Internal Audit System

With the purpose of adding value to the operation of the Aozora Group and assisting it to accomplish its objectives, the Bank’s Internal Audit Division, independently of all groups and units, examines and evaluates objectively whether the internal control systems of the Group function properly and effectively, and offers recommendations for improvement.

Internal audits are conducted in line with the audit plan, which is formulated according to the Annual Internal Audit Plan approved by the Management Committee and the Board of Directors each fiscal year. In formulating the audit plan, we consider the frequency and intensity of an audit depending on the type and degree of inherent risk within each business unit and the status of internal controls. The Bank also conducts system audits and cross-sectional target audits considering the importance of risk management.

The Internal Audit Division directly reports to the Chief Executive Officer. It presents audit results to the Management Committee monthly, as well as a summary of audits directly to the Audit and Compliance Committee and the Board of Directors semiannually, providing an independent assessment of internal control. Furthermore, the Internal Audit Division cooperates with the Audit and Supervisory Board (Members), directly exchanging information and opinions, including the above summary of audits, for the achievement of audit purposes. The Division is also exchanging information with the audit firm, for improving cooperation with them.

To raise the expertise of auditors, the Internal Audit Division sends them to external seminars and encourages them to obtain professional certifications such as Certified Internal Auditor (CIA) and Certified Information System Auditor (CISA). The Bank’s internal audit is conducted in conformity with the IIA (Institute of Internal Auditors)’s international standards. In addition to continuous internal quality assessment, we periodically receive an external quality assessment from a third-party institution to further enhance our audit standards and capabilities.

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