Internal Audit Policy

Our Internal Audit Division examines and evaluates whether our internal control system functions properly and effectively from an independent standpoint. The purpose of an audit is to verify effectiveness and efficiency of operations, risk management, compliance and reliability of financial statements. All activities and entities of the Aozora Group fall within the scope of the internal audit.

Our Internal Audit Division also conducts assessment of overall internal controls and operational process in order to satisfy the management's obligation to submit an internal control report on financial reporting from FY2008, based on the Financial Instruments and Exchange Law.

Our Internal Audit Division conducts internal audits along with the Audit Plan, approved by the Board of Directors each fiscal year. The formulation the Audit Plan considers the frequency and intensity of the audit depending on the type and degree of inherent risk within each business unit and status of internal controls. Audit focus particularly on business operations or units with increasing risk due to business expansion and concentration of credit exposure, on new business, or on diversified risk of products arising from sophisticated structuring or features.

We report audit results to the Management Committee monthly and a Summary of Audit to the Audit Compliance Committee and the Board of Directors semiannually, and as such provide an independent assessment to the internal control system.

To strengthen our internal audit capabilities, we have continued to enhance the necessary infrastructure and developed new audit methodologies. We also encourage employees to obtain professional certifications such as Certified Internal Auditor and Certified Information System Auditor to develop their expertise. We work with external auditors to further enhance our audit standards and capabilities.