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- Internal Controls -
How do internal controls and self-assessment
of risk ensure accurate financial reporting?
An internal control mechanism is vital to any business. In addition to
following various laws and regulations we carry out self-assessments in order
to advance the level of internal controls and to be able to disclose reliable
financial data.
the Bank exploring potential problems (Self), then evaluating
Internal Controls
the steps already planned to deal with those problems
Internal controls are activities to ensure legal compliance,
(Control), and then proposing improvements. The basic idea
reliability of financial reporting and risk specification and
here is that the people doing business are in the best position
countermeasures and are carried out by all staff and
to understand that department's risks. Based on this principle,
managers. We need to continuously improve our internal
each of
control functions and adopt self-regulating mechanisms that
our divisions requires its staff to assess the significant
can cope with various types of risk. We strive to always be
business risks in their area, aiming to further strengthen
conscious of the check and balance functions within the
internal controls.
organization and to specify the risks located in each business
Internal controls on financial reporting (responding to
area in order to be able to cope with risks before they
article 404 of the Sarbanes-Oxley Act)
materialize. End business-level staff draw up counter
In order to gain the trust of a company's investors, article 404
measures, which we then incorporate into systems, rules and
of the U.S. Sarbanes-Oxley Act ("SOX") requires companies to
procedures. Accurate processes as a result of strict procedures
strengthen internal controls related to financial reporting. The
are also required in the area of financial data disclosure where
same movement is evident in Japan as well, where the
correct representations of the company's true conditions are
legislature has been considering the strengthening of internal
controls related to financial reporting and disclosure for listed
Carrying out control self-assessments (CSA)
companies since last year.
We are introducing a Risk Control Self-Assessment system in
MUFG, BTM's parent company, is listed on the New York
order to make our business safer, more accurate, and more
Stock Exchange and SOX will be applicable to non-U.S.
efficient. Since we started to work on this system, a number of
companies from the closing of fiscal 2006 (March 2007). We
other industries have begun to employ similar measures for
will make preparations in line with MUFG. Our preparation for
internal control, risk management, and internal audit.
compliance with SOX represents a planned step towards
These assessments involve each business group within
improved internal controls, and as a result we expect to be able
to disclose even more accurate and reliable financial data.
*1: Article 404 of the Sarbanes-Oxley Act ("SOX"):
In July 2002, after a series of corporate scandals, the United States Congress passed the Sarbanes-Oxley Act ("SOX") in order to restore investor confidence. Article 404 of
SOX requires the following actions to prevent inaccurate and false financial reporting:
1: A statement of management's responsibility for establishing and maintaining an adequate internal control structure and procedures for financial reporting;
2: Management's own assessment of the effectiveness of the company's internal control structure and procedures for financial reporting.
3: An audit certificate by an external auditor.
CSA workshop
SOX work-out session
Bank of Tokyo-Mitsubishi CSR Report 2005