Mitsubishi 2004 Annual Report Download - page 38

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profitability, reduced packaging costs, and reassessing its outsourcing to reduce export charges.
(b)Restoring customer trust
MMC will seek to rebuild its domestic operations by restoring consumer trust. Through close communication with its
customers to restore trust in the Company and its products, MMC is offering a free 20-point inspection and oil change for all
MMC vehicles. To give new buyers peace of mind, the Company is also offering a three-year full support program, which
includes free inspections and 24-hour roadside service.
MMC also recently conducted a sweeping in-house probe into past “repair directives” dating back to December 1993 in an
effort to ease the concern of its some six million users in Japan, ensure traffic safety, and rid itself of past problems and mistakes
so as to pave the way for a self-revitalization of its business. As a result of this investigation, MMC will submit 26 recalls to the
Japanese Ministry of Land, Infrastructure and Transport covering a total of 180,000 vehicles.
(c) Across-the-board compliance: Plan to reform corporate culture, ethics
In order to reform its corporate culture, MMC outlined three top priority areas in its business revitalization plan: compliance,
safety, and customers. MMC also mapped out a new corporate structure geared to pushing through reform, centering on its
Business Ethics Committee, Corporate Social Responsibility (CSR) Promotion Office, and Corporate Restructuring
Committee.
Awareness of compliance issues is being raised throughout the Company. Action that was not possible with MMC’s previous
organization and human resources is now possible and this new structure will help ensure compliance across the board, which
MMC plans to report on regularly. MMC sees compliance as its most urgent task, one that must be enforced with resolve to
ensure its survival. The Corporate Restructuring Committee has already started work on pushing through reforms.
In placing compliance first, MMC’s compliance and communication functions will be brought together under the CSR Pro-
motion Office, thereby improving the ability to gather and release information while implementing all measures uniformly
throughout the Company. Reporting directly to the Board of Directors, the Business Ethics Committee will monitor the activi-
ties of the CSR Promotion Office from an external perspective and will offer proposals to the board.
The cycle of planning, implementing, and evaluating initiatives within MMC will be completely overhauled to ensure com-
pliance issues are upheld company wide and all executives, including the chairman and president, will sign a compliance pledge
that will be a code of conduct.
Accordingly, MMC’s consolidated financial statements have been prepared on the basis that the Company is a going
concern and the effect of any significant doubt as to going concern is not reflected.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
MMC and its domestic consolidated subsidiaries maintain their books of account in conformity with the financial accounting
standards of Japan, and its foreign subsidiaries in conformity with those of their countries of domicile.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International
Financial Reporting Standards and are compiled from the consolidated financial statements prepared by the Company filed
with the Financial Services Agency as required by the Securities and Exchange Law of Japan.
In addition, the notes to the consolidated financial statements include information which is not required under accounting
principles generally accepted in Japan but is presented herein as additional information.
Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s
presentation.
As permitted, amounts of less than one million yen have been omitted. Consequently, the totals shown in the accompanying
financial statements (both in yen and U.S. dollars) do not necessarily agree with the sum of the individual amounts.
(b)Principles of consolidation
All significant companies over which MMC has effective control are consolidated. Significant companies over which MMC has
the ability to exercise significant influence have been accounted for by the equity method.