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Tokyo Gas Group CSR Report 2016

Governance Report
Audit Structure

Mutual Collaboration among Audit & Supervisory Board Members' Audit,
Internal Audit, and Independent Auditors' Audit

In order to enhance the effectiveness of so-called three-way auditing (audit & supervisory board members' audit, internal audit, and independent auditors' audit) as well as to improve the quality of audits as a whole, Tokyo Gas makes efforts to strengthen close mutual collaboration between each audit in areas such as the reporting of audit plans and results, as well as exchanges of opinions and witnessing of audits, as shown in the diagram below:

Three-way Auditing
Three-way Auditing

Audit & Supervisory Board Members and the Audit & Supervisory Board

The audit & supervisory board of our company consists of 5 members, including 3 outside audit & supervisory board members, and the audit & supervisory board members' office independent from business execution has been established for support with 4 dedicated staff members. In line with the Corporate Auditor's Audit Standards, the audit & supervisory board members attend the meetings of the Board of Directors, the Corporate Executive Meeting, and other important meetings. They also state their opinions relating to legality and other perspectives when necessary, conduct research into the state of operations at the head office, major business offices, subsidiaries and affiliates, and hold discussions with top management to exchange opinions on a regular or ad-hoc basis. The audit & supervisory board members cooperate closely with the Internal Audit Department and independent auditors and strictly audit the execution of duties by the directors to enhance and strengthen high-quality corporate governance systems.

Internal Audit Department

Our company has established the Internal Audit Department as an internal audit body (with 37 staff members assigned as of April 1, 2016, including those in charge of operations in response to the Internal Control Reporting System) with a structure that can effectively implement specialized audits from the perspectives of accounting, operations, compliance, information systems, and risk management, among others.

Procedures and Status of Internal Audits

The audit of Tokyo Gas is conducted for the Company, as well as our subsidiaries and affiliates. The results of the internal audit are reported not only to the President, Corporate Executive Meeting, Board of Directors, and audit & supervisory board members, but also to the manager of all audited offices. All of these offices are obliged to submit their replies on the recommendations provided. The implementation status of the submitted replies is updated in the following year and the results are reported to the Corporate Executive Meeting, etc. In fiscal 2015, 3 divisions of our company and 8 subsidiaries and affiliates were audited, 4 divisions and 10 subsidiaries and affiliates were given follow-up audits, and issue-specific audits were made of the management of overseas businesses and subsidiaries and the state of internal control at small and medium-sized subsidiaries and affiliates.

Collaboration on Audits within the Group

In the Tokyo Gas Group, audit & supervisory board members, audit & supervisory board members of subsidiaries and affiliates, and the Internal Audit Department periodically exchange opinions. We have established a system that ensures efficient and effective audit activities across the Group by coordinating closely with each other through liaison meetings. In fiscal 2015, we held 4 liaison meetings for audit & supervisory board members of subsidiaries and affiliates.

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