 |
 In April 2007, Polyplastics set up "Internal Control Project Team relating to financial reporting" in order to create a new "Internal Control" system in the Polyplastics Group according to the Daicel's policy.
For the near future we will have to ask all Polyplastics Group Employees to cooperate the activities for establishing "Internal Control" system in the near future, so your deep understanding and cooperation will be much appreciated.
I. What is "Internal Control"?
(1) What does "Internal Control" mean?
"Internal Control" is a mechanism to effectively and correctly conduct our daily business and ensure the achievement of our intended goal.
In other words, it's a set of administrative process built into company operations to provide reasonable assurance that the goals of "Internal control" are properly achieved. It's developed in-house and followed by board members, company management, employees, and everyone else.
(2) Background for the Necessity of "Internal Control"
Over the past couple of years, there have been a series of corporate scandals, which included use of fraudulent accounting methods by listed companies, misstatements in the securities reports, and insider trading.
That has led to growing chaos and distrust on the stock market, shaking the capitalist economy to its foundations.
In order to improve this situation, there was a growing necessity throughout the world to make "Internal Control" functions for corporations strong.
In 2002, the Act relating governing corporate accounts and financial reporting was enacted in the United States. This act is known as the SOX Act after Senator Paul Sarbanes and Representative Michael G. Oxley, the legislators who tabled it.
In May 2006, the "Company Law" was enacted in Japan and major companies including Daicel and Polyplastics have to adopt a basic policy on establishing "Internal Control" system.
According to this law, Polyplastics last year adopted its own basic policy on "Internal Control" system. But this "Company Law" has no requirements or details or restrictions relating to establishing "Internal Control" system. So, Polyplastics doesn't have detailed internal rules relating to it either.
In June 2006 the "Financial Instruments and Exchange Law" which have requirements or details or restrictions relating to establishing "Internal Control" system was enacted in Japan, and based on this law we have to establish "Internal Control" system. On the model of the U.S. SOX Act, this goes by the nickname of the Japanese SOX Act or J-SOX.
II. Activities of Polyplastics
The Polyplastics Group is targeted under J-SOX Act. The J-SOX Act targets listed companies, and although at first glance it may appear that the group is not targeted, evaluation of the effectiveness of internal Control is on a consolidated basis, and the Polyplastics Group, a subsidiary of Daicel, is targeted under the law.
(1) Establishment of a project team
A project team was officially launched on April 16, 2007.
Team name: Polyplastics Internal Control Project Team
Director in charge: Yuji Takahashi, Executive Officer
| Leader: |
Shunji Matsumura,
Chief Internal Auditor , Internal Audit Dept. |
| Sub-leader: |
Hideaki Nakano,
Department manager of Financial and Accounting Dept. |
Effective Period
From April 12, 2007 to December 31, 2008
(2) Schedule for Future Development
We've already checked all internal rules, regulations and manuals at Polyplastics in Japan. We are now planning to check them at all overseas subsidiaries.
As soon as we decide the detailed plans, we will let you know.
Thank you for your cooperation.
End
|
|
