralizing the Groupʼs governance system, simplify the decision-
making process, expedite the decision-making process, and improve operational efficiency. Hence, on October 1, 2010, it converted
JVC, Kenwood and J&K Car Electronics into companies without a Board of Directors and a Board of Auditors. Corporate decision-
making on important issues at each operating company was centralized at JVC KENWOOD to be processed by the general meeting of
shareholders of each company, or the Board of Directors and the Board of Executive Officers of JVC KENWOOD. With regard to
cross-sectional functions common to JVC KENWOOD and its operating companies, head office functions, production management and
procurement functions were integrated into the relevant organizations of JVC KENWOOD.
・ JVC KENWOOD revised the internal control assessment manual, focusing on the prevention of falsified recording and such like in
financial reports. It achieved this by enhancing the internal control assessment and reporting system so that any deficiencies in internal
control can be detected more properly and in a timely manner.
・ With regard to the accounting system, JVC KENWOOD established consolidated accounting rules and developed operational workflows
and systems. We expect this will enable JVC KENWOOD to centrally identify the profits and losses of operating companies as well as of
overseas affiliates. In addition, we promoted strengthening of consistent consolidated management by business segment, established a
management system over affiliated companies overseas, and revised the accounting rules as necessary.
・ All operating companies and their affiliates investigate business operations on their own at the time of regular personnel transfers.
They check rules, accounts receivable, inventories, compliance, and such like from the perspective of internal control according to the
prescribed format. Then, they submit a report on the investigation to the management audit office.
・ External specialists continuously evaluate the effectiveness of the monitoring system.
Corporate Governance