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Internal Control

View Sumitomo Corporation's Sustainability : Internal Control

Basic Policy and System

The Sumitomo Corporation Group has strengthened its internal controls to retain the trust of all its stakeholders.

Basic Policy and System

To realize sustainable growth and development, the Sumitomo Corporation Group is working on enhancing group governance and improving the overall quality of groupwide operations through the development, operation, evaluation, and improvement of appropriate internal controls. We have established basic regulations on internal controls to reasonably ensure compliance with laws and regulations related to business activities, safeguarding of assets against loss, effectiveness and efficiency of operations, and reliability of financial reporting in the Group’s overall businesses.

To ensure efficient operation of existing internal control frameworks, create synergy, and coordinate with internal audit functions, the Internal Control Promotion Department, which takes on overall control of the Group’s internal control-related operations, has been established alongside the Internal Auditing Department under the supervision of the Head of Internal Control and Internal Audit. By actively identifying issues and utilizing internal control activities within the Group, the department will promote greater effectiveness and consistency of the above efforts throughout the Group.

As of December 2, 2022

Internal Control System

The Company's Board of Directors resolved and implemented the systems set forth in the Companies Act, Article 362, Paragraph 4, Item 6 (internal control system) to realize the high effectiveness of internal control of the Company. The Company will endeavor to establish a system in line with requests from time to time based on ongoing reevaluations by reviewing the Company’s internal control implementation status each year.

Internal control system which is resolved by the Board of Directors and an overview of our internal control systems and their implementation status are provided below. Moreover, the Internal Control Committee assessed the implementation of the internal control systems, confirmed that these internal control systems were functioning effectively, and reported this fact at the Board of Directors' meeting.

Internal Control System (as of April 1, 2024)

An overview of the Company’s internal control systems and their implementation status

Financial Reporting

The Sumitomo Corporation Group creates financial reports in accordance with the Accounting Policy Manual that lays out the Group’s internal policies for accounting, and discloses information in a timely and appropriate manner and in compliance with relevant laws, regulations, and accounting standards.

For its financial reporting internal control system, the Company acts in accordance with the Internal Control Reporting System stipulated in the Financial Instruments and Exchange Act, by promoting internal control activities as required by the Act, and evaluating and improving its business processes.

Internal Audits

The Internal Auditing Department is an independent organization under the supervision of the Head of Internal Control and Internal Audit, which reports directly to the President and Chief Executive Officer, that monitors the operations of the Group, and audits organizations and operating companies of the Group. As well as reporting the internal audit results directly to the President and Chief Executive Officer, in principle on a monthly basis, periodic reports are also made to the Board of Directors and the Audit & Supervisory Board. The department regularly conducts audits on all aspects of internal control, comprising asset and risk management, compliance, and business operations. It evaluates the effectiveness and adequacy of the internal controls of auditees, taking into account the significance of the inherent risks. At the same time, it provides appropriate advice for improvements and expedites improvement and maintenance on the auditee’s own initiative, thereby contributing to the improvement of governance and internal controls within the Group.

Internal audit process