16th Comprehensive Research of Internal Audit in Japan IA Whitepaperx.pdf · 4 PREFACE The...

RESARCH REPORT

16th Comprehensive Research of Internal Audit in Japan

Internal Audit Whitepaper 2007

Abridged translation

The Institute of Internal Auditors - Japan

2

TABLE OF CONTENTS PREFACE............................................................................................................................................................... 4

REFERENCE ......................................................................................................................................................... 5

Corporate Auditor System in Japan ............................................................................................................... 5

COMMENTARY SECTION.................................................................................................................................. 9

Research Method ................................................................................................................................................. 9

1. Scope of research ............................................................................................................................... 9

2. Number of questionnaires sent........................................................................................................... 9

3. Period of research............................................................................................................................... 9

4. Method of research............................................................................................................................. 9

5. Number of responses.......................................................................................................................... 9

Basic Research................................................................................................................................................... 12

1. Classification of respondents – by Industry Classifications ............................................................. 12

2. Classification of respondents – by Capital ....................................................................................... 14

3. Classification of respondents – by Sales .......................................................................................... 15

4. Classification of respondents – by Total Assets................................................................................ 16

5. Classification of respondents – by Number of Employees............................................................... 17

Specific Research............................................................................................................................................... 18

<Internal Audit>.............................................................................................................................................. 18

1. Auditable entities (Table 1) .............................................................................................................. 18

2. Positioning of the Internal Audit Activity (IAA) in the organization (Tables 2 to 29)...................... 19

3. Internal Audit Plan (Tables 30 to 42)................................................................................................ 30

4. Performing Internal Audit (Tables 43 to 57)..................................................................................... 35

5. Internal Audit Report and Follow-up (Tables 58 to 74).................................................................... 41

6. Information System Audit (Tables 75 to 81) .................................................................................... 47

7. Audit of Subsidiary companies and Affiliated companies (Tables 82 to 89).................................... 50

8. Environment Audit (Tables 90 to 96)............................................................................................... 53

<Relationship with Other Audits> .................................................................................................................. 55

1. Relationship between Internal Audit and Kansayaku (Corporate Auditors) Audit (Tables 97 to 103)55

2. Relationship between Internal Audit and Audit Committee (Tables 104 to 110) ............................. 58

3. Relationship between Internal Audit and External Auditors (CPAs) (Tables 111 to 114) ................ 60

<Recent implementation / revision of Laws and Regulations> (Tables 115 to 117)....................................... 61

<Internal Auditors’ role under the Internal Control Report System> (Tables 118 to 126) .............................. 62

<Quality Assessments of Internal Audit> ....................................................................................................... 63

1. Internal Assessments (Tables 127 to 133) ........................................................................................ 63

2. External Assessments (Tables 134 to 143) ....................................................................................... 65

DATA SECTION.................................................................................................................................................. 67

Basic Research................................................................................................................................................... 67

1. Classification of respondents............................................................................................................ 67

Specific Research............................................................................................................................................... 74

<Internal Audit>.............................................................................................................................................. 74

1. Auditable entities (Table 1) .............................................................................................................. 74

3

2. Positioning of the Internal Audit Activity in the organization (Tables 2 to 29)...................................... 76

3. Internal Audit Plan (Tables 30 to 42)................................................................................................... 120

4. Performing Internal Audit (Tables 43 to 57)........................................................................................ 138

5. Internal Audit Report and Follow-up (Tables 58 to 74)....................................................................... 162

6. Information System Audit (Tables 75 to 81) .................................................................................. 185

7. Audit of Subsidiary companies and Affiliated companies (Tables 82 to 89).................................. 195

9. Environment Audit (Tables 90 to 96)............................................................................................. 204

<Relationship with Other Audits> ................................................................................................................ 212

1. Relationship between Internal Audit and Kansayaku (Corporate Auditors) Audit (Tables 97 to 103)212

2. Relationship between Internal Audit and Audit Committee (Tables 104 to 110) ........................... 219

3. Relationship between Internal Audit and External Auditors (CPAs) (Tables 111 to 114) .............. 226

<Recent implementation / revision of Laws and Regulations> (Tables 115 to 117)..................................... 230

<Internal Auditors’ role under the Internal Control Report System> (Tables 118 to 126) ............................ 237

<Quality Assessments of Internal Audit> ..................................................................................................... 246

1. Internal Assessments (Tables 127 to 133) ...................................................................................... 246

2. External Assessment (Tables 134 to 143)....................................................................................... 253

4

PREFACE

The Institute of Internal Auditors – Japan (IIA-Japan) was established in 1957, and it began to undertake

comprehensive research on internal auditing in Japan in 1958. The IIA-Japan conducts the research once every

three years, and 2007 marks the 16th year in which such research was conducted.

This is an abridged translation of the Internal Audit Whitepaper 2007. The original Japanese version includes the

personal views of Dr. Hida, a professor emeritus at Chuo University; however, some of Dr. Hida’s views are not

available in the English version. This translation meant to be only a source of information on the Japanese internal

audit practice. For more information on this topic, please refer to the Japanese version, which is the official text.

The IIA-Japan has provided additional information on the “Corporate Auditor System in Japan” as a source of

reference to understand a major Japanese corporate governance system. In this white paper, the “corporate

auditor” is referred to as “kansayaku” (kansa means audit and yaku means role).

March 2009

The Institute of Internal Auditors - Japan

5

REFERENCE

Corporate Auditor System in Japan (Excerpt from Japan Corporate Auditors Association’s web-site

http://www.kansa.or.jp/english/index.html)

1. Overview

Under Japan’s Companies Act of 2005, which consolidated corporate law regulations in Japan, a corporate

auditor ("kansayaku") is a mandatory organ of a joint-stock company with two exceptional situations. Specifically,

a small-scale closely-held company is not required to have kansayaku, and a "committee" company is required to

have three committees (the audit committee, the nominating committee and the compensation committee) but not

kansayaku. All other joint-stock companies must have kansayaku. This memorandum focuses on large-scale,

publicly held companies, which must set up a board of kansayaku ("kansayaku-kai") under the Companies Act.

The kansayaku system existed before World War II, but the amendments to the Commercial Code in 1950

reduced its power and responsibility. The system took on its current form through Commercial Code amendments

in 1974, 1981, 1993, and 2001; all of which extensively strengthened the power and independence of kansayaku.

These various provisions in the Commercial Code were consolidated under the Companies Act of 2005.

Kansayaku must be elected at a shareholders' meeting, and his/her role is to "audit" the activities of directors. This

audit includes both a "business audit" and a "financial audit." A business audit is an assessment of whether or not

the directors are correctly observing applicable laws and the company's charter provisions while managing the

company, and is commonly referred to as a "compliance audit."

A financial audit is conducted before the financial statements are submitted to a shareholders' annual meeting.

The audit report, which contains the results of both the financial and business audits, must accompany the notice

of the shareholders' meeting. Consolidated financial statements are also subject to auditing by kansayaku, and the

results of the audit must be reported at the annual shareholders' meeting.

The kansayaku system is stricter in "large companies." A large company is defined in the statute as a joint-stock

company having legal capital of 500 million yen or more or total balance-sheet liabilities of 20 billion yen or more,

and there are approximately 12,000 large companies today. For such a large company, if it is a publicly-held

company (which is defined under the statute as a company where the transfer of shares is not restricted by its

charter), there must be at least three kansayaku members, at least one of whom is required to be full-time, and at

least half of whom must be "outside" kansayaku. Kansayaku-kai must be formed. In view of the function it plays

in large companies, kansayaku-kai can be seen as similar to an audit committee in the United States. However, the

Japanese kansayaku-kai must be a separate body from the board of directors, and must include at least one

full-time kansayaku. In addition, kansayaku may not serve concurrently as a director. The Companies Act

requires even greater independence for outside kansayaku.

2. Election, Duty and Liability of Kansayaku

6

2.1. Election of Kansayaku

Kansayaku members are elected at the shareholders' meeting with a quorum that may not be reduced to less than

one-third of the total number of voting shares (the same as for the election of directors). The Companies Act

provides grounds for the disqualification of kansayaku and directors, such as not permitting an auditor to serve

concurrently as a director, officer or employee of the company or its subsidiaries.

Kansayaku has the right to express opinions at the shareholders' meeting regarding the election of other

kansayaku. Kansayaku who has resigned is entitled to attend the first shareholders' meeting that is convened after

his resignation and express his/her views. Other kansayaku members have the same right.

Kansayaku-kai also has the right to give consent and the right to make suggestions regarding the board of

directors' proposals on the candidates of kansayaku that are submitted to a shareholders' meeting for election.

Each kansayaku serves a four-year term, as compared to two years for directors. This term cannot be shortened by

the charter. Compensation must be set in the charter or by a resolution at the shareholders' meeting, separately

from the compensation for directors.

As mentioned earlier, large publicly-held company must have a minimum of three kansayaku members. Also, at

least half of them must be "outside" kansayaku, and this means that they must not have formerly been a director,

officer, or employee of the company or its subsidiaries. A board of kansayaku (kansayaku-kai) must be formed,

and the board must elect at least one full-time kansayaku. Thus, in such large companies, while the Japanese

board system is two-tiered, it differs considerably from the German two-tier corporate governance system.

2.2 Duty of Kansayaku

The legal relationship between kansayaku and the company is entrustment “inin”. Consequently, kansayaku owes

a duty of care to the company. Under the Companies Act, the legal duty of kansayaku is to "audit" the activities of

directors, through a business and financial audit. (The audit may be limited to the latter in "small-scale

closely-held companies," but the situation concerning such small companies is omitted in this memorandum.)

A business audit is a check on whether or not the directors are observing laws, regulations and the company's

charter provisions in managing the company and is commonly called a "compliance audit." It is generally

understood that this does not include a check on the appropriateness of a director's decision-making or activities

(sometimes referred to as an "appropriateness audit"). However, since the Companies Act imposes a duty of care

upon its directors, a business audit must include a check on whether or not there have been any breaches of this

duty of care, and therefore, kansayaku must examine the directors' business judgments from this perspective.

A financial audit is an audit of financial statements and, unlike an audit required under the Securities and

Exchange Act, it must be conducted before the annual shareholders' meeting. The audit report, which contains the

results of the financial and business audits, must accompany the notice of the annual shareholders' meeting and be

sent to shareholders two weeks prior to the meeting. Reporting companies under the Securities and Exchange Act

must prepare consolidated financial statements under both the Securities and Exchange Act and the Companies

Act, and they are also subject to auditing by kansayaku, the results of which are reported to the annual

shareholders' meeting.

7

Kansayaku is given various powers and legal rights in order to carry out their duties.

2.3 Right of Investigations

Kansayaku has the right to ask a director or employee to provide a report on the company's operations and the

right to examine the operations and assets of the company at any time. If a director is aware of the possibility of

significant damage occurring to the company, he or she must report this to kansayaku-kai even without being

asked by kansayaku. Each kansayaku also has the legal right, under prescribed conditions, to ask for a report and

examine the operations and assets of any of the company's subsidiaries. The company bears the expenses of this

audit (including the examination).

2.4. Prevention of Director's Illegal Action

All kansayaku members must attend all board of directors' meetings and each auditor is entitled to express

opinions as necessary with a view to preventing the board of directors from making illegal or significantly

inappropriate decisions affecting the company. Even outside the realm of board of directors’ meetings, if

kansayaku notices a violation, or the possibility thereof, of a law or the company's charter provisions by a director,

he or she must report it to the board of directors. If necessary, kansayaku may ask for a board of directors meeting

to be called, or kansayaku has the right to call a meeting him/herself. When a decision or action violating a law or

the company's charter provisions cannot be prevented or rectified, and the proposals or documents submitted by a

director addressing this violation to a shareholders’ meeting contain illegal statements or significant

inappropriateness, kansayaku must report his/her judgment on this point at the shareholders' meeting. If there is a

possibility that the director's action in violation of law or the charter provisions will cause considerable damage to

the company, kansayaku has the right to ask the director to stop the action. Finally, kansayaku has standing to sue

for the nullification of a shareholders' meeting.

2.5. Litigation Between the Company and Its Directors

In litigation between a company and its director, kansayaku represents the company. Accordingly, it is kansayaku

who makes decisions about whether the company will sue a director. It is also kansayaku to whom a "demand" is

submitted in a shareholder derivative action. When a shareholder derivative action is filed before the court, the

company may "participate" in the litigation on behalf of the defendants only if all kansayaku members give their

consent. In addition, more generally, consent of all kansayaku members is required for the liability of directors to

be discharged in accordance with the procedures and limitations provided by the Companies Act.

2.6. Financial Audit

A financial audit is an audit of financial statements and their appendices. A large company must appoint a CPA or

auditing firm as an external financial auditor. The external financial auditor is elected at the shareholders' meeting,

and the election proposal must be approved by kansayaku-kai in advance. Accordingly, a financial audit in large

companies is undertaken primarily by the external financial auditor, and this financial auditor's report is submitted

to both kansayaku-kai and the board of directors. Kansayaku checks the appropriateness of a summary of the

process and of the results of the financial auditor's auditing. If kansayaku believes that either is inappropriate, he

or she usually must state this along with his/her reasons in the audit report. Kansayaku will then undertake an

audit by him/herself and describe a summary of the process and the results of such audit in the audit report. If the

financial auditor uncovers an inappropriate act or a violation of the law or the company's charter provisions in

8

connection with the directors' activities, the financial auditor must report it to kansayaku-kai. Kansayaku also has

the right to ask the financial auditor for a report if necessary. Along with all of the above, in large companies,

kansayaku is responsible for monitoring and managing the external financial audit, as is the case with an audit

committee in the United States. The audit report accompanies the notice of the annual shareholders' meeting and

includes the results of the financial and business audits. This audit report is prepared by kansayaku-kai, but each

kansayaku has the right to write his or her own opinion. As noted above, consolidated financial statements are

also subject to auditing by kansayaku.

2.7. Liability of Kansayaku

Under the Companies Act, if there is a breach of kansayaku’s duty of care owed to the company, such kansayaku

is liable to the company for damages. In addition, if there is bad faith or gross negligence in the audit activity, or if

the audit report contains a false statement, such kansayaku may be liable directly to a third party for damages.

9

COMMENTARY SECTION

Research Method 1. Scope of research

In order to cover all kinds of Internal Audit Activities (IAAs) found in different organizations, the Institute of

Internal Auditors - Japan (IIA-Japan) distributed research questionnaires to not only business corporations

but also to independent administrative institutions, special public institutions, school corporations,

associations etc. The business corporations were not limited to listed companies. The questionnaire was sent

to IIA-Japan’s corporate member organizations as well as non-member organizations.

2. Number of questionnaires sent Questionnaires were sent to 1,885 corporate member organizations of IIA-Japan and 2,411 non-member

organizations. In all, 4,296 questionnaires were sent. This was an increase of 1,139 organizations in

comparison to the previous research conducted in 2003.

3. Period of research

The research was conducted from October 26 to November 25, 2007. All questionnaires had to be filled in

and sent by November 26, 2007.

4. Method of research The questionnaires were sent by post. The replies, on the other hand, were received by either post or fax.

IIA-Japan did not conduct follow-up interviews.

5. Number of responses The number of responses and ratios are as follows.

Number of total responses 1,481 organizations (34.47%)

Number of usable responses 1,473 organizations (34.29%)

Number of unusable responses 8 organizations ( 0.19%)

The historical data is as follows: Research year

Number 2007 2003 2000 1997

Questionnaires sent 4,296 3,157 2,891 2,675

Total responses 1,481 (34.47%) 1,053 (33.35%) 883 (30.54%) 918 (34.32%)

Usable responses 1,473 (34.29%) 1,044 (33.06%) 870 (30.09%) 911 (34.05%)

In comparison to the research conducted in 2000, the ratio of both the number of total responses and the

number of usable responses increased by 3.93 percent and 4.20 percent respectively. These ratios also

exceeded the results of 1997, which were the highest in the past. In addition, the number of total responses is

40 percent higher than the research conducted in 2003. This was due to the recent implementation of the

“Corporation Law” and the “Financial Instruments and Exchange Law”, and increased interests of corporate

governance and internal controls.

10

The number of usable responses is 1,473, which is 429 more than that of the research conducted in 2003. The

highest-increased industry groups shown in the next page are Chemical, Machine, Electric equipment, Misc.

manufacturing among manufacturing industry group, and Various commercial, Real estate, Transportation/

Warehouse, and Service among non-manufacturing industry group. The recent implementation of the

“Corporation Law”, the “Financial Instruments and Exchange Law”, and the “Internal Control Report

System” (so called “J-SOX”) increased the interests in internal auditing. As a result, response to this research

was particularly high.

11

Industry Classification

Unit: Number of organizations

2007 2003 Research year

Industry Group # % # %

Increase /

decrease

Construction 70 4.8 54 3.7 16

Fishing / Food 53 3.6 41 2.8 12

Textile / Paper / Pulp 24 1.6 14 1.0 10

Chemical 92 6.2 65 4.4 27

Medicine 33 2.2 26 1.8 7

Oil / Coal / Mining 10 0.7 7 0.5 3

Rubber 5 0.3 8 0.5 -3

Glass / Soil & Stone 14 1.0 8 0.5 6

Steel 17 1.2 6 0.4 11

Metal 32 2.2 13 0.9 19

Machine 69 4.7 36 2.4 33

Electric equipment 106 7.2 76 5.2 30

Transportation equipment 44 3.0 27 1.8 17

Precision equipment 27 1.8 16 1.1 11

Misc. manufacturing 62 4.2 34 2.3 28

Manufacturing industry

Manufacturing total 658 44.7 431 41.3 227

Trading 76 5.2 88 6.0 -12

Department store / Super market 40 2.7 33 2.2 7

Various commercial 84 5.7 43 2.9 41

Life insurance 17 1.2 13 0.9 4

Non-life insurance 13 0.9 12 0.8 1

Finance 168 11.4 187 12.7 -19

Real estate 51 3.5 15 1.0 36

Transportation / Warehouse 72 4.9 36 2.4 36

Telecom / Advertising 40 2.7 15 1.0 25

Electric / Gas 18 1.2 21 1.4 -3

Services 193 13.1 127 8.6 66

Independent administrative institution /

Special public institution / School

corporation / Association etc.

43 2.9 23 1.6 20

Non-m

anufacturing industry

Non-manufacturing total 815 55.3 613 58.7 202

Grand total 1,473 100.0 1,044 100.0 429

Based on the above result, the next section examines contents of each study of basic research and specific

research.

12

Basic Research 1. Classification of respondents – by Industry Classifications

(Manufacturing versus non-manufacturing)

Industries are classified into 27 types. Although this system of classification is not the same as the 33 industry

classification in the first section of the Tokyo Stock Exchange, the two are very similar. Of the 27 types of

industries, 15 are manufacturing (including construction) industries, and 12 are non-manufacturing industries.

The usable response rate of manufacturing versus non-manufacturing is as follows.

<Number of usable responses>


Research year

Type 2007 2003 2000 1997

Manufacturing 658 (44.7%) 431 (41.3%) 475 (54.6%) 504 (55.3%)

Non-manufacturing 815 (55.3%) 613 (58.7%) 395 (45.4%) 407 (44.7%)

The response rate of manufacturing was higher than non-manufacturing until the research conducted in 2000.

However, the response rate of non-manufacturing has been higher since the research conducted in 2003. The

response rate of non-manufacturing was 10.6 percent higher than manufacturing in the research conducted in

2007.

Usable response rate by capital amount is as follows.

<Usable response rate by Capital>

Unit: percent

Capital

(Billion yen)

Research year

Type 2007 2003

Manufacturing 21.0% 28.4% � 0.9

Non-manufacturing 79.0% 71.6%

Manufacturing 45.6% 36.4% 1 � 2.9


Manufacturing 47.4% 32.1% 3 � 4.9


Manufacturing 49.2% 42.5% 5 � 9.9


Manufacturing 54.4% 45.3% 10 � 19.9


Manufacturing 54.0% 47.4% 20 � 49.9


Manufacturing 46.6% 44.5% 50 � 99.9


Manufacturing 57.9% 59.5% 100 � 199.9


200 � 999.9 Manufacturing 45.3% 51.1%

13

Capital

(Billion yen)

Research year

Type 2007 2003


Manufacturing 34.3% 35.3% 1,000 �


In the research conducted in 2007, the response rate of non-manufacturing industry was higher than

manufacturing industry except for capital amount between 10 billion yen and 19.9 billion yen, between 20

billion yen and 49.9 billion yen, and between 100 billion yen and 199.9 billion yen. Please keep in mind that

the response rate of manufacturing was smaller than non-manufacturing except for these three capital ranges.

The response rate of manufacturing in capital range from 100 billion yen to 199.9 billion yen was higher than

non-manufacturing, which was consistent with the results of the research conducted in 2003. The response rate

of manufacturing in capital range from one billion yen to 99.9 billion yen increased.

The response rate of capital amount less than 3 billion yen organization increased.



Capital (Billion yen) # % # %

� 0.9 210 14.7 67 6.6

1 � 2.9 193 13.5 118 11.6

The response rate of non-manufacturing in capital range less than five billion yen was higher than

manufacturing. The response rate of manufacturing in capital range between 10 billion yen and 199.9 billion

yen was higher than non-manufacturing except for capital range between 50 billion yen and 99.9 billion yen.

The response rate of non-manufacturing in capital range over 200 billion yen was higher than manufacturing

because non-manufacturing industries include Finance, Transportation / Warehouse, Telecom / Advertising,

Electric / Gas, and Services.

Regarding classification by sales amount, while 78 organizations out of the 168 organizations in Finance

industry group responded sales amount, 53.6 percent did not respond. Similarly, 53.5 percent in Independent

administrative institution / Special public institution / School corporation / Association etc. industry group did

not respond to the sales amount question.

Regarding classification by capital amount, of the total 1,323 respondents, 609 (46.0%) were in manufacturing

industry and 714 (54.0%) were in non-manufacturing industry. Sixteen (1.2%) of “less than one billion yen”

capital respondents were primarily in Service industry organizations.

Regarding classification by the number of employees, 656 organizations (45.1%) out of the 1,454

organizations which responded to this question were in manufacturing industry. Fifty-four point three percent

of the 1,454 respondents had fewer than 1,001 employees. The necessity of an internal audit is understood

widely and has been paid attention.

14

2. Classification of respondents – by Capital

Forty-two organizations did not respond on capital amount. Of those, 17 were in Independent administrative

institution / Special public institution / School corporation / Association etc. industry group and six were in

Services industry group.

<Number and usable response rate by Capital >


In comparison to the research conducted in 2000, the response from less than one billion yen capital

organizations increased by 143 organizations (313%), which was 14.7 percent of the total. The responses from

capital range between one billion yen and 2.9 billion yen organizations also increased by 75 organizations

(164%). Hence, 28.2 percent of respondents’ capital amount is less than three billion yen.

2007 2003 2000 1997 Capital

(Billion yen) # % # % # % # %

� 0.9 210 14.7 67 6.6 146 16.8 157 17.2

1 � 2.9 193 13.5 118 11.6 168 19.3 172 18.9

3 � 4.9 116 8.1 84 8.3 87 10.0 113 12.4

5 � 9.9 189 13.2 146 14.4 143 16.4 139 15.3

10 � 19.9 195 13.6 128 12.6 100 11.5 118 13.0

20 � 49.9 202 14.1 156 15.4 109 12.5 102 11.2

50 � 99.9 118 8.2 110 10.9 51 5.9 58 6.4

100 � 199.9 76 5.3 74 7.3 32 3.7 43 4.7

200 � 999.9 97 6.8 88 8.7 18 2.1 - -

1,000 � 35 2.4 17 1.7 - - - -

15

3. Classification of respondents – by Sales

It is not easy to estimate size of the organization only from capital amount and the number of employees.

Therefore, sales amount was added to the research from 2003. One hundred and forty-four organizations did

not respond on sales amount. Of the 1,329 usable responses, 652 were in manufacturing industry and 677

were in non-manufacturing industry.

Sales amount of manufacturing industry was relatively bigger than non-manufacturing industry. Four

organizations (0.3%) in manufacturing and 20 organizations (1.5%) in non-manufacturing had less than one

billion yen sales. Eighty-seven point one percent of respondents had 10 billion yen or more sales irrespective

of industry group.


2007 2003 Type Sales

(Billion yen) # % # %

1 � 19.9 132 20.2 85 20.1

20 � 49.9 167 25.6 105 24.8

50 � 199.9 204 31.3 132 31.2

Manufacturing

200 � 145 22.2 101 23.9

1 � 19.9 192 28.4 176 31.7

20 � 49.9 141 20.8 115 20.7

50 � 199.9 181 26.7 143 25.7

Non-manufacturing

200 � 143 21.1 116 20.9

In comparison to the research conducted in 2003, the ratio of sales amount between one billion yen and 49.9

billion yen increased in manufacturing industry group.

16

4. Classification of respondents – by Total Assets

In addition to sales amount in 2003, total asset was added to the research conducted in 2007 in order to

estimate size of the organization more accurately. Five (0.8%) manufacturing industry and 11 (1.5%)

non-manufacturing industry organizations’ total assets were less than one billion yen. These are not included

in the below table. Twenty-two point eight percent of the total respondents had less than 20 billion yen of

total assets.


1 � 19.9 20 � 49.9 50 � 199.9 200 � Total Assets

(Billion yen)

Type # % # % # % # %

Manufacturing 110 18.1 153 25.1 192 31.5 149 24.5

Non-manufacturing 175 24.5 132 18.5 167 23.4 229 32.1

17

5. Classification of respondents – by Number of Employees

The number of employees did not include executives but full time employees, part time employees,

temporary workers, and field workers.


2007 2003 2000 1997 Research year

Number of Employees # % # % # % # %

� 500 492 33.8 323 31.6 215 24.7 197 21.6

501 � 1,000 297 20.4 210 20.5 187 21.5 187 20.5

1,001 � 2,000 266 18.3 183 17.9 175 20.1 191 21.0

2,001 � 3,000 116 8.0 79 7.7 77 8.9 99 10.9

3,001 � 5,000 105 7.2 98 9.6 90 10.3 91 10.0 5,001 � 10,000 106 7.3 66 6.5 65 7.5 80 8.8

10,001 � 30,000 49 3.4 50 4.9 51 5.9 56 6.1

30,001 � 100,000 19 1.3 11 1.1 9 1.0 10 1.1

100,000 � 4 0.3 2 0.2 1 0.1 - -

While the response rate of organizations which higher capital has been increasing, the response rate of

organizations with fewer than 1,000 employees was 54.3 percent. This shows that the internal audit is not only

being conducted in large organizations but also in smaller ones.

The response rate of organizations that have less than 5o1 employees increased by 12.2 percent in comparison

to the research conducted in 1997.

18

Specific Research

<Internal Audit>

1. Auditable entities (Table 1)

From the viewpoint of the independence of internal auditors, it is best if internal auditors can audit any

entities within the organization and address any problems or concerns that arise. In other words, it is

considered most desirable if internal auditors can audit head offices, domestic business offices, overseas

business offices, domestic subsidiaries / affiliates, and overseas subsidiaries / affiliates. The number and ratio

of organizations that did not have any restrictions on auditable entities increased, as shown in the following

table.

Research year 2007 2003 2000 1997

Number of organizations (%) 266 (18.1%) 101 (9.8%) 114 (13.1%) 115 (12.9%)

Some organizations excluded certain entities from the auditable entities. The number of organizations that

excluded the overseas business offices and the overseas subsidiaries / affiliates from the auditable entities is

as follows.

Research year 2007 2003 2000 1997


The number of organizations which excluded the overseas business offices, the overseas subsidiaries /

affiliates, and the domestic subsidiaries / affiliates from the auditable entities is as follows.

Research year 2007 2003 2000 1997


The number of organizations which included the overseas business offices and / or the overseas subsidiaries /

affiliates in the auditable entities is as follows.

Research year 2007 2003 2000 1997


The number of organizations which included the domestic and / or the overseas subsidiaries / affiliates in the

auditable entities is as follows.

Research year 2007 2003 2000 1997

Number of organizations (%) 1,032 (70.2%) 660 (63.8%) 547 (63.1%) 551 (61.4%)

The number of organizations which excluded the head offices from the auditable entities is as follows.

Research year 2007 2003 2000 1997


19

2. Positioning of the Internal Audit Activity (IAA) in the organization (Tables 2 to 29)

(1) Positioning of the IAA by the number of employees (Table 2)

There are three major positioning of the IAA as shown in the following table.


2007 2003 2000 1997 Research year

Positioning # % # % # % # %

1 Direct report to Top

� President 1,115 76.8 688 66.9 604 69.7 611 67.1

� Board 52 3.6 48 4.7 9 1.0 - -

� Other executives 116 8.0 123 12.0 81 9.4 122 13.4

2 Belong to a specific department 51 3.5 57 5.5 81 9.4 51 5.6

3 Same level as other departments 79 5.4 90 8.8 78 9.0 96 10.6

Regarding group one, 88.4 percent of the IAA reported directly to top management irrespective of

industry, capital, and the number of employees. This has been increasing notably over past ten years. It

was 49.9 percent in the research conducted in 1988.

In terms of industry group, Construction, Fishing / Food, Textile /Paper / Pulp, Chemical, Oil / Coal /

Mining, Rubber, Metal, Machine, Electric equipment, Precision equipment, Misc. manufacturing,

Trading, Various commercial, Real estate, and Services industries tended to report directly to top

management. Especially, direct report to top management exceeded 88 percent in Oil / Coal / Mining,

Precision equipment, Trading, and Various commercial industry group.

Regarding group two, while 38 percent of the IAA belonged to a specific department in the research

conducted in 1958, the ratio has been decreasing. It decreased to 5.5 percent in the study of 2003 and 3.5

percent in the study of 2007.

Regarding group three, the ratio has been decreasing and there were 79 organizations (5.4%) in the

research conducted in 2007. The ratio was relatively higher in non-manufacturing industry group.

Construction, Transportation equipment, Life insurance, Telecom / Advertising, and Electric / Gas

industry group showed relatively higher ratio.

The number of organizations which the IAA reported directly to the kansayaku is as follows.

Research year 2007 2003 2000 1997


Although cooperation and coordination between the IAA and the kansayaku is important, the ratio of

direct report to the kansayaku has been decreasing. From the view points of interpretation of the

Corporation Law, it is not desirable if the IAA reports directly to the kansayaku.

(2) Positioning of the IAA by capital amount (Table 3)

The ratio of positioning of the IAA by capital amount is as follows.

Unit: percent

20

Positioning

Capital

(Billion yen)

Direct report to

President

Direct report to

Board

Direct report to

Senior E

xecutive

Direct report to

Audit C

omm

ittee

Direct report to

Kansayaku

Direct report to

Executive O

fficer

Sam

e level as other

departments

Belong to a

specific

department

Others

� 0.9 81.3 1.5 3.9 1.0 - 1.0 6.9 4.4 -

1 � 2.9 82.5 2.6 6.9 0.5 - - 3.7 3.7 -

3 � 4.9 88.6 0.9 4.4 1.8 0.9 - 0.9 1.8 0.9 5 � 9.9 79.5 2.2 5.9 0.5 0.5 1.1 3.8 5.4 1.1

10 � 19.9 82.0 2.6 8.2 - 0.5 - 3.6 3.1 - 20 � 49.9 71.6 6.5 11.9 - - 1.5 5.0 3.0 0.5

50 � 99.9 66.9 5.9 13.6 1.7 - 2.5 6.8 2.5 -

100 � 199.9 71.1 5.3 7.9 - - 3.9 10.5 1.3 -

200 � 999.9 57.7 6.2 13.4 1.0 1.0 1.0 14.4 4.1 1.0

1,000 � 52.9 8.8 11.8 2.9 - 8.8 8.8 5.9 - Average Ratio 76.5 3.6 8.2 0.7 0.3 1.2 5.6 3.5 0.4

The following is a summary of the above table by major positioning.


Research year 2007 2003

�¥9.9 bil.

(647 Organization)

¥10 bil. �

(691 Organization)

�¥9.9 bil.

(415 Organization)

¥10 bil. �

(573 Organization)

Capital

Positioning

# % # % # % # %

1 Direct report to Top

� President 569 82.3 510 70.8 321 77.3 339 59.2

� Board 13 1.8 38 5.3 15 3.6 33 5.6

� Other executives 37 5.4 79 11.0 26 6.3 93 16.2

2 Belong to a specific department 29 4.2 50 6.9 21 5.1 64 11.2

3 Same levels other departments 28 4.0 22 3.0 25 6.0 31 5.4

(3) Positioning of the IAA by the number of employees (Table 4)

Positioning of the IAA by the number of employees is as follows.

Unit: percent Positioning

Number of employees

Direct report to

President

Direct report to

Board

Direct report to

Senior E

xecutive

Direct report to

Audit C

omm

ittee

Direct report to

Kansayaku

Direct report to

Executive O

fficer

Sam

e level as other

departments

Belong to a specific

department

Others

�500 82.8 1.6 4.6 1.2 0.4 0.6 3.7 4.6 0.4

501�1,000 81.2 3.1 7.5 0.3 - 0.3 3.8 2.7 1.0

1,001�2,000 77.1 5.7 7.3 0.4 0.8 0.8 4.6 3.4 -

2,001�3,000 66.1 4.3 12.2 - - 2.6 11.3 3.5 - 3,001�5,000 69.5 6.7 15.2 1.9 1.0 1.0 3.8 1.0 - 5,001�10,000 69.5 3.8 9.5 - - 2.9 10.5 3.8 -

10,001�30,000 57.1 4.1 10.2 2.0 - 6.1 14.3 6.1 -

21

Positioning

Number of employees

Direct report to

President

Direct report to

Board

Direct report to

Senior E

xecutive

Direct report to

Audit C

omm

ittee

Direct report to

Kansayaku

Direct report to

Executive O

fficer

Sam

e level as other

departments

Belong to a specific

department

Others

30,001� 59.0 - 27.2 - - 4.5 9.0 - - Average Ratio 76.9 3.5 8.0 0.8 0.3 1.2 5.4 3.6 0.3

(4) Name of the IAA (Table 5)

As the name of the IAA, “audit”, “examination”, “inspection”, and “corporate planning” have been used

by many organizations. However, the research conducted in 2007 showed that majority used “audit”.

The historical data since 1991 is as follows.


Research Year

Name 2007 2003 2000 1997 1994 1991

Audit 663 527 494 532 556 469

Internal Audit 436 179 157 128 131 14

Operational Audit 76 51 27 11 17 -

Management Audit 54 27 14 - - -

Compliance 17 - - - - -

Audit Group 15 - - - - -

Examination 15 22 14 16 16 13

Inspection 14 57 47 57 53 23

Corporate Planning 13 20 36 16 - -

Internal Control 10 - - - - -

CSR 10 - - - - -

Administration 9 13 11 - - -

Risk Management 6 - - - - -

Audit section in President’s Office 4 8 23 18 21 16

Audit section in Accounting 4 10 10 - - -

Legal Audit 3 - - - - -

Business Management 3 - - - - -

Operation Inspection 1 2 6 - - -

Inspector’s Office - 8 8 - - -

Others 104 87 7 - - -

(5) Number of auditors who conduct only IAA (Tables 6 to 8)



2007 2003 2000 1997 Research year

Number of auditors # % # % # % # %

1 (0�3) 333 24.0 276 26.9 303 35.1 611 67.1

2 319 23.0 202 19.7 161 18.6 - -

3 165 11.9 132 12.9 111 12.8 - -

4 (4�6) 132 9.5 100 9.8 68 7.9 164 18.0

22

2007 2003 2000 1997 Research year

Number of auditors # % # % # % # %

5 72 5.2 51 5.0 49 5.7 - -

6 60 4.3 54 5.3 38 4.4 - -

7 (7�9) 48 3.5 38 3.7 27 3.1 52 5.7

8 31 2.2 13 1.3 13 1.5 - -

9 20 1.4 18 1.8 12 1.4 - -

10�14 (10�15) 87 6.3 45 4.4 28 3.2 28 3.1

15�24 (16�25) 55 4.0 43 4.2 28 3.2 35 3.8

25�49 (26�50) 43 3.1 42 4.1 21 2.4 16 1.8

50� (51�) 22 1.6 11 1.1 5 0.6 4 0.4

(* Number in ( ) in “Number of auditors” is the classification used in the 1997 study.)

Generally speaking, the number of internal auditors has been increasing. In the research conducted in

2007, 58.9 percent of the respondents had one to three auditors and 77.9 percent had one to six auditors

who only perform IAA. The number of organizations which had more than 25 auditors were one

organization (2.0%) in Fishing / Food industry group, seven organizations (6.8%) in Electric equipment,

one organization (2.6%) in Transportation equipment, five organizations (7.0%) in Trading, five

organizations (31.3%) in Life insurance, six organizations (46.2%) in Non-life insurance, 28

organizations (17.3%) in Finance, four organizations (6.3%) in Transportation / Warehouse, one

organization (2.8%) in Telecom / Advertising, five organizations (29.4%) in Electric / Gas, one

organization (0.5%) in Service, and one organization (2.6%) in Independent administrative institution /

Special public institution / School corporation / Association etc. Finance industry group was the top in

terms of the number of organizations which had more than 25 auditors who perform only IAA, and

Non-life insurance industry group was the top in terms of ratio.

Table 7 shows that the number of auditors is generally small in small capital organizations. In table 8, we

can see that the number of auditors is generally small in organizations with a small number of employees.

The relationship between the number of auditors and number of employees is shown on the following

page.

24


1 2 3 4 5 6 7 8 9 10 � 14 15 � 24 25 � 49 50 � Total # of auditors

The number of

Employees

# % # % # % # % # % # % # % # % # % # % # % # % # % #

� 500 201 45.7 120 27.3 45 10.2 34 7.7 13 3.0 7 1.6 5 1.1 3 0.7 2 0.5 8 1.8 2 0.5 - - - - 440

501 � 1,000 72 25.7 93 33.2 33 11.8 34 12.1 14 5.0 12 4.3 3 1.1 4 1.4 3 1.1 9 3.2 3 1.1 - - - - 280

1,001 � 2,000 35 13.6 61 23.6 48 18.6 35 13.6 16 6.2 16 6.2 6 2.3 6 2.3 3 1.2 12 4.7 13 5.0 7 2.7 - - 258

2,001 � 3,000 10 8.8 23 20.4 15 13.3 10 8.8 8 7.1 8 7.1 11 9.7 4 3.5 1 0.9 5 4.4 8 7.1 10 8.8 - - 113

3,001 � 5,000 7 6.7 7 6.7 15 14.4 6 5.8 13 12.5 7 6.7 8 7.7 6 5.8 3 2.9 17 16.3 4 3.8 8 7.7 3 2.9 104

5,001 � 10,000 5 4.8 8 7.7 8 7.7 6 5.8 4 3.8 5 4.8 12 11.5 3 2.9 7 6.7 22 21.2 12 11.5 7 6.7 5 4.8 104

10,001 � 30,000 - - 1 2.0 1 2.0 3 6.1 4 8.2 2 4.1 2 4.1 5 10.2 1 2.0 9 18.4 7 14.3 7 14.3 7 14.3 49

30,001 � 100,000 1 5.3 - - - - 1 5.3 - - 2 10.5 - - - - - - 4 21.1 4 21.1 2 10.5 5 26.3 19

100,000 � - - - - - - - - - - - - - - - - - - - - 1 25.0 2 50.0 1 25.0 4

Total (# of Organizations) 331 313 165 129 72 59 47 31 20 86 54 43 21 1,371

Ratio (%) 24.1 22.8 12.0 9.4 5.3 4.3 3.4 2.3 1.5 6.3 3.9 3.1 1.5

� Not applicable: 19 organizations

� No responses: 83 organizations

25

(6) Number of auditors who are also assigned non-IAA (Table 9)

This is the first time to study on the number of auditors who are also assigned non-IAA. Four hundred

and seventeen respondents (28.3%) had auditors who are also assigned non-IAA. In terms of industry

group, 51 organizations in Service, 35 organizations in Finance, 33 organizations in Electric

equipment, 31 organizations in Chemical, 27 organizations in Construction, and 25 organizations in

Machine had such auditors. Particularly, in Finance, there was one organization which had more than

50 auditors who are also assigned non-IAA, and there was one organization in Fishing / Food and

Metal, which had 25 to 49 auditors who are also assigned non-IAA.

(7) Number of auditors who are non-permanent employees (Table 10)

This is a study of part-time and temporary employees in the IAA. Of the 1,473 total usable responses,

198 respondents (13.4%) had non-permanent employees. However, it is not known whether these

non-permanent employees were auditors or audit administration staff. In terms of industry group, 15

organizations (14.2%) were in Electric equipment, 44 organizations (26.2%) were in Finance, 18

organizations (9.3%) were in Service.

(8) Other activities which the IAA is assigned (Table 11)

This is a study to confirm organizational independence of the IAA, which is one of the most important

aspects for the IAA.



2007 2003 2000 1997 Research year

Other activities assigned # % # % # % # %

Internal audit only 913 62.2 701 67.1 539 62.6 518 56.9

Accounting / Finance 107 7.3 38 3.6 16 1.9 16 1.8

General Affairs / Human Resources 83 5.7 33 3.2 17 2.0 15 1.6

Legal / Compliance 59 4.0 78 7.5 18 2.1 15 1.6

Administration (Budget) 57 3.9 9 0.9 2 0.2 6 0.7

Kansayaku / Audit Committee staff 50 3.4 140 13.4 190 22.1 233 25.6

Planning / PR 41 2.8 46 4.4 36 4.2 53 5.8

Information System (Information security) 40 2.7 5 0.4 - - - -

Sales / Marketing 37 2.5 - - - - - -

Risk Management 30 2.0 - - - - - -

Environment Management / ISO 29 2.0 14 1.2 - - - -

Whistle blowing 21 1.4 - - - - - -

Affiliate company management 21 1.4 6 0.5 - - - -

Promotion of Internal Controls 21 1.4 - - - - - -

Materials / Purchasing 18 1.2 - - - - - -

Production 18 1.2 - - - - - -

Research / Development 12 0.8 - - - - - -

President’s office / Secretary office 10 0.7 - - - - - -

Advertisement 3 0.2 - - - - - -

Regulatory relations 3 0.2 - - - - - -

Asset evaluation / Credit control - - 15 1.3 - - - -

Improvement suggestion - - 32 3.1 39 4.5 37 4.1

26

2007 2003 2000 1997 Research year

Other activities assigned # % # % # % # %

External auditors relations - - 33 3.2 29 3.4 44 4.8

Others 6 0.4 49 4.1 6 0.7 - -

The ratio of assigned “accounting / finance”, “general affairs / human resources”, “administration

(budget)” generally increased. In relation to the recent implementation of the Financial Instruments

and Exchange Law and the Internal Control Report System (so called “J-SOX), responses in the

research conducted in 2007 included new activities such as “internal control project” and “J-SOX”.

(9) Average years of experience as internal auditors (Tables 12 to 13)



2007 2003 2000 1997 Research year

Experiences # % # % # % # %

Less than 3 years 907 62.6 583 56.2 452 52.0 442 48.7

3�less than 5 years 404 27.9 310 29.9 276 31.8 331 36.5

5�less than 10 years 118 8.1 112 10.8 109 12.5 115 12.7

10 years or more 21 1.4 32 3.1 32 3.7 20 2.2

The ratio of “less than 3 years” has been increasing. Table 13 showed the average years of experience

as internal auditors by the number of employees of the organizations. More than 60 percent of the

organizations which have less than 3,001 employees responded that the average years of experience is

less than three years. Fifty percent-level or less of the organizations which have more than 3,000

employees responded that the average years of experience is less than three years.

(10) Training of internal audit (Table 14)

The historical data whether training is conducting is as follows.


2007 2003 2000 1997 Research year

Training # % # % # % # %

Conducting 1,386 95.1 830 80.8 796 84.1 755 82.9

Not conducting 72 4.9 197 19.2 151 153.9 156 17.1

Majority of respondents conducted internal audit training. Many organizations participated to training

that conducted by outside of their organizations.

(11) Holders of QIA (Qualified Internal Auditor), CIA (Certified Internal Auditor) and other internal audit

related qualifications (Tables 15 to 23)

Tables 15 to 23 are the results of the study of internal audit and related qualification holders. In the

research conducted in 2007, “Qualified Information System Internal Auditor (QISIA)”, “Certified

Financial Internal Auditor�CFIA�, “Certification in Control Self-Assessment (CCSA)”, and “Certified

Financial Services Auditor (CFSA)” were added to the internal audit related qualifications.

According to Table 15, 50.8 percent of respondents did not have internal audit and related qualification

27

holders. Of the 1,460 respondents, 434 organizations (29.7%) had QIA holders and 229 organizations

(15.7%) had CIA holders.

The following is the number of organizations which had QIA holders and CIA holders or both by

industry group.


QIA CIA (CIA only) Qualification

Industry 2007 2003 2007 2003 2007 2003

Construction 13 4 5 - 2 -

Fishing / Food 26 16 6 2 - 1

Textile / Paper / Pulp 6 1 1 - - -

Chemical 31 16 10 2 3 1

Medicine 19 15 12 3 1 1

Oil / Coal / Mining 6 2 3 1 1 1

Rubber 1 2 2 - 1 -

Glass / Soil & Stone 7 2 1 - - -

Steel 4 2 2 - - -

Metal 6 4 - - - -

Machine 16 4 10 2 5 1

Electric equipment 37 21 19 9 4 3

Transportation equipment 12 7 7 1 1 -

Precision equipment 8 4 4 - 1 -

Misc. manufacturing 15 6 4 2 1 -

Trading 19 21 9 6 2 -

Department store / Super market 11 8 3 2 - -

Various commercial 18 7 8 1 4 -

Life insurance 6 4 11 7 3 5

Non-life insurance 4 5 8 4 1 -

Finance 16 18 32 14 7 11

Real estate 17 1 7 - 2 -

Transportation / Warehouse 23 9 11 1 1 1

Telecom / Advertising 23 1 8 - 1 -

Electric / Gas 11 11 9 2 3 -

Services 71 42 33 5 10 2

Independent administrative institution / Special

public institution / School corporation /

Association etc.

8 1 4 - 2 -

Total (# of Organizations) 434 234 229 64 56 27

The numbers of organizations which had QIA holders increased notably except for Trading and

Finance industry group. The numbers of organizations which had CIA holders also increased

dramatically.

Tables 16 and 17 are summary of the number of QIA holders by industry and by the number of

employees. Tables 19 and 20 are summary of the number of CIA holders by industry and by the

number of employees.

28

(12) Prior experiences of internal auditors (Table 24)

This study analyzed the trend that internal auditors are transferred from other functions / departments

within the organization. (Multiple answers were allowed.) The historical data is as follows.

Unit: percent

Research year

Prior experiences 2007 2003 2000 1997

Sales / Marketing 47.9 49.7 41.3 39.5

Administration 42.9 29.5 23.1 23.1

Accounting / Finance 39.2 42.6 44.9 50.8

General Affairs / Human Resources 31.6 24.3 21.7 25.0

Information System 22.3 18.6 12.2 14.4

Internal Audit from the begging 17.1 4.0 3.8 3.8

Production 14.0 8.8 9.0 7.6

Technology / Development 10.7 12.8 15.7 10.2

Materials / Purchasing 9.2 8.1 7.7 8.3

Parent / Affiliate company 9.4 2.4 - -

Others 7.5 8.4 0.5 8.0

Because many organizations have been facing competitive market, “sales / marketing” has been

increasing since 1997. Reflecting importance of operational audits, “administration” also has been

increasing. In contrast, “accounting / finance” has been decreasing over the past 10 years.

(13) Special considerations when internal auditors are transferred (Table 25)

This study is to understand whether experience as an internal auditor is taken into considerations when

the auditor is transferred to other functions / departments within the organization. The historical data is

as follows.


2007 2003 2000 1997 Research year

Considerations # % # % # % # %

Take internal audit experience into

considerations 734 55.1 457 50.6 329 39.7 362 43.2

Not take internal audit experience

into considerations 597 44.9 446 49.4 500 60.3 476 56.8

The ratio of “experience as an internal auditor is taken into consideration” has been increasing and the

results of 2007 study showed the highest percentage.

(14) Establishment and approval of the internal audit charter and the procedure manual (Tables 26 to 29)

As the historical data below showed, establishment of the internal audit charter became common

practice.


2007 2003 2000 1997 Research year

Internal Audit Charter # % # % # % # %

Established 1,444 98.7 979 96.5 842 96.8 869 95.5

Not established 19 1.3 35 3.5 28 3.2 41 4.5

29

In addition to the charter, the procedure manual is also established as a separate document or as a part

of the charter. The historical data is as follows.


2007 2003 2000 1997 Research year

Structure # % # % # % # %

Charter only 582 39.8 383 37.8 408 46.9 418 45.9

Both Charter and Procedure manual 823 56.3 581 57.3 421 48.4 451 49.6

Procedure Manual only 39 2.7 15 1.5 13 1.5 - -

Most of (95.2%) the internal audit charter was approved by authoritative body such as “president”

(39.9%), “executive committee” (10.2%), and “board” (45.1%). On the other hand, 45.1 percent of the

procedure manual was approved by the CAE.

Table29 is a study to confirm whether the internal audit charter and the procedure manual adhered to

the Standards. The result of the study in the research in 2007 and 2003 is as follows.



Standards # % # %

Adhered 933 70.0 544 57.6

Not adhered 399 30.0 401 42.4

Industry groups which showed higher percentage to adhere the Guidance of the Standards for Japan,

which is an interpretation of the Standards to accommodate Japanese governance systems, or the

Standards were Textile / Paper / Pulp, Chemical, Medicine, Oil / Coal / Mining, Rubber, Glass / Soil &

Stone, Electric equipment, Precision equipment, Various commercial, and Non-life insurance.

Especially, Textile / Paper / Pulp, Chemical, and Glass / Soil & Stone showed hither percentage as

same as the result of the research conducted in 2003.

Two hundred and thirty-three organizations (17.5%) adhered to the Standards. Of those, Rubber, Life

insurance, and Non-life insurance industry group showed higher percentage.

30

3. Internal Audit Plan (Tables 30 to 42)

(1) Conducting risk assessment by the IAA (Table 30)

The historical data whether the IAA conducts business risk or control risk assessment is as follows.


2007 2003 2000 Research year

Risk assessment # % # % # %

Conducting 889 61.2 495 49.1 368 42.3

Not conducting 563 38.8 513 50.9 502 57.7

Risk assessment is necessary when the IAA determine:

a) audit universe at annual audit planning

b) engagement objectives

c) risk approach for each engagement

As shown above, the ratio of the IAA which conducts risk assessment has been increasing.

(2) Timing of risk assessment (Table 31)

When the IAA conducts risk assessment, there are two types. One is to evaluate risk assessment which

is conducted by risk assessment functions / departments, and the other is risk assessment which is

conducted by the IAA to make annual audit plan (i.e. the IAA does not act as risk assessment

functions).

This study is based on the assumption that the IAA does not act as risk assessment functions.



Timing of risk assessment # % # %

Annual audit planning 550 62.7 306 61.8

Each engagement planning 424 48.3 271 54.7

After each engagement completed 213 24.3 - -

Others 15 1.7 22 4.4

Many organizations conducted risk assessment at the annual audit planning and at the each

engagement planning. It is important to conduct risk assessment after the each engagement if the

engagement was conducted based on the risk assessment. However, risk assessment after completion

of the each engagement is not popular yet.

(3) Sources to determine audit universe (Table 32)

The ratio of the following five sources to determine audit universe has still been high.

Unit: percent

Research year

Sources to determine audit universe 2007 2003 2000 1997

From key management objectives 75.5 82.6 75.8 75.1

Review prior working papers / audit reports 62.0 54.4 42.9 37.5

Based on results of risk assessment 48.5 30.9 15.0 -

Consult with top management 44.6 45.4 45.7 42.9

31

Research year


Consult with other departments 22.8 30.7 27.3 27.0

From the research conducted in 2007, the following items were added to the sources.

- Consult with the kansayaku / audit committee (464 organizations, 31.8%)

- Based on the “Practice Standards for Management Assessment and Audit concerning Internal

Control Over Financial Reporting” (323 organizations, 22.2%)

- From the results of self-check / CSA (208 organizations, 14.3%)

- Based on the “Inspection Manual of Financial Services Agency” (168 organizations, 11.5%)

The historical data of the rest of items in Table 32, which are not included in the above nine items, is as

follows.

Unit: percent

Research year


Review meeting minutes / approval requests 19.1 18.2 14.5 11.9

Based on on-site review 19.0 24.0 17.4 13.7

Attend internal meetings 18.3 18.0 12.7 11.0

Rumor / letters / whistle-blowing 14.2 9.6 4.6 3.7

Review business process flowchart 12.4 15.4 10.4 10.2

Examine management information data 10.2 14.4 12.4 11.9

Select large expenditure departments 6.8 9.1 6.9 5.4

Benchmark comparison to competitors 2.0 4.5 4.4 3.3

“Review meeting minutes / approval request” and “attend internal meetings” have been increasing

during past 10 years.

(4) Method to determine audit universe (Table 33)

The historical data of five major methods to determine audit entities is as follows.

Unit: percent

Research year

Method to determine audit universe 2007 2003 2000 1997

Selected by CAE and supported by top management 74.4 70.3 56.0 58.2

Determined by Internal Audit Activity 33.3 32.8 42.2 40.6

Instructed by top management 23.1 14.9 13.0 12.1

Discussed with Kansayaku / Audit Committee 18.9 - - -

Requested by other departments 7.4 8.9 5.1 4.2

From the research conducted in 2007, “discussed with the kansayaku / audit committee” (276

organizations, 18.9%) was added. This ratio was higher than “requested by other departments”. As

multiple answers were allowed to this question, the total exceeded 100 percent. The highest increase

from the research conducted in 2003 was “instructed by top management", and gradual increase was

“selected by the CAE and supported by top management".

(5) Development and format of internal audit checklist (Tables 34 to 35)

32

Development of standardized and/or a unique audit checklist is common practice. The historical data

is as follows.

Unit: percent

Research year

Audit checklist 2007 2003 2000 1997

Developing 88.3 89.0 89.3 88.2

Not developing 11.7 11.0 10.7 11.7

Format of the standardized checklist is as follows.

Unit: percent

Research year

Format 2007 2003 2000 1997

List engagement objectives 34.7 35.8 47.5 51.0

List engagement objectives and engagement work program 11.8 14.5 17.1 14.9

List engagement objectives, engagement work program and

findings 33.6 27.6 23.0 31.5

Point rating system based on an importance of engagement

objectives 6.1 8.9 5.9 7.5

List engagement objectives, engagement work program and

findings, and add point rating system 13.1 15.9 11.8 15.1

“List engagement objectives” has been decreasing. “List engagement objectives, engagement work

program and findings” increased to 33.6 percent while it was 20 percent-level in the research

conducted in 2000 and 2003.

(6) Classification, length, and approval of internal audit plan (Tables 36 to 42)

Almost all (98.8 percent) of the organizations developed some form of audit plan. Because only

long-term plan”, “annual plan and “engagement plan” were examined in the research conducted in

2007, historical comparisons are not possible. The result of the research conducted in 2007 is as

follows. (Multiple answers were allowed to this question.)


Audit plan development # %

Long-term (exceeding one year) 231 15.9

Annual plan 1,351 93.2

Engagement plan 911 62.8

As the study showed, 84.1 percent of the organizations did not develop long-term audit plan.

Tables 37, 39, and 41 are length (frequency) of audit plans.

Length of long-term plan is as follows.

Unit: percent

Research year

Length 2007 2003 2000

2 years 7.0 11.1 16.2

3 years 65.5 80.2 71.5

4 to 5 years 26.2 7.9 3.8

33

Research year

Length 2007 2003 2000

Others 1.3 0.8 1.5

Length of annual plan is as follows.

Unit: percent

Research year

Length 2007 2003 2000

1 year 98.2 96.9 97.5

6 months 1.6 3.1 1.9

Others 0.2 - 0.6

Frequency to prepare engagement plan is as follows.

Unit: percent

Research year

Frequency 2007 2003 2000 1997

Each engagement 64.4 66.1 66.3 32.3

1 month 9.6 3.6 1.9 8.2

3 months 4.5 8.9 6.5 6.0

6 months 7.3 15.7 20.4 13.4

1 year 13.6 4.8 3.0 40.2

Others 0.6 0.7 1.9 -

Tables 38, 40, and 42 are study of approval of audit plans.

Approval of long-term plan is as follows.

Unit: percent

Research year

Approved by 2007 2003 2000

President 55.5 59.1 71.7

Board 18.9 12.6 3.9

Executive Committee 4.7 4.7

Management Committee 7.5

5.5 8.7

Executive in charge of audit 11.9 11.8 3.1

Kansayaku or Audit Committee 0.9 4.7 6.3

CAE 2.2 4.7 6.3

Others 3.1 1.6 1.6

Most (93.8%) of long-term audit plans were approved by “president”, “board”, “executive committee”,

“management committee, or “executive in charge of audit”. This means long-term audit plan is not

only information within the IAA but also formal document for the organization.

Approval of engagement plan is as follows.

Unit: percent

Research year

Approved by 2007 2003 2000 1997

34

Research year

Approved by 2007 2003 2000 1997

President 37.1 38.3 41.0 48.7

Board 2.4 1.6 0.5 0.4

Executive Committee 1.6 1.4 1.0


0.3 0.3 1.0

Executive in charge of audit 7.5 10.8 12.4 2.2

Kansayaku 0.7 - 15.1

Audit Committee 1.0

0.2 - -

Executive Officer 0.3 0.3 - -

CAE 49.2 45.8 43.6 30.2

Others 0.9 0.3 0.7 1.4

The CAE is the highest, the president is the next.

35

4. Performing Internal Audit (Tables 43 to 57)

(1) Compliance with the Standards (Table 43)

There are “The International Standards for the Professional Practices of Internal Auditing (the

Standards)” and “Guidance of the Standards for Japan” that is an interpretation of the Standards to

accommodate Japanese governance systems. The historical data whether the IAAs comply with the

Standards is as follows:



Standards # % # % # %

Complying 320 22.0 165 16.2 594 69.0

Trying to comply 930 63.9 586 57.6 248 28.8

Not paying attention at all

(2003 and 2000: Not complying) 205 14.1 267 26.2 19 2.2

“Complying” and “trying to comply” dramatically increased from the research conducted in 2003.

The ratio of “not paying attention at all” was almost half of the result in 2003 study.

By industry group, Rubber (80.0%), Life insurance (47.1%), Non-life insurance (38.5%), and

Telecom / Advertising (38.5%) showed high percentage in “complying”. Metal (31.3%), Textile /

Paper / Pulp (25.0%), Finance (24.7%), Special public institution etc. (23.3%), Construction (18.8%),

Steel (17.6%), Trading (17.1%), Electric / Gas (16.7%), and Machine (16.2%) showed high

percentage in “not paying attention at all”. While many organizations in Finance industry group

responded “complying” or “trying to comply", one fourth responded “not paying attention at all”.

(2) Type of internal audit engagements (Table 44)

This is a study to examine which type of engagement is more focused on either operational audits or

financial audits. “ Financial audit only” has been decreasing historically, but it slightly (12

organizations, 0.8%) increased in the research conducted in 2007. However, “financial audit only” is

very exceptional. Two organizations in each Electric and Service industry group, and one organization

in Construction, Chemical, Steel, Machine, Misc. manufacturing, Trading, Finance, and Real estate

responded they conducted “financial audit only”.

While most of the organizations performed both financial and operational audit, some performed

operational audit only. Although the research conducted in 2007 did not include a question to ask the

reason why financial audit was not performed, the following is a historical data to this question for

your reference.



Reason # % # % # %

Leave financial audit entirely to external auditors

(CPAs) 226 24.8 166 17.6 123 15.4

Financial audit is included in operational audit 128 14.1 147 15.6 151 18.9

The next question is “when organizations perform both financial and operational audit, which is

primarily focused on?” The historical data is as follows.

36

Unit: percent

Research year

Weight 2007 2003 2000 1997

Primarily operational audit 45.3 42.9 47.2 35.2

Same weight on both operational and financial audits 21.2 20.0 21.7 18.9

Primarily financial audit 3.7 5.0 7.1 6.5

Seventy point two percent performed both financial and operational audit. The ratio increased 2.3

percent from the study conducted in 2003. Notable increase from 2003 to 2007 is “primarily

operational audit” and “same weight on both operational and financial audit".

(3) Classification of audit entities (Table 45)

This is a study to confirm different perspective to classify audit entities. The historical data is as

follows. (Note: Multiple answers were not requested after the research conducted in 2000.)

Unit: percent

Research year

Classification 2007 2003 2000 1997

By department 59.4 61.0 68.8 65.1

By function 3.8 3.6 4.4 6.4

Both by department and by function 36.7 35.4 - -

Depends on audit theme - - 25.3 29.6

Others - - 1.5

(4) Name on internal audit engagement notice letter (Table 46)

Majority (83.9%) of engagement notice letter’s name was the CAE. This trend has been stable since

the research conducted in 1994. The historical data is as follows.

Unit: percent

Research year

Name on engagement notice letter 2007 2003 2000 1997

CAE 83.9 78.2 84.2 81.6

President 8.0 13.1 7.1 8.3


Both President and CAE 1.3 - - -

Both Executive in charge of audit and CAE 1.0 1.4 2.6 3.8

Others 2.2 2.8 1.0 -

(5) Notification of internal audit engagement to audit clients (Tables 47 to 48)

Majority (1,311 organizations, 90.0%) of the organizations performed audits with prior notice and this

is common practice in Japan. However, 145 organizations (10.0%) performed audits without prior

notice (surprise audit). The reason and the historical data are as follows.


Research year

Reason 2007 2003 2000 1997

To conduct physical inspection 102 130 - -

To prevent destruction of facts and evidences 100 103 30 3

37

Research year

Reason 2007 2003 2000 1997

To conduct fraud audit 78 73 8 13

To let audit client have sense of tension 73 89 - -

In case of special audit requested by President 11 14 - -

In case of urgency 6 1 - -

The audit is based on rumor / anonymous letter /

whistle-blowing 5 6 - -

To confirm normal operation - 1 1 71

Depends on the number of audit entities - 1 - -

Among 145 organizations which performed audits without prior notice, 100 organizations (71.4%)

responded “to prevent destruction of facts and evidences” and 102 organizations (72.9%) responded

“to conduct physical inspection”.

(6) Order of the importance of the Internal Control Objectives (Table 49)

As the internal control objectives, “reliability of financial reporting”, “compliance with applicable

laws and regulations”, “safeguard of assets”, and “effectiveness and efficiency of operations” are

shown in the “Standard”, the “Practice Standards for Management Assessment and Audit concerning

Internal Control Over Financial Reporting”, etc. This is a study to confirm the order of the importance

of each internal control objective. While previous study conducted in 2003 referred to COSO

framework and responses to accounting frauds such as Enron, the study in 2007 was to confirm

changes to the order of the importance of each objective after implementation of the Financial

Instruments and Exchange Law. The top ten types (4 percent or more in the results in 2007 or 2003)

are as follows.

Unit: percent

Research year

Order of importance 2007 2003

1 Compliance with applicable laws and regulations – Effectiveness and efficiency of operations

– Reliability of financial reporting – Safeguard of assets 12.8 9.5

2 Compliance with applicable laws and regulations – Reliability of financial reporting –

Effectiveness and efficiency of operations –Safeguard of assets 12.6 6.8

3 Compliance with applicable laws and regulations – Reliability of financial reporting

–Safeguard of assets –Effectiveness and efficiency of operations 12.2 16.4

4 Compliance with applicable laws and regulations – Effectiveness and efficiency of operations

–Safeguard of assets – Reliability of financial reporting 10.3 11.0

5 Reliability of financial reporting –Compliance with applicable laws and

regulations–Safeguard of assets – Effectiveness and efficiency of operations 8.8 3.8

6 Effectiveness and efficiency of operations – Compliance with applicable laws and

regulations–Safeguard of assets – Reliability of financial reporting 7.0 6.1

7 Reliability of financial reporting –Compliance with applicable laws and regulations –

Effectiveness and efficiency of operations–Safeguard of assets 6.2 2.1

8 Effectiveness and efficiency of operations–Compliance with applicable laws and regulations

–Reliability of financial reporting –Safeguard of assets 5.7 3.7

9 Compliance with applicable laws and regulations – Safeguard of assets – Effectiveness and 4.1 9.1

38

Research year

Order of importance 2007 2003

efficiency of operations – Reliability of financial reporting

10 Compliance with applicable laws and regulations – Safeguard of assets –Reliability of

financial reporting – Effectiveness and efficiency of operations 4.1 11.7

The ratio of the most important objective is as follows.

Unit: percent

Research year

Most important objective 2007 2003

Compliance with applicable laws and regulations 56.0 64.5

Reliability of financial reporting 20.4 11.9

Effectiveness and efficiency of operations 19.0 16.6

Safeguard of assets 4.5 7.0

(7) Implementation and development of self-assessment (CSA) by audit clients (Tables 50 to 51)

Control Self-Assessment (CSA) attracted attention during past two or three years as a monitoring

activity of internal control systems. The historical data of the implementation is as follows.


2007 2003 2000 1997 Research year

CSA # % # % # % # %

Implemented

(incl. partially implemented) 817 56.2 498 48.7 265 30.9 265 29.3

Not implemented

(incl. under consideration) 638 43.8 524 51.3 593 69.1 638 70.7

More than fifty percent of organizations implemented CSA. The IAA’s involvement of development

of CSA checklist is as follows.


2007 2003 2000 1997 Research year

Who develop checklist? # % # % # % # %

IAA 288 35.3 203 41.3 168 67.5 205 77.4

Audit client (2003 and before: other

departments) 191 23.4 174 35.3 34 13.7 60 22.6

Administration department 139 17.1 - - - - - -

Together with IAA and

Administration department 83 10.2 46 9.3 10 4.0 - -

Together with IAA and audit clients 66 8.1 51 10.4 37 14.9 - -

Together with audit clients and

Administration department 48 5.9 18 3.7 - - - -

The IAA’s involvement has been decreasing. Instead, involvement of Administration department has

been increasing.

(8) Audit techniques used by the IAA at field work (Table 52)

39

Multiple answers were allowed to this question. While interviews have been frequently used and the

ratios have been increasing, the ratios of substantive testing such as sampling have been decreasing.

Summary of the historical data since 1997 is as follows.

Unit: percent

Research year

Techniques used 2007 2003 2000 1997

Examine information and ledgers 97.1 96.7 88.3 89.2

Interview general condition with responsible

person 88.7 88.8 74.8 72.0

Frequently used Interview details with person in charge 86.8 86.7 71.1 75.0

Observe working condition and working

environment 59.3 58.1 43.7 32.2

Count cash and securities 58.7 63.4 49.0 47.9

Som

etime used Count non-cash items 43.3 46.1 29.7 26.8

(9) Format of working papers (Table 53)


Unit: percent

Research year

Format of working papers 2007 2003 2000 1997

Established standardized format 70.9 69.0 68.6 66.1

Not established 20.2 23.3 30.0 33.9

Established for specific audit engagement 8.5 7.3 - -

Others 0.5 0.3 1.4 -

(10) Use and purpose of Computer Assisted Audit Techniques (CAAT) (Tables 54 to 55)

Only 114 organizations (7.9%) used CAAT. It seems there were some misunderstandings about

“CAAT”, because 85.1 percent responded “Computer is used to prepare working papers” in the

research conducted in 2003.

Of the 114 respondents, 47 organizations (43.5%) used CAAT as “general support tool”, 27

organizations (25.0%) used CAAT as “data analysis tool”, and 12 organizations (11.1%) used CAAT

as “management tool of the IAA”.

(11) Outsourcing of the IAA (Tables 56 to 57)

Resources to conduct internal audit is not only internal auditors within the organization but also

include the followings.

1) Specific person within the organization

2) Co-working with specific person within the organization and internal auditors

3) Co-sourcing with the third-party and internal auditors

4) Outsourcing to the third-party

Although outsourcing to the third-party in above 4) may include both outsourcing of the entire IAA and

outsourcing of the specific area of internal audit, the study result showed that outsourcing in the above 4)

is considered latter situation.


40

# %

Outsource entire IAA - -

Outsourcing partially 156 10.8

Not outsourcing 1,284 89.2

Outsourcing is not common; however, about 10 percent of respondents used outsourcing. By industry

group, Finance industry (26.3%), Service (10.3%), Transportation / Warehouse (5.8%), Electric

equipment (5.1%), Trading (5.1%), Life Insurance (5.1%), and Real estate (5.1%) used outsourcing.

Table 57 is a breakdown of the 151 organizations, which used outsourcing partially. Of those, 62

organizations (41.1%) responded “co-sourcing with the third-party and IAA”, 52 organizations

(34.4%) responded “outsourcing the IAA to the third-party”. Three-quarters of the 151 organizations

used the third-party as outsourcer. On the other hand, seven organizations (4.6%) used specific

person within the organization as outsourcer, and 30 organizations (19.9%) co-worked with specific

person within the organization.

41

5. Internal Audit Report and Follow-up (Tables 58 to 74)

(1) Confirming findings with audit clients before issuing internal audit report (Table 58)

An exit meeting is generally held to confirm facts of findings, interpretation of judgments, and criteria

to determine materiality between audit clients and internal auditors before issuing the final audit report.

The question in the research conducted until 1997 was “whether opinions are discussed / adjusted”,

however, the question was changed to “how to confirm the findings” from the research conducted in

2000. The historical result is as follows.

Unit: percent

Research year

Method of confirmation 2007 2003 2000 1997

Confirming during fieldwork 48.8 41.5 86.1 79.2

Confirming both during fieldwork and by fax / email 32.3 37.3 2.5 -

Confirming by fax / email 13.4 11.3 7.2 -

Confirming by other method 3.0 - -

Not confirming 2.6 7.6 4.0 20.8

Most of the organizations (97.4%) confirmed facts of findings before issuing the final audit report. Of

those, 81.1 percent confirmed by “face to face” style during the fieldwork.

(2) Timing of the reporting of engagement outcomes (Table 59)

Although timing of the reporting of engagement outcomes depends on the type of internal audit report,

the historical data since 1997 is as follows.

Unit: percent

Research year

Timing of reporting 2007 2003 2000 1997

After each engagement 83.3 84.8 85.7 90.7

Not consistent – depends on audit theme 4.1 4.1 8.4 6.5

At the end of fiscal year 2.1 1.7 2.6 2.9

Periodically (Quarterly, Semi-annually, etc.) 10.5 9.4 2.9 -

There are two types of internal audit report; one is to communicate specific findings to management,

and the other is to summarize audit results during certain period of time.

If an audit is based on management's needs, and/or an audit is emphasized improvement to findings,

the former type of report will be prepared. On the other hand, if the report is periodical performance

report of the IAA, and/or audits are periodical assurance of organization’s departments, functions, or

systems, the above latter type of report will be prepared.

The former type of report may be prepared “after each engagement” and the latter type of report may

be prepared “at the end of fiscal year” or “periodically”. “Not consistent - depends on audit theme” can

be applicable to both types of reports.

(3) Format of internal audit report (Table 60)

There are two formats of internal audit report. One is a summary report and the other is a detailed

report. The ratio to prepare each or both reports since 1997 is as follows.

42

Unit: percent

Research year

Format of report prepared 2007 2003 2000 1997

Both summary and detailed report 58.2 55.8 60.1 56.8

Summary report only 21.1 24.4 26.0 38.3

Detailed report only 20.6 19.7 13.3 12.3

Others - - 0.6 -

More than half of the organizations prepared both summary and detailed report. This trend has been

unchanged over past ten years.

(4) Distribution of internal audit report (Tables 61 to 63)

The following is the results of study in 2007 and 2003 on distribution of internal audit report. Multiple

answers were allowed.

Unit: percent

Summary report

only

Detailed report

only

Both summary

and detailed

Research year

Distribution to 2007 2003 2007 2003 2007 2003

President 88.6 81.0 84.6 83.1 84.8 82.2

Board 10.4 9.8 13.4 8.2 21.6 13.1

Executive Committee 7.7 6.7 16.1


7.3 7.2

3.1 18.1

8.4

Executive in charge of audit 11.0 20.3 18.2 22.1 26.4 28.9

Kansayaku / Audit Committee 23.1 11.8 28.4 14.9 46.5 23.6

Executive Officer 2.3 3.3 2.7 5.1 5.3 3.3

Executive in charge of audit client 26.4 3.7 33.6 30.8 54.1 43.1

Distribution to “president” showed high percentage in any types of reports. In comparison to the

research conducted in 2003, the ratio of distribution to “board” and “kansayaku / audit committee”

increased.

“Executive officer” is considered as executive officers other than executive in charge of audit and

CAE. It is easy to understand that distribution to “executive in charge of audit client” has been

increasing steadily.

If both summary and detailed reports were prepared, these reports tended to distribute to each of the

above party.

(5) Distribution of copy of internal audit report (Tables 64 to 65)

The following is the results of study in 2007 and 2003 on distribution of copy of internal audit report.

Multiple answers were allowed.

Unit: percent

Summary report Detailed report Research year

Distribution to 2007 2003 2007 2003

President 35.9 - 32.3 -

Board 15.8 13.1 9.8 7.0

43

Summary report Detailed report

Executive Committee 8.6 5.9


7.7 7.5

3.2


Kansayaku / Audit Committee 60.0 35.3 52.6 41.4

Executive Officer 6.8 6.3 4.3 5.9

Executive in charge of audit client - -

Head of audit client 59.5

62.9 66.7

65.6

Executive of related departments 23.1 38.2

Head of related departments 26.2

33.9 27.9

37.6

External Auditor 4.9 - 5.1 -

The number of organizations has been increasing, which distributed copy of internal audit report to

“president”, “executive in charge of audit”, “kansayaku / audit committee”, “executive in charge of

audit client / head of audit client”, and “executive of related departments / head of related

departments”.

(6) Description of recommendations in internal audit report (Table 66)

Internal audit report may include the IAA’s recommendation to the findings. The historical data

whether the recommendation is described in the report is as follows.

Unit: percent

Research year

Recommendations 2007 2003 2000 1997

Describing 52.3 50.1 51.6 46.3

Describing as necessary 40.3 43.2 41.8 46.4

Not describing 7.4 6.7 6.3 7.2

Others - - 0.3 -

Majority of respondents included recommendations in internal audit report.

(7) Preparation of recommendations separately from internal audit report (Table 67)

There are several documents that relate to internal audit report such as “improvements related

documents”, “notification of audit results”, “follow-up report”, and “audit working papers”. This

study is to confirm whether a separate recommendation document is prepared by the IAA.


2007 2003 2000 1997 Research year

Separate recommendation # % # % # % # %

Preparing 679 47.1 482 47.4 416 48.0 442 48.7

Not preparing 762 52.9 534 52.6 446 51.5 466 51.3

Others - - - - 4 0.5 - -

(8) Average days to prepare internal audit report (Table 68)

Timely reporting is important to enhance the usefulness of internal audit report. Although the average

days to prepare an internal audit report may be different by type / format of the report, the historical

data since 1997 is as follows.

44

Unit: percent

Research year

Days 2007 2003 2000 1997

1 6.7 4.5 6.0 - -

2 8.8 8.8 8.2 - -

3 10.7 11.5 12.6 - -

4 2.3 2.6 3.4 - -

5 9.4 9.1 10.1 - -

6 0.6 0.2 0.7 Within 6 days 35.9

7 10.1 10.4 14.7 - -

8�15 26.6 25.4 17.8 7�15 days 36.2

16�21 7.8 7.1 9.1 - -

22�1 month 12.2 15.5 9.7 16�30 days 18.0

1 month�1.5 months 1.9 1.1 0.7 - -

1.5 months�2 months 0.7 2.6 2.8 31�59 days 7.2

More than 2 months 2.2 1.2 3.2 60 days or more 2.8

Not constant - - 0.8 - -

More than three quarters of respondents prepared an internal audit report within two weeks. This trend

has been unchanged since 1997. Three hundred and seventy-three organizations (26.2%, 24.8% in the

2003 study) prepared an internal audit report within three days and the ratio has been increasing. These

organizations are trying to prepare the internal audit report as soon as possible because timely

reporting is important for immediate management decision for corrective actions. On the other hands,

the number of organizations which responded “1.5 months to 2 months“ and ”more than 2 months”

increased although these ratios were low.

(9) Style of internal audit report (Table 69)

More than 80 percent of the organizations developed standardized style of internal audit report.

“Developed standardized styles for some audits” was added from the research conducted in 2007 and

resulted to 11.8 percent. In all, 94.6 percent of the organizations developed some standardized style of

internal audit reports.

Unit: percent

Research year

Standard style 2007 2003 2000 1997

Developed standardized style 82.8 81.7 81.9 76.6

Developed standard styles for some audits 11.8 4.6 - -

Not developed standardized style 5.4 13.7 18.1 23.4

(10) Route to instruct corrective actions on audit findings (Table 70)

It is important to clearly establish a route to instruct corrective actions on audit findings in order to

ensure audit results.

Unit: percent

Research year

Route 2007 2003 2000 1997

Chief Audit Executive to audit client 67.9 64.1 63.4 60.9

45

Research year

Route 2007 2003 2000 1997

President to audit client 17.7 22.1 25.8 26.2

Executive in charge of audit client to audit client 4.9 6.2 7.2 6.0

Executive in charge of audit to audit client 4.7 8.0 6.7 8.5

Department in charge to audit client 3.5 4.3 6.0 4.6

Executive Officer to audit client 0.5 0.9 - -

Kansayaku to audit client 0.3 0.7 3.5 2.5

Audit Committee to audit client 0.3 0.1 - -

Seventy-two point nine percent of the organizations responded “CAE to audit client”, “executive in

charge of audit to audit client”, or “kansayaku to audit client”, while 26.1 percent of the organizations

responded “president to audit client”, “executive in charge of audit client to audit client”, or

“department in charge to audit client”.

(11) Confirmation of the status of corrective actions on audit findings (Tables 71 to 72)

Most of the organizations (98.6%) confirmed the status of corrective actions on audit findings while

only 21 organizations (1.4%) did not confirm it. This trend has been unchanged since 1990’s. Method

to confirm the status of corrective actions is as follows.

Unit: percent

Research year

Method 2007 2003 2000 1997

Directly confirming fieldwork place / entity 20.3 18.8 19.0 22.4

Confirming by written report 39.4 38.3 37.8 31.4

Both directly confirming of fieldwork place / entity and by written

report 38.9 43.0 43.2 46.6

Although the ratio decreased in the research conducted in 2007, majority responded “directly

confirming fieldwork place / entity” or “both directly confirming of fieldwork place and by report”.

Timing to confirm the status of corrective actions is as follows.

Unit: percent

Research year

Timing 2007 2003 2000 1997

Follow-up audit after certain period of time 38.9 32.3 48.9 39.2

By report after certain period of time 23.8 31.4 2.3 -

At the next audit 19.5 26.9 33.3 28.5

As necessary 17.8 20.3 26.5 32.2

Because multiple answers were not allowed in the research conducted in 2007, simple comparisons to

prior results would not be appropriate. However, “by report after certain period of time”, “at the next

audit”, and “as necessary” decreased in the 2007 study. “Follow-up audit after certain period of time”

seemed be supported by more organizations.

(12) Preparation of follow-up report (Table73)


46

Unit: percent

Research year

Follow-up report 2007 2003 2000

Preparing 41.6 35.9 51.1

Preparing as necessary 27.2 26.0 3.9

Not preparing 31.3 38.2 44.6

Others - - 0.3

In comparison to the study in 2003,“preparing” and “preparing as necessary" increased 5.7 percent and

1.2 percent respectively.

(13) Retention period of the internal audit report (Table 74)


Unit: percent

Research year

Retention period 2007 2003 2000 1997

Permanently 12.0 14.3 22.2 19.4

10�29 years 7.7 - - -

7�9 years 28.1 29.2 27.3 28.6

5�6 years 10.2 4.8 3.8 4.2

3�4 years 12.8 17.3 15.2 15.1

�3 years 2.8 3.8 4.2 4.2

Others 0.3 1.6 1.0 0.3

Not stipulated 26.0 29.0 26.2 26.9

Although 26.0 percent responded “not stipulated”, majority of the respondents stipulated retention

period of internal audit report. The possibility of use and the space for retention would be considered

when organizations determine the retention period. Twenty-eight point one percent responded “7 to 9

years” and 12.8 percent responded “3 to 4 years”. Because the reports can be retained electronically, it

is desirable that audit reports are retained “permanently” as 12.0 percent responded.

47

6. Information System Audit (Tables 75 to 81)

(1) Conducting information system audit (Tables 75 to 76)

With the increase of dependency to information systems of the organizations’ operation, and the

increase of expenditure for information systems, information system audit has been attracting attention

long time.

As table 24 indicated, the number of organizations which transferred internal auditors from

information system department has been increasing (23.3%).

The ratio that the organizations conducted information system audit is as follows.

Unit: percent

Research year

Information system audit 2007 2003 2000 1997

Conducting 51.4 47.0 40.7 37.5

Not conducting 48.6 53.0 59.3 62.5

Although the organizations which conduct information system audit exceeded 50 percent, and the

ratio has been increasing, it is considered insufficient.

Industry groups which “conducting” information system audit exceeded “mot conducting” were

Textile / Paper, Pulp, Chemical, Metal, Electric equipment, Transportation equipment, Precision

equipment, Life insurance, Non-life insurance, Finance, Electric / Gas, and Service.

Entity to conduct information audit is as follows.

Unit: percent

Research year

Entity 2007 2003 2000 1997

IAA 28.8 32.1 29.9 30.4

Together with IAA and Information system department 6.0 5.0 4.2 3.7

Information system department 3.5 - 2.6 3.7

Outsourcing (including co-sourcing) 10.9 6.6 2.4 -

Others 0.8 2.5 0.6 -

About 30 percent of the organizations conducted information system audit by the IAA.

(2) Staffing of information system auditors in the IAA (Table 77)

As shown below, majority of the organizations did not allocate information system auditors in the IAA.

It will be desirable to allocate information system auditors if the audit is to evaluate adequacy of

information system and/or to technically evaluate efficiency of information system.


2007 2003 2000 1997 Research year

Information system auditors # % # % # % # %

Allocated 159 33.2 94 29.4 65 21.0 68 24.6

Not allocated 320 66.8 226 70.6 245 79.0 208 75.4

(3) Alternative method if there is no information system auditor in the IAA (Table 78)

The historical data since 1997 is as follows. (Note: Multiple answers were allowed until the research

48

conducted in 2003.)

Unit: percent

Research year

Alternative method 2007 2003 2000 1997

Limit audit scope and conduct possible audit only 69.6 73.8 71.8 80.3

Ask support to information system department 17.4 20.0 - -

Review self-assessment by information system department 7.0 10.7 14.7 13.0

Ask support to third-party 6.0 1.8 10.2 8.2

Others - - 6.5 -

Majority limited the audit scope and conducted possible audit only, because information system audit

need specialized technical skills.

(4) Approach of information system audit (Table 79)


Unit: percent

Research year

Approach 2007 2003 2000 1997

Information system audit only 16.4 17.4 26.9 19.5

As a part of operational audit 53.4 55.2 47.9 56.0

Both information system audit only and as a part of operational

audit 30.2 27.4 24.3 24.5

The ratio of “both information system audit only and as a part of operational audit” has been increasing.

In the research conducted in 1994, this ratio was 19.2 percent.

(5) Development of information system audit checklist (Table 80)

There are some information about audit checklists such as the “Inspection Manual by Financial

Service Agency”, the “FISC Information Systems Audit Guidelines for Financial Institutions by the

Financial Industry Information Systems Center (FISC)”, and the “System Audit Standards”, which

describe checkpoints of information system audit. The historical data on the development of

information system audit checklist is as follows.

Unit: percent

Research year

Information system audit checklist 2007 2003 2000 1997

Developed standardized checklist 36.8 32.3 23.4 27.6

Developing for each engagement 46.6 49.4 38.9 46.8

Not developing 16.6 18.4 37.7 25.6

As already shown in Table 34, “not developing” internal audit checklist was 11.7 percent while “not

developing” information system audit checklist was 16.6 percent.

(6) Areas of information system audit (Table 81)

Multiple answers were allowed to this question. While the total number of responses in the 2003 study

was 3,085, that in the 2007 study was 5,079, which is 1.65 times more than the figure for the 2003

49

study. While the average number of items responded in the 2007 study was 7.21, it was 6.95 in 2003,

2.21 in 2000, and 4.74 in 1997. Forty percent or more of respondents listed the following areas.

Unit: percent

Research year

Areas 2007 2003 2000 1997

Information security management 78.4 83.6 - -

Contingency planning 65.1 66.9 23.5 57.4

Maintenance of equipment 64.5 62.4 18.6 45.9

Network management 64.1 55.6 18.6 -

Organization / structure of Information System department 60.2 58.6 20.9 51.5

System planning / designing / development management 53.7 48.4 23.3 46.2

Conformity of information system strategy with organizational

policy 51.6 51.4 38.1 -

Outsourcing 44.2 30.9 6.4 -

Less than 40 percent of the respondents listed the following Areas.

Unit: percent

Research year

Areas 2007 2003 2000 1997

Documentation control 37.2 31.3 8.1 -

Input control 34.1 29.7 7.3 30.6

On-line system control 31.8 29.7 5.5 18.5

Output control 30.3 25.9 7.6 30.9

Computer usage of each department 27.1 28.6 10.5 34.7

End-user computing management 24.6 21.8 4.7 -

Expense management of Information System department 22.9 31.8 12.8 29.7

Individual application system 21.2 21.8 7.0 -

Utilization of output data 10.7 16.4 8.1 33.8

From this study, it was noted that audit of computer system itself is not so common in Japan.

50

7. Audit of Subsidiary companies and Affiliated companies (Tables 82 to 89)

(1) Conducting audits of subsidiaries / affiliates (Table 82)


Unit: percent

Research year

Subsidiaries / Affiliates audit 2007 2003 2000 1997

Conducting 73.0 68.9 69.4 65.8

Not conducting 27.0 31.1 30.6 34.2

About 70 percent of the respondents conducted subsidiaries / affiliates audit and this trend has been

unchanged so far.

(2) Criteria to audit domestic and overseas subsidiaries / affiliates (Tables 83 to 84)

Multiple answers were allowed to this question. Comparison to the research conducted in 2003 is as

follows.


Domestic

subsidiaries / affiliates

Overseas

subsidiaries / affiliates

2007 2003 2007 2003

Research year

Criteria # % # % # % # %

Wholly-owned company 456 49.4 277 43.0 169 40.7 73 33.5

Consolidated group 351 38.0 208 32.3 164 39.5 80 36.7

Majority-owned company 242 26.2 134 20.8 117 28.2 55 25.2

All subsidiaries and affiliates 242 26.2 128 19.9 100 24.1 46 21.1

No internal audit company 104 11.3 33 5.1 31 7.5 9 4.1

Sending Executives 68 7.4 40 6.2 35 8.4 12 5.5

Manufacture of company’s product

/ parts 27 2.9 17 2.6 24 5.8 10 4.6

Sales company 21 2.3 11 1.7 13 3.1 8 3.7

Investing company 6 0.7 4 0.6 6 1.4 3 1.4

Others 13 1.4 23 3.6 14 3.4 12 5.5

High-rated criteria to audit both domestic and overseas subsidiaries / affiliates were “wholly-owned

company”, “consolidated group”, “majority-owned company”, “all subsidiaries and affiliates”, and

“no internal audit company”. This is because the scope of companies to be included in the consolidated

financial statement is determined based on the actual controlling power. In addition, organizations are

required to establish structures to ensure sound management of corporate group.

(3) Priority area of subsidiaries / affiliates audit (Table 85)

The historical data of the top ten priority areas where respondents conducted audit of subsidiaries /

affiliates is as follows.

Unit: percent

51

Research year

Priority area 2007 2003 2000 1997

Compliance to laws and regulations 78.4 72.6 12.1 -

Internal Controls 77.0 69.7 19.7 52.3

Overall operation 59.8 59.9 - -

Operational improvement 57.6 59.2 23.8 66.6

Risk management 50.0 - - -

Reliability of financial statements 41.0 - - -

Safeguard of receivables 39.1 48.1 21.1 41.1

Inventory management 39.1 - - -

Profitability as a group 32.2 41.8 30.7 44.6

Health and safety 32.2 - -

In the research conducted in 2007, the five high-rated areas were “compliance to laws and regulations”,

“internal controls”, “overall operation”, “operational improvement”, and “risk management”.

“Safeguard of receivables” was a high-rated area but the ratio was lowered currently.

The other areas included in this question were “transaction with parent company” (23.3%), “security /

fire protection” (22.8%), “adequacy of management” (22.1%), “environment management” (17.8%),

“quality control” (21.2%), “sales results” (16.9%), and “investment results” (7.3%).

(4) Who requested audit of subsidiaries / affiliates? (Table 86)


Unit: percent

Research year

Who requested? 2007 2003 2000 1997

Subsidiaries / affiliates management department 59.6 5.0 8.1 9.0

President 29.2 32.3 35.5 34.2


Based on internal audit plan 0.4 66.6 66.4 62.9

Instead of “based on internal audit plan”, “subsidiaries / affiliates management department” increased

dramatically.

(5) Timing of the reporting of subsidiaries / affiliates audit (Table 87)

The following is a comparison of timing of the ordinary internal audit report (Table 59) with the

subsidiaries / affiliates audit report.

Unit: percent

Subsidiaries /

Affiliates audit report

Ordinary

audit report

Research year

Timing 2007 2003 2000 2007 2003 2000

After each engagement 85.9 90.0 80.4 83.3 84.8 85.7

At the end of fiscal year 2.1 0.3 7.8 2.1 1.7 2.6

Not consistent – depends on audit universe 3.6 4.5 4.4 4.1 4.1 8.4

Periodically (quarterly, semi-annually, etc) 8.4 8.7 6.9 10.5 9.4 2.9

Others - - 0.5 - - 0.5

52

There was no big difference of the timing between subsidiary / affiliate audit report and ordinary audit

report. Majority of audit reports were issued after the each engagement.

(6) Distribution of internal audit report of subsidiaries / affiliates (Tables 88 to 89)

In the research conducted in 2007, distribution of audit report was asked on the original and the copy

respectively. However, it was not studied separately until the research conducted in 2003. As a

reference, the historical trend until 2000 is as follows.

Unit: percent

Research year

Distribution to 2000 1997 1994

President 84.5 77.8 76.9

President of subsidiary / affiliate 56.8 55.1 59.4

Kansayaku or Audit Committee 30.3 37.1 32.0

Department in charge of subsidiaries / affiliates management 28.0 31.1 29.5

Executive in charge of audit 20.3 24.7 22.1

Executive Committee / Management Committee 6.3 8.3 7.6

Others 1.8 - -

“President” has been increasing while “president of subsidiary / affiliate” has been decreasing

historically.

Distribution of the original and copy of audit report has been studying since the research conducted in

2003. The result is as follows.

Unit: percent

Original Copy Research year

Distribution to 2007 2003 2007 2003

President 82.2 81.7 24.3 17.5

President of subsidiary / affiliate 44.9 38.6 54.4 62.2

Kansayaku 12.7 42.3

Audit Committee 28.7

2.5 50.8

9.7


Subsidiaries / affiliates management department 18.1 7.1 40.5 35.1

Board 12.1 - 11.7 -

Executive Committee / Management Committee 10.9 6.2 7.4 11.3

Head of all related departments - - 20.7 -

53

8. Environment Audit (Tables 90 to 96)

(1) Conducting environment audit (Tables 90 to 91)

The ratio that the organizations conduct environment audit is as follows.



Environment audit # % # % # %

Conducting 765 52.5 434 43.1 327 38.2

Not conducting 692 47.5 572 56.9 528 61.8

The organizations which conduct environment audit exceeded 50 percent in the research conducted in

2007. Industry groups which “conducting” environment audit exceeded “not conducting” were

Trading, Department store / Super market, Transportation / Warehouse, Electric / Gas, and all

manufacturing groups except for Textile / Paper, Pulp.

Entity to conduct environment audit is as follows.


Entity # %

1 IAA 151 20.0

2 Department in charge of environment 296 39.2

3 Together with the above 1 and 2 61 8.1

4 Quality control department 126 16.7

5 General affair department 71 9.4

6 Outsourcing 20 2.6

(*Denominator of ratio calculation is 765, which is the number of organizations conducting

environment audit.)

More than 50 percent of the organizations conducted environment audit by non-IAA.

(2) Staffing of environment auditors in the IAA (Table 92)

Although the ratio has been decreasing, majority of the organizations did not allocate environment

auditors in the IAA. Of the 765 organizations that conducted environment audit, 160 organizations

responded to this question.



Environment auditors # % # % # %

Allocated 39 24.4 29 18.6 27 18.1

Not allocated 121 75.6 127 81.4 122 81.9

(3) Alternative method if there is no environment auditors in the IAA (Table 93)

Of the 121 organizations that did not allocate environment auditors, 117 organizations responded to

this question.



Alternative method # % # % # %

54

2007 2003 2000

Limit audit scope and conduct possible audit only 96 82.1 101 80.8 106 89.8

Ask support to department in charge of

environment 17 14.5 22 17.6 11 9.3

Ask support to third-party 4 3.4 2 1.6 3 2.5

(4) Development of environment audit checklist (Table 94)

Of the 765 organizations that conducted environment audit, 156 organizations responded to this

question.



Environment audit checklist # % # % # %

Developed standardized checklist 68 43.6 68 43.6 137 52.7

Developing for each engagement 64 41.0 52 33.3 55 21.2

Not developing 24 15.4 36 23.1 70 26.9

Others - - - - 3 1.2

(5) Priority area of environment audit conducted by IAA(Table 95)

Of the 765 organizations that conducted environment audit, 158 organizations responded to this

question. Multiple answers were allowed.



Priority area # % # % # %

Environment management structure 104 65.8 94 60.6 173 64.6

Handling of industrial waste 102 64.6 82 52.9 136 50.7

Policy on environment management 79 50.0 55 35.5 122 45.5

Effort to conserve and recycle resources 72 45.6 54 34.8 137 51.1

Maintenance of ISO14001 66 41.8 50 32.3 - -

Others 11 7.0 7 4.5 14 5.2

(6) Report to the IAA if other functions / departments conducted environment audit (Table 96)



Report to IAA # % # %

Reporting 190 41.1 72 40.7

Not reporting 272 58.9 105 59.3

About 60 percent of the organizations that environment audits were conducted by non-IAA did not

report the result to the IAA.

55

<Relationship with Other Audits>

1. Relationship between Internal Audit and Kansayaku (Corporate Auditors) Audit (Tables 97 to 103) The following questions (1), (2), (3), and (4) were not asked in the research conducted in 2007. However, in

order to provide some background information about the relationship between the IAA and the kansayaku,

the historical data since 1997 is shown below.

(1) Dedicated staff members for the kansayaku

Unit: percent

Research year

Dedicated staff member 2007 2003 2000 1997

No dedicated staff member 48.4 45.4 46.3

Dedicated staff member exist 30.1 26.3 23.7

Part of IAA staff support Kansayaku 12.8 16.2 16.8

All IAA staff support Kansayaku 6.2 7.6 9.1

Other department’s staff support Kansayaku 3.7 5.2 4.1

Others

Not

asked

- 0.5 -

The number of dedicated staff member for the kansayaku is as follows.



Number of staff 2007

# % # % # %

Less than 3 242 81.5 178 81.3 166 77.9

4�6 39 13.1 28 12.8 33 15.5

7�9 9 3.0 7 3.2 8 3.8

10�

Not

asked

7 2.4 6 2.7 6 2.8

(2) Establishment of the kansayaku audit standards



Audit Standards 2007

# % # % # %

Established 763 80.6 631 79.7 626 72.7

Not established

Not

asked 184 19.4 161 20.3 235 27.3

(3) Instruction to the IAA if the IAA has staff roles of kansayaku



Instruction from 2007

# % # % # %

Kansayaku 96 53.0 98 53.3 103 44.2

Kansayaku or CAE depends on

topics 52 28.7 59 32.1 86 36.9

CAE 28 15.5 25 13.6 44 18.9

President

Not

asked

5 2.8 2 1.1 - -

56

(4) Stipulation in organization’s regulation if the IAA has staff roles of kansayaku

Unit: percent

Research year

Stipulated in 2007 2003 2000 1997

Segregation of duty regulation 32.2 39.2 32.2

Kansayaku charter 13.7 16.5 22.9

Internal audit charter 12.0 10.3 11.9

Not stipulated

Not

asked

47.0 38.1 38.6

Multiple answers were allowed except for the research conducted in 2000.

(5) Communication between the IAA and the kansayaku (Tables 97 to 100)

In the study conducted in 2003, 85.9 percent of the organizations responded that the IAA reports the

results of audits to kansayaku. In 2007, communication between the IAA and the kansayaku is

examined.


Communication # %

Information are transferred from Kansayaku to IAA 1,137 82.2

Information are transferred from IAA to Kansayaku 1,321 96.4

The contents of information from the kansayaku to the IAA are as follows. Multiple answers were

allowed and 1,114 organizations responded.

Unit: Number of organization

Audit policy Audit results Audit schedule Audit location Others

# % # % # % # % # %

828 74.3 769 69.0 675 60.6 652 58.5 39 3.5

The contents of information from the IAA to the kansayaku are as follows. Multiple answers were

allowed and 1,370 organizations responded.


Audit results Audit plan Audit status Others

# % # % # % # %

1,304 95.2 1,150 83.9 876 63.9 24 1.8

The timing (frequency) of the reporting of internal audit results from the IAA to the kansayaku is as

follows. There were 1,289 responses.


Each

engagement

Monthly Quarterly Semi-

Annually

Annually Others

# % # % # % # % # % # %

909 70.5 147 11.4 115 8.9 81 6.3 18 1.4 19 1.5

(6) Coordination of audit work between the IAA and the kansayaku (Tables 101 to 102)

Unit: percent

57

Research year

IA and Kansayaku audit 2007 2003 2000 1997

Coordinating 60.6 66.0 67.5 64.6

Not coordinating 39.4 34.0 32.5 35.4

The contents of coordination of audit work between the IAA and the kansayaku are as follows. There

were 824 responses.

Unit: percent

Research year

Contents 2007 2003 2000 1997

Audit schedule 74.0 57.2 60.5 61.8

Audit scope / items 56.2 45.8 61.2 66.0

Audit location 55.3 36.2 35.4 34.5

Audit policy 35.7 31.3 1.4 -

(7) Conducting joint audit by the IAA and the kansayaku (Table 103)


2007 2003 2000 1997 Research year

Joint audit # % # % # % # %

Conducting 443 32.7 339 35.5 333 39.9 321 36.3

Not conducting 913 67.3 615 64.5 492 58.9 563 63.7

Others - - - - 10 1.2 - -

58

2. Relationship between Internal Audit and Audit Committee (Tables 104 to 110)

There were 222 responses to audit committee questions. This was only 15.07 percent of the 1,473 usable

responses. However, the number of organizations which has the audit committee has been increasing. In

the research conducted in 2003, it was 36 organizations. The following are results of responses to questions

on the audit committee, although the number of responses is not sufficient to understand current situations

and trends.

(1) Establishment of the audit committee charter



Audit Committee Charter # % # %

Established 95 42.8 32 88.9

Not established 127 57.2 4 11.1

(2) The audit committee’s authority to order / instruct the IAA



Authority # % # %

Having authority to order / instruct 53 38.1 22 62.9

Not having authority to order / instruct 86 61.9 13 37.1

(3) Dedicated staff members for the audit committee



Authority # % # %

Dedicated staff exist 34 24.1 20 57.1

Some of internal audit staff concurrently serve 17 12.1 3 8.6

All of internal audit staff concurrently serve 11 7.8 2 5.7

Some of other department staff concurrently serve 3 2.1 1 2.9

No dedicated staff exist 76 53.9 9 25.7

(4) Contents of communication from the IAA to the audit committee


Audit results Audit plan Audit status Not

communicated Others

# % # % # % # % # %

83 62.4 70 52.6 59 44.4 45 33.8 - -

(5) Timing (frequency) of reporting of the internal audit results from the IAA to the audit committee


Each

engagement Monthly Quarterly

Semi-

Annually Annually Others

# % # % # % # % # % # %

59

Each

engagement Monthly Quarterly

Semi-

Annually Annually Others

# % # % # % # % # % # %

41 50.6 17 21.0 14 17.3 5 6.2 2 2.5 2 2.5

(6) Contents of instruction from the audit committee to the IAA


Audit universe Audit policy Audit scope Risk

assessment Others

# % # % # % # % # %

39 50.6 34 44.2 33 42.9 26 33.8 8 10.4

(7) Approval by the audit committee on the IAA


Audit plan Charter / manuals Human

resources Budget Others

# % # % # % # % # %

45 80.4 20 35.7 11 19.6 9 16.1 1 1.8

60

3. Relationship between Internal Audit and External Auditors (CPAs) (Tables 111 to 114)

(1) Coordination of audit work between the IAA and the external audit (CPAs) (Tables 111 to 112)

Unit: percent

Research year

Internal and external audit 2007 2003 2000 1997

Coordinating 21.7 24.8 25.9 27.7

Not coordinating 78.3 75.2 74.1 72.3

“Not coordinating” has been increasing since the research conducted in 1994.

The contents of coordination of audit work between internal and external audit is as follows. Multiple

answers were allowed.


2007 2003 2000 1997 Research year

Contents # % # % # % # %

Audit schedule 231 76.5 165 67.6 153 69.2 187 77.0

Audit location 136 45.0 66 27.0 89 40.3 110 45.3

Audit scope / items 140 46.4 94 38.5 78 35.3 78 32.1

Others - - - - 4 1.8 - -

As shown in Table 44, the IAA tended to focus on the operational audit; therefore, the IAA did not

coordinate with the external auditors (CPAs) well. Because the Internal Control Report System (so

called J-SOX) will be implemented from the fiscal year starting from April 1, 2008, coordination

between internal and external audit will be enhanced.

(2) Communication of internal audit results to external auditors (CPAs) (Table 113)

Unit: percent

Research year

Internal Audit Results 2007 2003 2000 1997

Always communicating 8.6 14.1 13.0 11.1

Communicating if requested 49.0 38.8 45.3 41.6

Communicating depends on matters 13.0 8.5 1.3 -

Not communicating 29.5 38.6 40.3 47.3

The ratio of “not communicating” internal audit results has been decreasing since the research

conducted in 1997. In 1985, “communicating” was 6.1 percent and “not communicating” was 71.6

percent.

(3) Documents that external auditors (CPAs) request the IAA (Table 114)

Multiple answers were allowed to this question. There were 648 responses.


Audit report Working paper Not consistent

# % # % # %

623 96.1 147 22.7 67 10.3

61

<Recent implementation / revision of Laws and Regulations> (Tables 115 to 117)

(1) Impacts from the recent implementation / revision of laws and regulations on internal audit (Tables

115 to 117)

One thousand and ninety-five organizations (75.6%) responded that there were some impacts from the

recent implementation / revision of laws and regulation. Name of laws and regulations is as follows.


Financial Instruments

and Exchange Law and

Council Opinion (*1)

Corporation law

Financial Services

Agency’s Inspection

Manual

Basel II (*2) Others

# % # % # % # % # %

867 79.8 784 72.2 187 17.2 95 8.7 73 6.7

(*1) “Council Opinions” is “On the Setting of Standards and Practice Standards for Management

Assessment and Audit concerning Internal Control Over Financial Reporting (Council Opinions)”,

which was published by Business Accounting Council.

(*2) “Basel II” is “Basel II: International Convergence of Capital Measurement and Capital

Standards: A Revised Framework - Comprehensive Version”, which was published by Basel

Committee on Banking Supervision.

The eight highest-rated contents of impact from the recent implementation / revision of laws and

regulations, which 1,081 organizations responded, are as follows. Multiple answers were allowed.

Unit: percent

1 Implementation of internal control audit 61.6

2 Revision of internal audit charter 37.1

3 Increasing internal audit staff 36.4

4 Strengthening of collaboration with kansayaku audit 31.3

5 Revision of internal audit procedure manuals 28.6

6 Strengthening of collaboration with external auditors (CPAs) 21.0

7 Increasing internal audit budget 15.3

8 Change of the IAA’s name 6.8

62

<Internal Auditors’ role under the Internal Control Report System> (Tables 118 to 126)

One thousand and thirty-six organizations (71.5%) are required to comply with the Internal Control Report

System (so called J-SOX), which will be implemented from the fiscal year beginning April 1, 2008. Of those,

946 organizations (91.8%) established a project to promote the J-SOX. About 90 percent of the organizations

responded that internal auditors were involved in the project.


As project member As observer As project leader

# % # % # %

479 50.5 245 25.8 111 11.7

Needless to say, from the view point of independence, it is better if internal auditors are not involved in the

project. As internal auditors have highest skills, knowledge, and analysis experiences in internal controls within

their organization, some internal auditors were transferred to the project team.

Forty-four out of the 1,015 respondents (4.3%) answered that the IAA did not have any roles under the J-SOX.

Respondents were asked to indicate which of the following roles the IAA has. Multiple answers were allowed.


1 Monitoring operation of internal controls 811

2 Monitoring maintenance of internal controls 743

3 Maintaining internal controls 263

4 Operating internal controls 151

Regarding impacts from the J-SOX to the IAA’s planned activities, 572 organizations (57.6%) responded that

there was no impact and the original audit plan was completed.

Regarding impacts from the J-SOX to the IAA, 989 respondents indicated as follows.

Unit: percent

a Human resources of the IAA Increased 40.5 Not changed 57.8

b Management’s expectations to the IAA Heighten 62.2 Not changed 37.3

c Make internal audit woks easier Easier 36.2 Not changed 50.1

63

<Quality Assessments of Internal Audit>

Quality assessment of internal audit consists of external assessments and internal assessments.

The first question was development of “Internal audit quality assessments rules / manuals”. There were 1,433

organizations (26%) which developed the rules / manuals.

As this is the first time to study quality assessments of internal audit, we provide the outlines of the Japanese

IAA’s practice of quality assessment of internal audit as follows.

1. Internal Assessments (Tables 127 to 133)

1) Implementation of periodic review

Periodic review # %

Implementing 215 15.5

Not implementing 1,175 84.5

Total responses 1,390 100.0

2) Cycle of “periodic review”

Cycle of periodic review # %

Less than 1 year 52 25.6

Every year 127 62.5

Every 2�4 years 17 8.4

Every 5 years 5 2.5

6 years or more 2 1.0

Total responses 203 100.0

3) Timing of previous periodic internal assessment

Previous assessment # %

2007 98 48.7

2006 91 45.3

2005 or before 12 6.0


4) Ongoing monitoring and measurement of effectiveness

Ongoing monitoring Measurement # %

Measuring 108 8.0 Implementing

Not measuring 96 7.2



5) Purpose to measure the effectiveness of ongoing monitoring

Purpose # %

To facilitate / confirm importance of IAA 78 74.3

To manage IAA effectively 56 53.3

To confirm level of internal audit performed 42 40.0

64

Purpose # %

To enhance awareness and evaluation of importance of IAA within

organization 38 36.2

Others 3 2.9

Total responses 217

(Multiple answers were allowed.)

6) Timing to measure the effectiveness of ongoing monitoring

Timing # %

After each engagement 57 54.3

Periodically 40 38.1

At the next audit 8 7.6


65

2. External Assessments (Tables 134 to 143)

1) Understanding that “external assessments” must be conducted at least once every five years, which is

required by the Standards

Understanding of requirement # %

Understanding 858 61.1

Not understanding 547 38.9


2) Implementation of periodic review of external assessments

Periodic external assessment # %

Implementing 98 7.0



3) Cycle of periodic external assessments

Cycle of periodic review # %

Less than 1 year 13 14.8

Every year 27 30.6

Every 2�4 years 24 27.3

Every 5 years 18 20.5

6 years or more 6 6.8


4) Timing of previous periodic external assessment

Previous assessment # %

2007 38 45.8

2006 24 28.9

2005 or before 21 25.3


5) Method of external assessments

Method # %

By external reviewer 74 84.1

Self-assessment with independent validation 14 15.9


6) Reviewer of external assessments

Reviewer # %

Audit firm 48 55.2

Service provider of internal audit 9 10.3

Peer reviewer ( 3 organizations or more) 2 2.3

Others 28 32.2

66

Reviewer # %


7) Involvement of the board (audit committee), kansayaku, and management regarding selection of

external assessments

Selection items # %

Selection of method of external assessments 6 7.3

Selection of reviewer 16 19.5

Both method of external assessments and reviewer 26 31.7

Not involved 34 41.5


8) Reason why external assessments are not yet implemented

Reason # %

Not up to 5 years cycle 416 35.0

Management does not find the value 365 30.7

No time 262 22.0

No budget 247 20.8

Others 248 20.9

Total responses 1,538

(Multiple answers were allowed.)

9) Timing of implementation of external assessments if not yet implemented

Timing # %

2007 6 0.5

2008 60 4.7

2009 57 4.5

2010� 33 2.6

Not yet determined 1,084 85.1

Will not implement 33 2.6


10) Method of external assessments if not yet implemented

Method # %

By external reviewer 510 46.8

Self-assessment with independent validation 579 53.2


67

DATA SECTION

Basic Research

1. Classification of respondents

<By Capital>

Capital

(Billion yen)

# of

Organizations

Ratio

(%)

� 0.9 210 14.7

1 � 2.9 193 13.5

3 � 4.9 116 8.1

5 � 9.9 189 13.2

10 � 19.9 195 13.6

20 � 49.9 202 14.1

50 � 99.9 118 8.2

100 � 199.9 76 5.3

200 � 999.9 97 6.8

1,000 � 35 2.4

Total 1,431 100.0

*No response: 42 organizations

<By Sales>

Sales

(Billion yen)

# of

Organizations

Ratio

(%)

� 0.9 24 1.8

1 � 2.9 32 2.4

3 � 4.9 32 2.4

5 � 9.9 84 6.3

10 � 19.9 176 13.2

20 � 49.9 308 23.2

50 � 99.9 211 15.9

100 � 199.9 174 13.1

200 � 999.9 210 15.8

1,000 � 78 5.9

Total 1,329 100.0


<By Total Assets>

Total Assets

(Billion yen)

# of

Organizations

Ratio

(%)

� 0.9 16 1.2

1 � 2.9 30 2.3

68

Total Assets

(Billion yen)

# of

Organizations

Ratio

(%)

3 � 4.9 30 2.3

5 � 9.9 87 6.6

10 � 19.9 138 10.4

20 � 49.9 285 21.5

50 � 99.9 219 16.6

100 � 199.9 140 10.6

200 � 999.9 223 16.9

1,000 � 155 11.7

Total 1,323 100.0


<By Number of Employees>

Number of Employees # of

Organizations

Ratio

(%)

� 100 91 6.3

101 � 200 119 8.2

201 � 300 110 7.6

301 � 500 172 11.8

501 � 1,000 297 20.4

1,001 � 2,000 266 18.3

2,001 � 3,000 116 8.0

3,001 � 5,000 105 7.2

5,001 � 10,000 106 7.3

10,001 � 30,000 49 3.4

30,001 � 100,000 19 1.3

100,000 � 4 0.3

Total 1,454 100.0


69

<Classification by Industry>

# Industry Group # of

Organizations

Ratio

(%)

1 Construction 70 4.8

2 Fishing / Food 53 3.6

3 Textile / Paper / Pulp 24 1.6

4 Chemical 92 6.2

5 Medicine 33 2.2

6 Oil / Coal / Mining 10 0.7

7 Rubber 5 0.3

8 Glass / Soil & Stone 14 1.0

9 Steel 17 1.2

10 Metal 32 2.2

11 Machine 69 4.7

12 Electric equipment 106 7.2

13 Transportation equipment 44 3.0

14 Precision equipment 27 1.8

15 Misc. manufacturing 62 4.2

Manufacturing industry

Manufacturing total 658 44.7

16 Trading 76 5.2

17 Department store / Super market 40 2.7

18 Various commercial 84 5.7

19 Life insurance 17 1.2

20 Non-life insurance 13 0.9

21 Finance 168 11.4

22 Real estate 51 3.5

23 Transportation / Warehouse 72 4.9

24 Telecom / Advertising 40 2.7

25 Electric / Gas 18 1.2

26 Services 193 13.1

27 Independent administrative institution /



43 2.9 N

on-manufacturing industry

Non-manufacturing total 815 55.3

Grand total 1,473 100.0

70

<Number of Organizations by Industry by Capital>


Capital

�Billion yen�

Industry

�0.9 1�

2.9

3�

4.9

5�

9.9

10�

19.9

20�

49.9

50�

99.9

100�

199.9

200�

999.9

1,000

�

Total

Construction 7 10 8 5 8 17 6 4 4 - 69

Fishing / Food 6 5 1 7 12 11 1 6 3 - 52

Textile / Paper / Pulp - 2 2 2 4 5 2 2 5 - 24

Chemical 3 8 9 13 20 14 10 11 3 1 92 Medicine 4 4 1 5 2 6 6 1 2 1 32

Oil / Coal / Mining - 1 2 1 - 1 - - 4 1 10 Rubber - - 1 1 - 2 - - - 1 5

Glass / Soil & Stone 1 - 3 3 1 1 2 1 2 - 14

Steel - 3 - 1 2 4 2 1 1 3 17

Metal 2 8 1 5 3 5 4 3 - - 31

Machine 3 8 7 9 15 13 7 3 4 - 69 Electric equipment 6 18 3 22 19 12 9 5 8 4 106

Transportation equipment 1 4 6 5 6 8 2 3 6 1 42

Precision equipment 3 6 2 5 1 3 3 2 1 - 26

Misc. manufacturing 8 11 9 9 13 7 1 2 1 - 61

Trading 15 12 9 10 10 7 3 - 7 2 75 Department store / Super market 4 7 3 8 6 6 2 1 2 1 40

Various commercial 16 15 12 8 10 12 7 1 - - 81

Life insurance - - - - 2 5 2 1 5 2 17

Non-life insurance 1 1 - 1 2 2 2 1 1 1 12

Finance 26 19 5 19 22 28 16 12 12 7 166

Real estate 12 6 4 7 9 5 4 2 1 1 51

Transportation / Warehouse 12 9 3 8 7 12 8 4 8 - 71 Telecom / Advertising 7 6 3 4 4 2 6 - 4 1 37

Electric / Gas 2 - 2 1 - 1 1 4 3 4 18

Services 69 27 20 27 14 11 9 4 5 1 187




2 3 - 3 3 2 3 2 5 3 26

Total (# of Organizations) 210 193 116 189 195 202 118 76 97 35 1,431

Ratio (%) 14.7 13.5 8.1 13.2 13.6 14.1 8.2 5.3 6.8 2.4


71

<Number of Organizations by Industry by Sales>


Sales

�Billion yen�

Industry

�0.9 1�

2.9

3�

4.9

5�

9.9

10�

19.9

20�

49.9

50�

99.9

100�

199.9

200�

999.9

1,000

�

Total

Construction - - - 1 6 20 14 11 13 5 70

Fishing / Food - - - 2 5 9 11 14 9 3 53

Textile / Paper / Pulp - - - 1 1 6 6 4 3 3 24 Chemical 1 - 1 7 14 26 15 8 20 - 92

Medicine 2 - - 3 3 8 6 3 6 - 31

Oil / Coal / Mining - - - 1 - 3 - - 1 5 10

Rubber - - 1 - 1 - 1 - 2 - 5

Glass / Soil & Stone - - - 1 1 5 1 2 4 - 14 Steel - - - - 1 3 3 3 3 3 16 Metal - - - 3 3 14 2 5 3 1 31

Machine - 1 1 6 10 19 9 9 12 2 69

Electric equipment 1 1 3 7 15 19 20 15 17 7 105

Transportation equipment - 1 - - 3 5 9 11 9 6 44 Precision equipment - 1 - 3 5 7 4 5 1 1 27

Misc. manufacturing - 4 1 2 12 23 10 3 6 - 61 Trading - - 2 2 2 23 13 12 11 9 74

Department store / Super market - - - - 2 4 12 9 10 3 40

Various commercial 3 2 3 3 9 18 18 10 13 1 80

Life insurance - - - - - 2 2 1 5 3 13

Non-life insurance - - - - 3 1 - 3 3 3 13 Finance 9 5 5 5 9 11 8 6 14 6 78

Real estate - 1 2 6 8 17 6 7 2 - 49

Transportation / Warehouse - - 3 2 12 11 12 13 14 4 71

Telecom / Advertising - 1 3 2 6 8 3 6 6 4 39

Electric / Gas - - - - - 2 3 3 4 6 18 Services 7 14 6 26 44 40 19 8 16 2 182




1 1 1 1 1 4 4 3 3 1 20


Ratio (%) 1.8 2.4 2.4 6.3 13.2 23.2 15.9 13.1 15.8 5.9


72

<Number of Organizations by Industry by Total Assets>


Total Assets

(Billion yen)

Industry

�0.9 1�

2.9

3�

4.9

5�

9.9

10�

19.9

20�

49.9

50�

99.9

100�

199.9

200�

999.9

1,000

�

Total

Construction 2 1 - 4 5 14 12 9 13 5 65

Fishing / Food - 2 - 1 6 10 10 8 9 3 49

Textile / Paper / Pulp - - - 1 1 5 7 1 6 3 24

Chemical 1 - - 4 10 24 19 8 18 4 88

Medicine 1 - - 1 2 6 7 6 5 2 30

Oil / Coal / Mining - - - - 1 2 1 2 - 4 10

Rubber - - - - 2 - 1 - 1 1 5

Glass / Soil & Stone - - - - 1 5 - 2 3 2 13

Steel - - - - 1 4 3 2 3 4 17

Metal - - 1 2 5 9 4 4 3 2 30

Machine - 1 4 12 12 8 11 16 2 66

Electric equipment - 1 2 7 8 25 22 13 13 7 98

Transportation equipment - - - 1 2 9 12 4 7 4 39

Precision equipment - - - 1 4 5 4 1 4 1 20

Misc. manufacturing 1 2 1 4 9 23 10 1 3 1 55

Trading - - - 4 9 26 13 7 6 7 72

Department store / Super market - - 1 1 3 11 6 2 11 2 37


Life insurance - - - - - - - 1 7 9 17

Non-life insurance - - - - - 3 1 - 3 6 13

Finance 4 2 1 5 4 7 19 8 33 54 137

Real estate - 1 2 4 2 6 14 10 8 2 49

Transportation / Warehouse - - 2 5 3 14 10 4 18 12 68

Telecom / Advertising - 2 2 5 4 7 1 5 5 3 34

Electric / Gas - - - - 1 2 2 1 3 9 18

Services 4 15 16 29 23 32 11 11 15 - 156




- 1 - 1 3 6 7 11 6 4 39


Ratio (%) 1.2 2.3 2.3 6.6 10.4 21.5 16.6 10.6 16.9 11.7


73

<Number of Organizations by Industry by Number of Employees>


Number of Employees

Industry

�

100

101

�

200

201

�

300

301

�

500

501 �

1,000

1,001

�

2,000

2,001

�

3,000

3,001

�

5,000

5,001

�

10,000

10,001

�

30,000

30,001 �

100,000

100,001

�

Total

Construction - 4 3 5 18 20 7 4 7 1 - - 69

Fishing / Food 2 2 3 5 14 12 4 5 4 2 - - 53

Textile / Paper / Pulp - - 1 2 4 8 2 2 2 2 1 - 24

Chemical 1 5 9 13 26 15 8 10 3 2 - - 92

Medicine 2 - 1 4 6 6 5 1 6 2 - - 33

Oil / Coal / Mining - 3 - 1 1 2 - - 2 1 - - 10

Rubber - - 1 - 1 - 1 - - 2 - - 5

Glass / Soil & Stone - 1 2 2 2 4 1 - 2 - - - 14

Steel 1 - 2 1 5 1 - 4 1 2 - - 17

Metal - 1 5 4 10 4 5 2 1 - - - 32

Machine 4 4 - 14 14 11 9 2 7 2 1 - 68

Electric equipment - 4 4 11 27 18 10 12 5 8 5 2 106

Transportation equipment - - - 3 7 10 8 3 5 5 2 1 44

Precision equipment - 2 1 4 3 8 2 4 1 - 2 - 27

Misc. manufacturing 3 3 5 8 20 14 4 4 1 - - - 62

Trading 2 10 14 18 17 6 2 4 3 - - - 76

Department store / Super market - 2 1 2 3 8 6 8 5 3 2 - 40

Various commercial 6 6 5 9 21 20 5 4 6 - - - 82

Life insurance - 2 1 4 1 - - 2 4 2 1 - 17

Non-life insurance - 1 1 2 1 - 1 2 2 3 - - 13

Finance 30 26 15 13 22 26 14 7 3 3 1 - 160

Real estate 14 13 4 4 10 4 1 - - - - - 50

Transportation / Warehouse 5 7 7 7 12 11 2 6 9 2 3 1 72

Telecom / Advertising 2 7 8 7 7 3 - 1 5 - - - 40

Electric / Gas - - 1 1 1 4 1 1 5 3 1 - 18

Services 17 16 14 24 40 37 13 11 16 3 - - 191




2 - 2 4 4 14 5 6 1 1 - - 39

Total (# of Organizations) 91 119 110 172 297 266 116 105 106 49 19 4 1,454

Ratio (%) 6.3 8.2 7.6 11.8 20.4 18.3 8.0 7.2 7.3 3.4 1.3 0.3


74

Specific Research

<Internal Audit>

1. Auditable entities (Table 1)

<Table 1> Auditable entities (by industry)


Auditable entities

Industry

Head office Domestic

business

office

Overseas

business

office

Domestic

subsidiary /

affiliate

Overseas

subsidiary /

affiliate

Total

Construction 57 66 17 50 20 210

Fishing / Food 46 51 16 43 23 179

Textile / Paper / Pulp 22 23 8 20 12 85

Chemical 83 88 31 73 55 330

Medicine 33 31 7 24 9 104

Oil / Coal / Mining 10 10 5 9 5 39

Rubber 4 5 2 4 3 18

Glass / Soil & Stone 13 12 5 13 7 50

Steel 17 16 8 14 11 66

Metal 27 29 8 22 20 106

Machine 67 67 29 54 42 259


Transportation equipment 42 40 14 34 28 158

Precision equipment 25 24 14 18 22 103

Misc. manufacturing 55 57 14 45 27 198

Trading 68 69 27 47 34 245

Department store / Super market 37 35 1 25 3 101

Various commercial 74 75 10 57 14 230


Non-life insurance 12 12 7 11 8 50

Finance 152 141 20 89 20 422

Real estate 46 39 2 32 6 125


Telecom / Advertising 37 34 6 28 9 114

Electric / Gas 15 18 5 14 3 55

Services 168 158 12 97 31 466


Special public institution / School corporation

/ Association etc.

35 40 6 8 - 89

Total (# of Organizations) 1,326 1,319 335 985 517 4,482

Ratio (%) 90.1 89.7 22.8 67.0 35.1

� No response: 2 organizations

� Multiple answers were allowed. The ratio is calculated using the following formula: number of responses

75

to each item / number of usable responses (1,471 organizations) * 100

76

2. Positioning of the Internal Audit Activity in the organization (Tables 2 to 29)

<Table 2> Positioning of the IAA (by industry)


Direct report to

President

Direct report to

Board

Direct report to

Senior

Executive

Direct report to

Audit

Committee

Direct report to

Kansayaku

Direct report to

Executive

Officer

Same level as

other

departments

Belong to a

specific

department

Others Total Positioning

Industry

# % # % # % # % # % # % # % # % # % #

Construction 54 78.3 - - 7 10.1 - - - - - - 7 10.1 1 1.4 - - 69

Fishing / Food 43 81.1 2 3.8 8 15.1 - - - - - - - - - - - - 53 Textile / Paper / Pulp 19 79.2 1 4.2 - - - - - - - - 1 4.2 3 12.5 - - 24

Chemical 75 81.5 3 3.3 11 12.0 - - - - 2 2.2 - - 1 1.1 - - 92

Medicine 22 68.8 - - 5 15.6 - - - - 3 9.4 1 3.1 1 3.1 - - 32

Oil / Coal / Mining 9 90.0 - - 1 10.0 - - - - - - - - - - - - 10

Rubber 4 80.0 - - 1 20.0 - - - - - - - - - - - - 5 Glass / Soil & Stone 10 71.4 - - 2 14.3 1 7.1 - - 1 7.1 - - - - - - 14 Steel 11 64.7 - - 3 17.6 - - - - 1 5.9 1 5.9 1 5.9 - - 17

Metal 25 78.1 2 6.3 3 9.4 - - - - 1 3.1 - - 1 3.1 - - 32

Machine 51 77.3 1 1.5 7 10.6 - - - - - - 3 4.5 4 6.1 - - 66

Electric equipment 93 89.4 3 2.9 3 2.9 - - - - 1 1.0 2 1.9 2 1.9 - - 104 Transportation equipment 30 68.2 1 2.3 3 6.8 - - - - - - 6 13.6 3 6.8 1 2.3 44

Precision equipment 24 88.9 - - 2 7.4 1 3.7 - - - - - - - - - - 27 Misc. manufacturing 52 83.9 - - 4 6.5 - - 1 1.6 1 1.6 2 3.2 2 3.2 - - 62

Trading 65 86.7 2 2.7 - - - - - - 2 2.7 3 4.0 3 4.0 - - 75

Department store / Super market 29 72.5 1 2.5 5 12.5 1 2.5 - - - - 3 7.5 1 2.5 - - 40

Various commercial 75 90.4 - - 2 2.4 1 1.2 1 1.2 - - 2 2.4 1 1.2 1 1.2 83

Life insurance 9 52.9 2 11.8 2 11.8 1 5.9 - - 1 5.9 2 11.8 - - - - 17 Non-life insurance 6 54.5 1 9.1 3 27.3 - - - - 1 9.1 - - - - - - 11

77

Direct report to

President

Direct report to

Board

Direct report to

Senior

Executive

Direct report to

Audit

Committee

Direct report to

Kansayaku

Direct report to

Executive

Officer

Same level as

other

departments

Belong to a

specific

department


Industry

# % # % # % # % # % # % # % # % # % # Finance 103 62.4 29 17.6 14 8.5 2 1.2 - - 1 0.6 11 6.7 4 2.4 1 0.6 165

Real estate 38 77.6 - - 4 8.2 - - - - - - 4 8.2 2 4.1 1 2.0 49

Transportation / Warehouse 46 65.7 1 1.4 9 12.9 1 1.4 - - - - 6 8.6 6 8.6 1 1.4 70

Telecom / Advertising 29 74.4 - - - - 1 2.6 - - - - 6 15.4 3 7.7 - - 39

Electric / Gas 12 66.7 1 5.6 - - - - - - - - 4 22.2 1 5.6 - - 18 Services 154 80.6 1 0.5 13 6.8 1 0.5 1 0.5 2 1.0 11 5.8 8 4.2 - - 191

Independent administrative institution

/ Special public institution / School


27 64.3 1 2.4 4 9.5 1 2.4 2 4.8 - - 4 9.5 3 7.1 - - 42

Total ( of Organizations) 1,115 52 116 11 5 17 79 51 5 1,451

Ratio (%) 76.8 3.6 8.0 0.8 0.3 1.2 5.4 3.5 0.3


� Others include “Management Committee”, “Parent Company”, “Direct report to Executive Committee”, “Secretariat”, etc.

78

<Table 3> Positioning of the IAA (by Capital)


Direct report to

President

Direct report to

Board

Direct report to

Senior

Executive

Direct report to

Audit

Committee

Direct report to

Kansayaku

Direct report to

Executive

Officer

Same level as

other

departments

Belong to a

specific

department


Capital

(Billion yen) # % # % # % # % # % # % # % # % # % #

� 0.9 165 81.3 3 1.5 8 3.9 2 1.0 - - 2 1.0 14 6.9 9 4.4 - - 203

1 � 2.9 156 82.5 5 2.6 13 6.9 1 0.5 - - - - 7 3.7 7 3.7 - - 189

3 � 4.9 101 88.6 1 0.9 5 4.4 2 1.8 1 0.9 - - 1 0.9 2 1.8 1 0.9 114

5 � 9.9 147 79.5 4 2.2 11 5.9 1 0.5 1 0.5 2 1.1 7 3.8 10 5.4 2 1.1 185

10 � 19.9 159 82.0 5 2.6 16 8.2 - - 1 0.5 - - 7 3.6 6 3.1 - - 194

20 � 49.9 144 71.6 13 6.5 24 11.9 - - - - 3 1.5 10 5.0 6 3.0 1 0.5 201

50 � 99.9 79 66.9 7 5.9 16 13.6 2 1.7 - - 3 2.5 8 6.8 3 2.5 - - 118

100 � 199.9 54 71.1 4 5.3 6 7.9 - - - - 3 3.9 8 10.5 1 1.3 - - 76

200 � 999.9 56 57.7 6 6.2 13 13.4 1 1.0 1 1.0 1 1.0 14 14.4 4 4.1 1 1.0 97

1,000 � 18 52.9 3 8.8 4 11.8 1 2.9 - - 3 8.8 3 8.8 2 5.9 - - 34

Total (# of Organizations) 1,079 51 116 10 4 17 79 50 5 1,411

Ratio (%) 76.5 3.6 8.2 0.7 0.3 1.2 5.6 3.5 0.4



79

<Table 4> Positioning of the IAA (by Number of Employees)


Direct report to

President

Direct report to

Board

Direct report to

Executive

Officer

Direct report to

Audit

Committee

Direct report to

Kansayaku

Direct report to

Executive

Officer

Same status as

other

departments

Belong to a

specific

department


Number of

Employees # % # % # % # % # % # % # % # % # % #

� 100 74 84.1 1 1.1 3 3.4 1 1.1 - - 1 1.1 5 5.7 2 2.3 1 1.1 88

101 � 200 97 82.9 2 1.7 5 4.3 - - 1 0.9 - - 5 4.3 6 5.1 1 0.9 117

201 � 300 93 86,9 2 1.9 4 3.7 2 1.9 - - - - 3 2.8 3 2.8 - - 107

301 � 500 135 79.4 3 1.8 10 5.9 3 1.8 1 0.6 2 1.2 5 2.9 11 6.5 - - 170

501 � 1,000 238 81.2 9 3.1 22 7.5 1 0.3 - - 1 0.3 11 3.8 8 2.7 3 1.0 293

1,001 � 2,000 202 77.1 15 5.7 19 7.3 1 0.4 2 0.8 2 0.8 12 4.6 9 3.4 - - 262

2,001 � 3,000 76 66.1 5 4.3 14 12.2 - - - - 3 2.6 13 11.3 4 3.5 - - 115

3,001 � 5,000 73 69.5 7 6.7 16 15.2 2 1.9 1 1.0 1 1.0 4 3.8 1 1.0 - - 105

5,001 � 10,000 73 69.5 4 3.8 10 9.5 - - - - 3 2.9 11 10.5 4 3.8 - - 105

10,001 � 30,000 28 57.1 2 4.1 5 10.2 1 2.0 - - 3 6.1 7 14.3 3 6.1 - - 49

30,001 � 100,000 12 63.2 - - 5 26.3 - - - - 1 5.3 1 5.3 - - - - 19

100,000 � 1 33.3 - - 1 33.3 - - - - - - 1 33.3 - - - - 3

Total (# of Organizations) 1,102 50 114 11 5 17 78 51 5 1,433

Ratio (%) 76.9 3.5 8.0 0.� 0.3 1.2 5.4 3.6 0.3



80

<Table 5> Name of the IAA (by industry)


Name

Industry

Audit

Internal Audit

Operational A

udit

Manage

ment A

udit

Inspection

Inspector’s Office

Exam

ination

Legal Au

dit

Operation Inspection

Corporate P

lanning

Com

pliance

Risk M

anagement

Adm

inistration

Audit section in P

resident’s

Office

Audit section in A

ccounting

Busine

ss Mana

gement

Internal Control

Audit G

roup

CS

R

Others

Total

Construction 37 13 2 - - - 1 1 - 1 1 - 1 - 1 1 - 1 - 10 70

Fishing / Food 24 13 2 4 - - - - 1 - 2 1 - - - - - 1 1 4 53

Textile / Paper / Pulp 11 6 3 1 - - - - - 1 - - - - - - - - - 2 24

Chemical 50 31 - 3 - - - - - - 1 - - - - - 1 1 - 4 91

Medicine 18 8 - - - - 1 - - - 2 - - - - - 2 - - 2 33

Oil / Coal / Mining 6 2 - - - - - - - - - - - - - - - - 1 1 10

Rubber 1 2 - 2 - - - - - - - - - - - - - - - - 5

Glass / Soil & Stone 7 3 - 1 - - - - - - - - - - - - 1 1 - 1 14

Steel 11 3 1 - - - - - - - - 1 - - - - - - - 1 17

Metal 15 8 2 1 - - - 1 - - - - - - - - 1 1 - 3 32

Machine 20 27 4 3 - - - - - 4 - - 1 - - - - 1 3 4 67

Electric equipment 40 36 4 12 - - 1 - - 1 1 - - - - 1 1 - - 9 106

Transportation equipment 21 7 5 2 - - - - - - 1 1 - - 1 - 1 - 2 3 44

Precision equipment 8 12 2 4 - - - - - - - - - - - - 1 - - - 27

Misc. manufacturing 22 27 3 2 - - - 1 - 1 - - - 2 - - - - 1 3 62

Trading 40 27 1 - - - 1 - - 1 1 1 1 - - - - 1 1 1 76

Department store / Super market 17 12 3 1 - - - - - 1 1 - - - - - - 1 - 3 39

Various commercial 35 39 1 2 - - - - - - 2 - 2 1 - - - - - 1 83

81

Name

Industry

Audit

Internal Audit

Operational A

udit

Mana

gement A

udit

Inspection

Inspector’s Office

Exam

ination

Legal Au

dit

Operation Inspection

Corporate P

lanning

Com

pliance

Risk M

anagem

ent

Adm

inistration

Audit section in P

resident’s

Office

Audit section in A

ccountin

g

Busine

ss Mana

gement

Internal Control

Audit G

roup

CS

R

Others

Total

Life insurance 7 4 4 - 2 - - - - - - - - - - - - - - - 17

Non-life insurance 3 6 4 - - - - - - - - - - - - - - - - - 13

Finance 104 18 14 6 9 - 1 - - - 1 1 - - - - - 2 - 6 162

Real estate 14 27 3 - 1 - 1 - - 1 - - - - - - 1 - - 3 51

Transportation / Warehouse 36 13 4 - - - - - - 1 1 - 1 - 1 - 1 3 - 8 69

Telecom / Advertising 15 14 2 1 - - 1 - - - 1 - - - - - - - - 6 40

Electric / Gas 5 3 2 1 - - 3 - - - - - - - - - - - - 3 17

Services 78 62 8 8 1 - 5 - - 1 2 1 3 1 - 1 - 2 1 19 193

Independent administrative

institution / Special public

institution / School corporation /

Association etc.

18 13 2 - 1 - - - - - - - - - 1 - - - - 7 42

Total (# of Organizations) 663 436 76 54 14 - 15 3 1 13 17 6 9 4 4 3 10 15 10 104 1457

Ratio (%) 45.5 29.9 5.2 3.7 1.0 - 1.0 0.2 0.1 0.9 1.2 0.4 0.6 0.3 0.3 0.2 0.7 1.0 0.7 7.1


� Others include “internal audit team”, “internal control promoting office”, “corporate planning group”, “examination division”, “legal management department”, etc.

82

<Table 6> Number of auditors who conduct only IAA (by industry)



Industry # % # % # % # % # % # % # % # % # % # % # % # % # % #

Construction 16 24.2 15 22.7 9 13.6 11 16.7 3 4.5 2 3.0 3 4.5 1 1.5 - - 6 9.1 - - - - - - 66

Fishing / Food 8 16.3 8 16.3 6 12.2 9 18.4 3 6.1 3 6.1 2 4.1 1 2.0 1 2.0 6 12.2 1 2.0 1 2.0 - - 49

Textile / Paper / Pulp 2 9.5 9 42.9 3 14.3 - - 1 4.8 2 9.5 - - 2 9.5 1 4.8 1 4.8 - - - - - - 21

Chemical 21 24.1 26 29.9 12 13.8 5 5.7 6 6.9 6 6.9 5 5.7 2 2.3 1 1.1 2 2.3 1 1.1 - - - - 87

Medicine 6 18.2 5 15.2 4 12.1 5 15.2 1 3.0 - - 4 12.1 1 3.0 1 3.0 6 18.2 - - - - - - 33

Oil / Coal / Mining - - 3 30.0 3 30.0 - - 1 10.0 - - 1 10.0 - - - - 1 10.0 1 10.0 - - - - 10

Rubber 1 20.0 2 40.0 - - - - 1 20.0 - - - - - - - - - - 1 20.0 - - - - 5

Glass / Soil & Stone 5 38.5 - - 1 7.7 3 23.1 1 7.7 2 15.4 - - - - - - - - 1 7.7 - - - - 13

Steel 6 37.5 2 12.5 2 12.5 1 6.3 2 12.5 - - 1 6.3 - - 2 12.5 - - - - - - - - 16

Metal 12 38.7 8 25.8 5 16.1 3 9.7 - - 1 3.2 - - - - - - 2 6.5 - - - - - - 31

Machine 19 30.6 16 25.8 6 9.7 5 8.1 3 4.8 2 3.2 4 6.5 2 3.2 - - 3 4.8 2 3.2 - - - - 62

Electric equipment 27 26.2 29 28.2 15 14.6 4 3.9 4 3.9 3 2.9 2 1.9 3 2.9 4 3.9 1 1.0 4 3.9 5 4.9 2 1.9 103

Transportation equipment 8 20.5 10 25.6 7 17.9 2 5.1 1 2.6 1 2.6 2 5.1 1 2.6 1 2.6 3 7.7 2 5.1 1 2.6 - - 39

Precision equipment 5 19.2 7 26.9 6 23.1 3 11.5 1 3.8 1 3.8 - - - - - - 2 7.7 1 3.8 - - - - 26

Misc. manufacturing 23 38.3 17 28.3 6 10.0 5 8.3 1 1.7 2 3.3 2 3.3 1 1.7 1 1.7 2 3.3 - - - - - - 60

Trading 25 34.7 16 22.2 9 12.5 6 8.3 3 4.2 2 2.8 1 1.4 - - - - 3 4.2 2 2.8 1 1.4 4 5.6 72

Department store / Super market 5 13.5 8 21.6 6 16.2 4 10.8 6 16.2 3 8.1 1 2.7 1 2.7 - - 1 2.7 2 5.4 - - - - 37

Various commercial 21 26.9 24 30.8 10 12.8 8 10.3 3 3.8 3 3.8 2 2.6 1 1.3 1 1.3 3 3.8 2 2.6 - - - - 78

Life insurance 1 6.3 - - - - - - 1 6.3 3 18.8 - - 2 12.5 - - 2 12.5 2 12.5 3 18.8 2 12.5 16

Non-life insurance - - 1 7.7 - - 2 15.4 - - 1 7.7 - - - - - - 2 15.4 1 7.7 2 15.4 4 30.8 13

Finance 22 13.6 18 11.1 12 7.4 18 11.1 5 3.1 9 5.6 8 4.9 4 2.5 3 1.9 15 9.3 20 12.3 22 13.6 6 3.7 162

Real estate 11 22.0 13 26.0 7 14.0 8 16.0 8 16.0 1 2.0 - - - - - - 2 4.0 - - - - - - 50

Transportation / Warehouse 8 12.7 13 20.6 5 7.9 8 12.7 5 7.9 4 6.3 4 6.3 1 1.6 2 3.2 7 11.1 2 3.2 2 3.2 2 3.2 63

83


Industry # % # % # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising 9 25.0 7 19.4 5 13.9 4 11.1 1 2.8 - - 1 2.8 1 2.8 - - 3 8.3 4 11.1 1 2.8 - - 36

Electric / Gas 1 5.9 1 5.9 1 5.9 1 5.9 - - 1 5.9 - - - - 1 5.9 5 29.4 1 5.9 3 17.6 2 11.8 17

Services 61 33.2 46 25.0 24 13.0 14 7.6 9 4.9 6 3.3 5 2.7 6 3.3 1 0.5 8 4.3 3 1.6 1 0.5 - - 184




10 26.3 15 39.5 1 2.6 3 7.9 2 5.3 2 5.3 - - 1 2.6 - - 1 2.6 2 5.3 1 2.6 - - 38


Ratio (%) 24.0 23.0 11.9 9.5 5.2 4.3 3.5 2.2 1.4 6.3 4.0 3.1 1.6


84

<Table 7> Number of auditors who conduct only IAA (by Capital)



Capital

(Billion yen)

# % # % # % # % # % # % # % # % # % # % # % # % # % #

� 0.9 84 45.9 45 24.6 26 14.2 16 8.7 3 1.6 - - 3 1.6 2 1.1 1 0.5 3 1.6 - - - - - - 183

1 � 2.9 77 43.0 49 27.4 14 7.8 14 7.8 4 2.2 6 3.4 2 1.1 3 1.7 1 0.6 6 3.4 1 0.6 1 0.6 1 0.6 179

3 � 4.9 41 36.9 34 30.6 12 10.8 16 14.4 1 0.9 3 2.7 2 1.8 2 1,8 - - - - - - - - - - 111

5 � 9.9 36 20.5 57 32.4 43 24.2 16 9.1 6 3.4 5 2.8 4 2.3 1 0.6 2 1.1 5 2.8 - - 1 0.6 - - 176

10 � 19.9 46 24.5 49 26.1 23 12.2 20 10.6 17 9.0 5 2.7 9 4.8 3 1.6 3 1.6 4 2.1 5 2.7 3 1.6 1 0.5 188

20 � 49.9 24 12.4 48 24.9 20 10.4 24 12.4 16 8.3 15 7.8 8 4.1 2 1.0 1 0.5 19 9.8 8 4.1 8 4.1 - - 193

50 � 99.9 6 5.3 14 12.3 15 13.2 9 7.9 13 11.4 10 8.8 7 6.1 7 6.1 1 0.9 13 11.4 10 8.8 5 4.4 4 3.5 114

100 � 199.9 4 5.3 6 8.0 3 4.0 7 9.3 4 5.3 6 8.0 8 10.7 7 9.3 3 4.0 13 17.3 8 10.7 5 6.7 1 1.3 75

200 � 999.9 2 2.1 3 3.1 5 5.2 5 5.2 5 5.2 9 9.3 5 5.2 4 4.1 5 5.2 19 19.6 15 15.5 16 16.5 4 4.1 97

1,000 � 1 2.9 1 2.9 - - 1 2.9 2 5.9 1 2.9 - - - - 2 5.9 5 14.7 7 20.6 4 11.8 10 29.4 34


Ratio (%) 23.8 22.7 11.9 9.5 5.3 4.4 3.6 2.3 1.4 6.4 4.0 3.2 1.6



85

<Table 8> Number of auditors who conduct only IAA (by Number of Employees)



Number of

Employees

# % # % # % # % # % # % # % # % # % # % # % # % # % #

� 100 47 59.5 14 17.7 7 8.9 4 5.1 5 6.3 1 1.3 - - - - 1 1.3 - - - - - - - - 79

101 � 200 49 45.0 30 27.5 17 15.6 5 4.6 1 0.9 2 1.8 - - - - - - 3 2.8 2 1.8 - - - - 109

201 � 300 42 42.9 30 30.6 6 6.1 14 14.3 3 3.1 1 1.0 - - - - - - 2 2.0 - - - - - - 98

301 � 500 63 40.9 46 29.9 15 9.7 11 7.1 4 2.6 3 1.9 5 3.2 3 1.9 1 0.6 3 1.9 - - - - - - 154

501 � 1,000 72 25.7 93 33.2 33 11.8 34 12.1 14 5.0 12 4.3 3 1.1 4 1.4 3 1.1 9 3.2 3 1.1 - - - - 280

1,001 � 2,000 35 13.6 61 23.6 48 18.6 35 13.6 16 6.2 16 6.2 6 2.3 6 2.3 3 1.2 12 4.7 13 5.0 7 2.7 - - 258

2,001 � 3,000 10 8.8 23 20.4 15 13.3 10 8.8 8 7.1 8 7.1 11 9.7 4 3.5 1 0.9 5 4.4 8 7.1 10 8.8 - - 113

3,001 � 5,000 7 6.7 7 6.7 15 14.4 6 5.8 13 12.5 7 6.7 8 7.7 6 5.8 3 2.9 17 16.3 4 3.8 8 7.7 3 2.9 104

5,001 � 10,000 5 4.8 8 7.7 8 7.7 6 5.8 4 3.8 5 4.8 12 11.5 3 2.9 7 6.7 22 21.2 12 11.5 7 6.7 5 4.8 104

10,001 � 30,000 - - 1 2.0 1 2.0 3 6.1 4 8.2 2 4.1 2 4.1 5 10.2 1 2.0 9 18.4 7 14.3 7 14.3 7 14.3 49

30,001 � 100,000 1 5.3 - - - - 1 5.3 - - 2 10.5 - - - - - - 4 21.1 4 21.1 2 10.5 5 26.3 19

100,000 � - - - - - - - - - - - - - - - - - - - - 1 25.0 2 50.0 1 25.0 4


Ratio (%) 24.1 22.8 12.0 9.4 5.3 4.3 3.4 2.3 1.5 6.3 3.9 3.1 1.5



86

<Table 9> Number of auditors who are also assigned non-IAA (by industry)



Industry

# % # % # % # % # % # % # % # % # % # % # % # % # % #

Construction 11 40.7 7 25.9 5 18.5 - - 2 7.4 1 3.7 - - - - - - 1 3.7 - - - - - - 27

Fishing / Food 4 30.8 4 30.8 1 7.7 3 23.1 - - - - - - - - - - - - - - 1 7.7 - - 13

Textile / Paper / Pulp 4 33.3 3 25.0 3 25.0 - - - - - - 1 8.3 - - - - - - 1 8.3 - - - - 12

Chemical 18 58.1 8 25.8 1 3.2 1 3.2 - - - - - - 1 3.2 2 6.5 - - - - - - - - 31

Medicine 5 83.3 - - 1 16.7 - - - - - - - - - - - - - - - - - - - - 6

Oil / Coal / Mining - - 1 25.0 1 25.0 - - 2 50.0 - - - - - - - - - - - - - - - - 4

Rubber 1 50.0 - - 1 50.0 - - - - - - - - - - - - - - - - - - - - 2

Glass / Soil & Stone 3 42.9 2 28.6 1 14.3 - - - - - - 1 14.3 - - - - - - - - - - - - 7

Steel 7 77.8 - - - - 1 11.1 - - - - - - 1 11.1 - - - - - - - - - - 9

Metal 3 37.5 3 37.5 - - 1 12.5 - - - - - - - - - - - - - - 1 12.5 - - 8

Machine 12 48.0 6 24.0 4 16.0 - - - - 1 4.0 - - - - 1 4.0 - - 1 4.0 - - - - 25

Electric equipment 15 45.5 9 27.3 1 3.0 2 6.1 1 3.0 - - 2 6.1 - - - - 2 6.1 1 3.0 - - - - 33

Transportation equipment 8 47.1 4 23.5 1 5.9 1 5.9 2 11.8 - - - - - - - - 1 5.9 - - - - - - 17

Precision equipment 4 44.4 - - 2 22.2 - - 1 11.1 2 22.2 - - - - - - - - - - - - - - 9

Misc. manufacturing 8 57.1 5 35.7 - - - - - - - - - - - - - - 1 7.1 - - - - - - 14

Trading 8 42.1 6 31.6 1 5.3 2 10.5 - - 1 5.3 - - - - - - - - 1 5.3 - - - - 19

Department store / Super market 3 33.3 5 55.6 - - 1 11.1 - - - - - - - - - - - - - - - - - - 9

Various commercial 10 62.5 3 18.8 2 12.5 - - 1 6.3 - - - - - - - - - - - - - - - - 16

Life insurance - - 1 50.0 - - - - 1 50.0 - - - - - - - - - - - - - - - - 2

Non-life insurance - - - - - - 1 50.0 1 50.0 - - - - - - - - - - - - - - - - 2

Finance 18 51.4 10 28.6 3 8.6 2 5.7 - - - - - - - - - - 1 2.9 - - - - 1 2.9 35

Real estate 7 58.3 2 16.7 1 8.3 - - - - 1 8.3 1 8.3 - - - - - - - - - - - - 12

87


Industry

# % # % # % # % # % # % # % # % # % # % # % # % # % #

Transportation / Warehouse 11 50.0 3 13.6 4 18.2 - - 3 13.6 - - 1 4.5 - - - - - - - - - - - - 22

Telecom / Advertising 7 53.8 1 7.7 5 38.5 - - - - - - - - - - - - - - - - - - - - 13

Electric / Gas 2 50.0 2 50.0 - - - - - - - - - - - - - - - - - - - - - - 4

Services 25 49.0 6 11.8 9 17.6 3 5.9 2 3.9 2 3.9 1 2.0 1 2.0 2 3.9 - - - - - - - - 51




5 33.3 3 20.0 2 13.3 2 13.3 - - - - - - 2 13.3 - - - - 1 6.7 - - - - 15

Total (# of Organizations) 199 94 49 20 16 8 7 5 5 6 5 2 1 417

Ratio (%) 47.7 22.5 11.8 4.8 3.8 1.9 1.7 1.2 1.2 1.4 1.2 0.5 0.2

� No responses: 1,056 organizations

88

<Table 10> Number of auditors who are not permanent employees (by industry)



Industry

# % # % # % # % # % # % # % # % # % # % # % # % # % #

Construction 3 75.0 1 25.0 - - - - - - - - - - - - - - - - - - - - - - 4

Fishing / Food 4 80.0 - - - - 1 20.0 - - - - - - - - - - - - - - - - - - 5

Textile / Paper / Pulp 4 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 4

Chemical 4 57.1 1 14.3 - - - - 1 14.3 - - - - - - - - - - - - - - 1 14.3 7

Medicine 5 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 5

Oil / Coal / Mining 1 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 1

Rubber - - - - 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Glass / Soil & Stone 2 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 2

Steel 1 100.0 - - - - - - - - - - - - - - - - - - - - - - 1

Metal 2 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 2

Machine 3 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 3

Electric equipment 12 80.0 3 20.0 - - - - - - - - - - - - - - - - - - - - - - 15

Transportation equipment 4 80.0 - - - - - - - - - - - - - - - - - - 1 20.0 - - - - 5

Precision equipment 2 66.7 - - - - - - - - - - - - - - - - - - - - - - 1 33.3 3

Misc. manufacturing 4 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 4

Trading 4 66.7 2 33.3 - - - - - - - - - - - - - - - - - - - - - - 6

Department store / Super market 3 60.0 2 40.0 - - - - - - - - - - - - - - - - - - - - - - 5

Various commercial 11 91.7 - - 1 8.3 - - - - - - - - - - - - - - - - - - - - 12

Life insurance 4 44.4 2 22.2 1 11.1 1 11.1 - - 1 11.1 - - - - - - - - - - - - - - 9

Non-life insurance 1 25.0 2 50.0 1 25.0 - - - - - - - - - - - - - - - - - - - - 4

Finance 24 54.5 9 20.5 1 2.3 3 6.8 - - - - 1 2.3 - - - - 5 11.4 1 2.3 - - - - 44

Real estate 4 66.7 1 16.7 - - 1 16.7 - - - - - - - - - - - - - - - - - - 6

Transportation / Warehouse 3 42.9 3 42.9 1 14.3 - - - - - - - - - - - - - - - - - - - - 7

89


Industry

# % # % # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising 9 75.0 - - - - - - 1 8.3 1 8.3 - - - - - - - - 1 8.3 - - - - 12

Electric / Gas 3 100.0 - - - - - - - - - - - - - - - - - - - - - - - - 3

Services 13 72.2 4 22.2 - - - - - - - - - - - - - - 1 5.6 - - - - - - 18




8 80.0 1 10.0 1 10.0 - - - - - - - - - - - - - - - - - - - - 10

Total (# of Organizations) 137 32 7 6 2 2 1 - - 6 3 - 2 198

Ratio (%) 69.2 16.2 3.5 3.1 1.0 1.0 0.5 - - 3.0 1.5 - 1.0


90

<Table 11> Other activities which the IAA is assigned (by industry)


Accoun

ting / F

inance

Mate

rial / Pu

rchasing

Pro

ductio

n

Sa

les / Marketing

Gen

eral A

ffairs /

Hu

man

Reso

urces

Ad

min

istration

Info

rmation

System

Research

/

Develop

ment

Pla

nning / P

R

Enviro

nm

ent

Man

agem

ent

Legal / C

ompliance

President’s o

ffice /

Secretary o

ffice

Advertisem

ent

Wh

istle blow

ing

Risk M

anagem

ent

Reg

ulatory relatio

ns

Oth

ers

Total

Other activities assig

ned

Industry # % # % # % # % # % # % # % # % # % # % # % # % # % # % # % # % # % #

Construction 10 20.0 1 2.0 3 6.0 2 4.0 8 16.0 3 6.0 3 6.0 1 2.0 1 2.0 2 4.0 5 10.0 1 2.0 - - 1 2.0 2 4.0 - - 7 14.0 50

Fishing / Food 2 10.5 - - 1 5.3 1 5.3 3 15.8 1 5.3 1 5.3 - - - - - - 3 15.8 - - - - 3 15.8 2 10.5 - - 2 10.5 19

Textile / Paper / Pulp 3 13.6 3 13.6 - - - - 2 9.1 1 4.5 1 4.5 - - 3 13.6 - - 2 9.1 - - - - 1 4.5 - - - - 6 27.3 22

Chemical 8 17.0 1 2.1 1 2.1 1 2.1 6 12.8 2 4.3 3 6.4 2 4.3 4 8.5 3 6.4 5 10.6 - - 2 4.3 2 4.3 - - - - 7 14.9 47

Medicine - - - - - - - - 2 28.6 - - - - - - - - - - - - - - - - - - - - - - 5 71.4 7

Oil / Coal / Mining 2 40.0 - - - - - - - - 1 20.0 - - - - - - - - - - - - - - - - - - - - 2 40.0 5

Rubber - - - - - - - - - - 1 100.0 - - - - - - - - - - - - - - - - - - - - - - 1

Glass / Soil & Stone 2 18.2 - - 1 9.1 2 18.2 1 9.1 - - - - - - - - - - 1 9.1 - - - - 1 9.1 1 9.1 - - 2 18.2 11

Steel 3 17.6 1 5.9 1 5.9 2 11.8 2 11.8 1 5.9 1 5.9 1 5.9 - - - - 3 17.6 - - - - - - - - - - 2 11.8 17

Metal 4 30.8 - - - - - - 1 7.7 2 15.4 1 7.7 - - 1 7.7 - - - - 2 15.4 - - - - - - - - 2 15.4 13

Machine 4 11.8 - - - - 3 8.8 4 11.8 4 11.8 1 2.9 - - 3 8.8 1 2.9 6 17.6 1 2.9 - - - - 1 2.9 - - 6 17.6 34

Electric equipment 12 19.7 4 6.6 3 4.9 3 4.9 5 8.2 2 3.3 9 14.8 4 6.6 5 8.2 2 3.3 3 4.9 1 1.6 1 1.6 - - - - 7 11.5 61

Transportation equipment 6 15.8 4 10.5 3 7.9 2 5.3 5 13.2 3 7.9 2 5.3 1 2.6 5 13.2 3 7.9 1 2.6 - - - - - - 1 2.6 - - 2 5.3 38

Precision equipment 3 14.3 - - 1 4.8 1 4.8 1 4.8 3 14.3 3 14.3 - - - - - - 5 23.8 1 4.8 - - - - 1 4.8 - - 2 9.5 21

Misc. manufacturing 3 17.6 - - - - 1 5.9 5 29.4 - - 1 5.9 1 5.9 2 11.8 - - 1 5.9 - - - - - - 1 5.9 - - 2 11.8 17

Trading 7 29.2 - - - - 2 8.3 1 4.2 2 8.3 - - - - 2 8.3 2 8.3 2 8.3 - - - - - - 3 12.5 - - 3 12.5 24

Department store / Super market 1 5.3 1 5.3 - - - - 1 5.3 2 10.5 1 5.3 - - 2 10.5 1 5.3 1 5.3 - - - - 3 15.8 2 10.5 1 5.3 3 15.8 19

Various commercial 4 26.7 - - - - 1 6.7 1 6.7 1 6.7 2 13.3 - - - - 1 6.7 2 13.3 - - - - - - - - 3 20.0 15

Life insurance - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 33.3 - - 2 66.7 3

Non-life insurance 1 33.3 - - - - - - - - 1 33.3 - - - - - - - - - - - - - - - - - - - - 1 33.3 3

91

Acco

unting / F

inance

Mate

rial / Pu

rchasin

g

Pro

ductio

n

Sales / M

arketing

Gen

era

l Affairs /

Hu

man

Reso

urces

Ad

min

istration

Info

rmation

System

Research

/

Develop

ment

Pla

nning / P

R

Enviro

nm

ent

Man

agem

ent

Legal / Co

mp

liance

President’s o

ffice /

Secreta

ry office

Ad

vertisemen

t

Wh

istle b

lowin

g

Risk M

anag

emen

t

Reg

ulatory relatio

ns

Oth

ers

Total

Other activities assig

ned

Industry # % # % # % # % # % # % # % # % # % # % # % # % # % # % # % # % # % #

Finance 4 7.7 2 3.8 - - 7 13.5 10 19.2 9 17.3 1 1.9 - - 2 3.8 - - 3 5.8 - - - - - - 3 5.8 1 1.9 10 19.2 52

Real estate 6 27.3 - - - - 1 4.5 3 13.6 - - 1 4.5 - - 2 9.1 - - 2 9.1 1 4.5 - - - - 2 9.1 - - 4 18.2 22

Transportation / Warehouse 5 18.5 - - - - 1 3.7 5 18.5 1 3.7 - - - - - - 2 7.4 3 11.1 - - - - 1 3.7 1 3.7 - - 8 29.6 27

Telecom / Advertising 1 5.9 - - 1 5.9 - - 2 11.8 1 5.9 2 11.8 - - - - - - 2 11.8 - - - - 2 11.8 2 11.8 - - 4 23.5 17

Electric / Gas - - - - 1 16.7 - - 1 16.7 1 16.7 - - - - - - - - - - - - - - - - 1 16.7 - - 2 33.3 6

Services 13 14.3 1 1.1 2 2.2 6 6.6 12 13.2 14 15.4 6 6.6 1 1.1 5 5.5 1 1.1 8 8.8 1 1.1 - - 5 5.5 5 5.5 1 1.1 10 11.0 91




3 13.6 - - - - 1 4.5 2 9.1 1 4.5 1 4.5 1 4.5 4 18.2 1 4.5 2 9.1 - - - - 2 9.1 1 4.5 - - 3 13.6 22

Total (# of Organizations) 107 18 18 37 83 57 40 12 41 18 59 10 3 21 30 3 107 664

Ratio (%) 25.8 4.3 4.3 8.9 20.0 13.7 9.6 2.9 9.9 4.3 14.2 2.4 0.7 5.1 7.2 0.7 25.8


� Multiple answers were allowed. The ratio is calculated using the following formula: number of responses to each item / number of usable responses (415 organizations)

* 100

� Others include “CAE of other business units” and “CSR”.

93

<Table 12> Average years of audit experiences (by industry)


Less than

3 years

3�less than 5

years

5�less than 10

years

10 years or

more

Total Experiences

Industry

# % # % # % # % #

Construction 41 59.4 20 29.0 7 10.1 1 1.4 69

Fishing / Food 36 67.9 12 22.6 4 7.5 1 1.9 53

Textile / Paper / Pulp 16 66.7 5 20.8 2 8.3 1 4.2 24

Chemical 61 67.0 22 24.2 8 8.8 - - 91 Medicine 15 46.9 13 40.6 3 9.4 1 3.1 32

Oil / Coal / Mining 7 70.0 3 30.0 - - - - 10

Rubber 3 60.0 1 20.0 1 20.0 - - 5

Glass / Soil & Stone 8 66.7 1 8.3 3 25.0 - - 12

Steel 11 64.7 5 29.4 1 5.9 - - 17 Metal 22 68.8 8 25.0 2 6.3 - - 32

Machine 42 61.8 17 25.0 7 10.3 2 2.9 68

Electric equipment 64 61.5 29 27.9 11 10.6 - - 104

Transportation equipment 30 68.2 12 27.3 2 4.5 - - 44

Precision equipment 18 66.7 5 18.5 4 14.8 - - 27 Misc. manufacturing 44 71.0 14 22.6 4 6.5 - - 62

Trading 38 50.7 25 33.3 8 10.7 4 5.3 75

Department store / Super market 22 55.0 11 27.5 4 10.0 3 7.5 40

Various commercial 52 62.7 25 30.1 6 7.2 - - 83

Life insurance 9 56.3 4 25.0 3 18.8 - - 16

Non-life insurance 11 84.6 2 15.4 - - - - 13

Finance 101 60.8 56 33.7 7 4.2 2 1.2 166 Real estate 42 82.4 7 13.7 1 2.0 1 2.0 51

Transportation / Warehouse 48 67.6 20 28.2 3 4.2 - - 71

Telecom / Advertising 21 53.8 13 33.3 5 12.8 - - 39

Electric / Gas 11 61.1 6 33.3 1 5.6 - - 18

Services 105 55.9 60 31.9 18 9.6 5 2.7 188 Independent administrative institution / Special


Association etc.

29 72.5 8 20.0 3 7.5 - - 40

Total (# of Organizations) 907 404 118 21 1,450

Ratio (%) 62.6 27.9 8.1 1.4


94

<Table 13> Average years of audit experiences (by Number of Employees)


Less than

3 years

3�less than 5

years

5�less than 10

years

10 years or

more

Total Experiences

# of Employees

# % # % # % # % #

� 100 58 65.2 17 19.1 9 10.1 5 5.6 89

101 � 200 75 64.1 34 29.1 4 3.4 4 3.4 117

201 � 300 72 66.1 26 23.9 8 7.3 3 2.8 109

301 � 500 109 64.5 37 21.9 20 11.8 3 1.8 169

501 � 1,000 182 62.3 79 27.1 27 9.2 4 1.4 292

1,001 � 2,000 174 66.7 68 26.1 19 7.3 - - 261

2,001 � 3,000 69 61.6 35 31.3 8 7.1 - - 112

3,001 � 5,000 53 51.0 43 41.3 7 6.7 1 1.0 104

5,001 � 10,000 61 57.5 36 34.0 9 8.5 - - 106

10,001 � 30,000 28 57.1 17 34.7 4 8.2 - - 49

30,001 � 100,000 9 47.4 8 42.1 1 5.3 1 5.3 19

100,000 � 2 50.0 1 25.0 1 25.0 - - 4


Ratio (%) 62.3 28.0 8.2 1.5



95

<Table 14> Audit training for internal auditors (by industry)


Within

organization

Outside of

organization

Both within

and outside of

organization

No training Total Training conducting

Industry # % # % # % # % #

Construction 5 7.1 47 67.1 14 20.0 4 5.7 70

Fishing / Food 2 3.8 29 54.7 21 39.6 1 1.9 53

Textile / Paper / Pulp 4 17.4 13 56.5 6 26.1 - - 23 Chemical 3 3.3 64 70.3 21 23.1 3 3.3 91

Medicine 1 3.1 16 50.0 15 46.9 - - 32 Oil / Coal / Mining - - 5 55.6 3 33.3 1 11.1 9

Rubber - - 4 80.0 1 20.0 - - 5

Glass / Soil & Stone 1 7.1 10 71.4 1 7.1 2 14.3 14

Steel - - 12 70.6 5 29.4 - - 17

Metal 1 3.2 23 74.2 3 9.7 4 12.9 31 Machine 2 2.9 46 67.6 18 26.5 2 2.9 68

Electric equipment 4 3.9 62 60.2 34 33.0 3 2.9 103

Transportation equipment - - 32 72.7 11 25.0 1 2.3 44

Precision equipment 1 3.7 22 81.5 4 14.8 - - 27

Misc. manufacturing 2 3.3 44 72.1 13 21.3 2 3.3 61 Trading 5 6.6 48 63.2 19 25.0 4 5.3 76


Various commercial 3 3.6 57 67.9 19 22.6 5 6.0 84

Life insurance - - 7 41.2 10 58.8 - - 17

Non-life insurance 1 7.7 4 30.8 8 61.5 - - 13

Finance 11 6.6 81 48.5 64 38.3 11 6.6 167

Real estate 1 2.0 34 66.7 13 25.5 3 5.9 51 Transportation / Warehouse 2 2.8 47 66.2 18 25.4 4 5.6 71

Telecom / Advertising - - 26 65.0 13 32.5 1 2.5 40

Electric / Gas - - 11 61.1 7 38.9 - - 18

Services 6 3.1 123 64.4 47 24.6 15 7.9 191




2 4.8 31 73.8 4 9.5 5 11.9 42

Total (# of Organizations) 61 924 401 72 1,458 Ratio (%) 4.2 63.4 27.5 4.9

Total (# of Organizations) 1,386 72 1,458

Ratio (%) 95.1 4.9


97

<Table 15> Number of organizations which had QIA (Qualified Internal Auditor) holders, CIA (Certified Internal Auditor) holders and other internal audit related

qualification holders


QIA

(Qualified Internal Au

ditor)

QISIA

(Qualified

Information

System Internal

Auditor)

CFIA (Certified

Financial Internal

Auditor)

CIA

(Certified Internal

Auditor)

CCSA

(Certification in

Control

Self-Assessment)

CFSA

(Certified

Financial Services

Auditor)

None Total Qualification

Industry

# % # % # % # % # % # % # % #

Construction 13 17.3 2 2.7 - - 5 6.7 - - - - 55 73.3 75

Fishing / Food 26 41.9 3 4.8 - - 6 9.7 1 1.6 - - 26 41.9 62

Textile / Paper / Pulp 6 23.1 1 3.8 - - 1 3.8 - - - - 18 69.2 26

Chemical 31 30.4 4 3.9 - - 10 9.8 1 1.0 - - 56 54.9 102

Medicine 19 38.8 4 8.2 - - 12 24.5 1 2.0 - - 13 26.5 49

Oil / Coal / Mining 6 46.2 1 7.7 - - 3 23.1 - - - - 3 23.1 13

Rubber 1 16.7 - - - - 2 33.3 - - - - 3 50.0 6

Glass / Soil & Stone 7 46.7 - - - - 1 6.7 - - - - 7 46.7 15

Steel 4 21.1 - - - - 2 10.5 - - - - 13 68.4 19

Metal 6 17.6 2 5.9 - - - - - - - - 26 76.5 34

Machine 16 21.3 3 4.0 1 1.3 10 13.3 - - - - 45 60.0 75

Electric equipment 37 28.2 9 6.9 - - 19 14.5 4 3.1 - - 62 47.3 131

Transportation equipment 12 23.1 3 5.8 - - 7 13.5 1 1.9 - - 29 55.8 52

Precision equipment 8 25.8 1 3.2 - - 4 12.9 - - - - 18 58.1 31

Misc. manufacturing 15 22.4 2 3.0 - - 4 6.0 1 1.5 - - 45 67.2 67

Trading 19 21.3 3 3.4 - - 9 10.1 2 2.2 1 1.1 55 61.8 89

Department store / Super market 11 23.4 4 8.5 - - 3 6.4 - - - - 29 61.7 47

Various commercial 18 20.0 2 2.2 - - 8 8.9 1 1.1 - - 61 67.8 90

Life insurance 6 16.2 1 2.7 6 16.2 11 29.7 3 8.1 5 13.5 5 13.5 37

98

QIA

(Qualified Internal Au

ditor)

QISIA

(Qualified

Information

System Internal

Auditor)

CFIA (Certified

Financial Internal

Auditor)

CIA

(Certified Internal

Auditor)

CCSA

(Certification in

Control

Self-Assessment)

CFSA

(Certified

Financial Services

Auditor)

None Total Qualification

Industry

# % # % # % # % # % # % # % #

Non-life insurance 4 14.3 2 7.1 7 25.0 8 28.6 1 3.6 4 14.3 2 7.1 28

Finance 16 7.1 10 4.5 50 22.3 32 14.3 4 1.8 25 11.2 87 38.8 224

Real estate 17 30.4 - - 1 1.8 7 12.5 - - - - 31 55.4 56

Transportation / Warehouse 23 27.4 3 3.6 - - 11 13.1 - - - - 47 56.0 84

Telecom / Advertising 23 45.1 4 7.8 1 2.0 8 15.7 - - - - 15 29.4 51

Electric / Gas 11 40.7 1 3.7 - - 9 33.3 2 7.4 - - 4 14.8 27

Services 71 30.5 12 5.2 1 0.4 33 14.2 4 1.7 2 0.9 110 47.2 233




8 17.4 1 2.2 - - 4 8.7 - - - - 33 71.7 46

Total (# of Organizations) 434 78 67 229 26 37 898 1,769

Ratio (%) 29.7 5.3 4.6 15.7 1.8 2.5 50.8


� Multiple answers were allowed. The ratio is calculated using the following formula: number of responses to each item / number of usable responses (1,460

organizations) * 100

99

<Table 16> Number of QIA (Qualified Internal Auditor) holders (by industry)


1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of QIA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Construction 6 46.2 4 30.8 - - 1 7.7 1 7.7 1 7.7 - - - - - - - - - - 13

Fishing / Food 7 26.9 8 30.8 3 11.5 3 11.5 1 3.8 - - 1 3.8 2 7.7 1 3.8 - - - - 26

Textile / Paper / Pulp 1 16.7 4 66.7 - - - - - - - - - - 1 16.7 - - - - - - 6

Chemical 10 33.3 6 20.0 6 20.0 6 20.0 1 3.3 1 3.3 1 3.3 - - - - - - - - 30 Medicine 1 5.3 7 36.8 1 5.3 3 15.8 1 5.3 - - 2 10.5 3 15.8 - - 1 5.3 - - 19

Oil / Coal / Mining 3 50.0 - - 1 16.7 1 16.7 - - 1 16.7 - - - - - - - - - - 6

Rubber 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Glass / Soil & Stone 4 57.1 - - 1 14.3 1 14.3 - - - - - - - - - - 1 14.3 - - 7

Steel 4 100.0 - - - - - - - - - - - - - - - - - - - - 4 Metal 3 50.0 - - 1 16.7 1 16.7 - - - - - - - - 1 16.7 - - - - 6

Machine 9 56.3 1 6.3 1 6.3 2 12.5 2 12.5 - - 1 6.3 - - - - - - - - 16

Electric equipment 13 35.1 6 16.2 3 8.1 5 13.5 2 5.4 - - 2 5.4 1 2.7 3 8.1 2 5.4 37

Transportation equipment 7 58.3 1 8.3 1 8.3 1 8.3 1 8.3 - - - - - - 1 8.3 - - - - 12

Precision equipment 5 62.5 1 12.5 - - - - - - - - - - 1 12.5 - - 1 12.5 - - 8 Misc. manufacturing 7 43.8 3 18.8 3 18.8 1 6.3 1 6.3 - - - - - - - - - - - - 16

Trading 6 31.6 4 21.1 - - 2 10.5 - - 1 5.3 - - 1 5.3 - - 2 10.5 3 15.8 19

Department store / Super market 2 18.2 4 36.4 - - 3 27.3 - - - - 1 9.1 - - - - 1 9.1 - - 11

Various commercial 9 50.0 3 16.7 3 16.7 3 16.7 - - - - - - - - - - - - - - 18

Life insurance 2 33.3 1 16.7 2 33.3 - - - - - - - - - - - - 1 16.7 - - 6

Non-life insurance 2 50.0 - - 1 25.0 - - - - 1 25.0 - - - - - - - - - - 4

Finance 9 52.9 5 29.4 1 5.9 - - 1 5.9 - - - - - - - - - - - - 17 Real estate 10 58.8 4 23.5 2 11.8 - - 1 5.9 - - - - - - - - - - - - 17

Transportation / Warehouse 7 30.4 5 21.7 2 8.7 4 17.4 3 13.0 - - - - - - 1 4.3 1 4.3 - - 23

100


Industry # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising 15 65.2 3 13.0 1 4.3 1 4.3 - - - - - - 1 4.3 - - 2 8.7 - - 23

Electric / Gas 3 27.3 1 9.1 - - 2 18.2 1 9.1 1 9.1 1 9.1 - - - - 2 18.2 - - 11

Services 42 60.0 11 15.7 6 8.6 7 10.0 1 1.4 - - 1 1.4 1 1.4 - - 2 2.9 - - 70




7 87.5 1 12.5 - - - - - - - - - - - - - - - - - - 8

Total (# of Organizations) 195 83 39 47 17 6 10 10 5 17 5 434 Ratio (%) 44.9 19.1 9.0 10.8 3.9 1.4 2.3 2.3 1.2 3.9 1.2

101

<Table 17> Number of QIA (Qualified Internal Auditor) holders (by Number of Employees)



Number of Employees # % # % # % # % # % # % # % # % # % # % # % #

� 100 12 80.0 1 6.7 1 6.7 1 6.7 - - - - - - - - - - - - - - 15

101 � 200 16 76.2 3 14.3 - - 1 4.8 - - - - - - - - - - 1 4.8 - - 21

201 � 300 14 87.5 2 12.5 - - - - - - - - - - - - - - - - - - 16

301 � 500 28 77.8 5 13.9 1 2.8 2 5.6 - - - - - - - - - - - - - - 36

501 � 1,000 35 53.0 16 24.2 6 9.1 2 3.0 5 7.6 - - - - 2 3.0 - - - - - - 66

1,001 � 2,000 44 50.6 23 26.4 9 10.3 6 6.9 4 4.6 1 1.1 - - - - - - - - - - 87

2,001 � 3,000 20 40.8 5 10.2 6 12.2 12 24.5 - - - - - - 4 8.2 - - 2 4.1 - - 49

3,001 � 5,000 11 20.8 13 24.5 6 11.3 5 9.4 4 7.5 2 3.8 3 5.7 2 3.8 4 7.5 2 3.8 1 1.9 53

5,001 � 10,000 9 17.0 11 20.8 4 7.5 12 22.6 2 3.8 2 3.8 5 9.4 1 1.9 - - 5 9.4 2 3.8 53

10,001 � 30,000 5 18.5 3 11.1 5 18.5 4 14.8 2 7.4 1 3.7 2 7.4 1 3.7 1 3.7 2 7.4 1 3.7 27

30,001 � 100,000 - - 1 12.5 - - 1 12.5 - - - - - - - - - - 5 62.5 1 12.5 8

100,000 � - - - - 1 50.0 1 50.0 - - - - - - - - - - - - - - 2

Total (# of Organizations) 194 83 39 47 17 6 10 10 5 17 5 433

Ratio (%) 44.8 19.2 9.0 10.9 3.9 1.4 2.3 2.3 1.2 3.9 1.2

� Not applicable: 1 organization

102

<Table 18> Number of QISIA (Qualified Information System Internal Auditor) holders (by industry)


1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of QISIA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Construction 1 50.0 - - 1 50.0 - - - - - - - - - - - - - - - - 2

Fishing / Food 2 66.7 1 33.3 - - - - - - - - - - - - - - - - - - 3

Textile / Paper / Pulp 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Chemical 3 75.0 1 25.0 - - - - - - - - - - - - - - - - - - 4 Medicine 3 75.0 - - 1 25.0 - - - - - - - - - - - - - - - - 4

Oil / Coal / Mining 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Rubber - - - - - - - - - - - - - - - - - - - - - - -

Glass / Soil & Stone - - - - - - - - - - - - - - - - - - - - - - -

Steel - - - - - - - - - - - - - - - - - - - - - - - Metal 2 100.0 - - - - - - - - - - - - - - - - - - - - 2

Machine 2 66.7 1 33.3 - - - - - - - - - - - - - - - - - - 3

Electric equipment 5 55.6 2 22.2 2 22.2 - - - - - - - - - - - - - - - - 9

Transportation equipment 2 66.7 1 33.3 - - - - - - - - - - - - - - - - - - 3

Precision equipment 1 100.0 - - - - - - - - - - - - - - - - - - - - 1 Misc. manufacturing 2 100.0 - - - - - - - - - - - - - - - - - - - - 2

Trading - - 1 33.3 - - - - 1 33.3 1 33.3 - - - - - - - - - - 3

Department store / Super market 3 75.0 - - - - - - - - - - 1 25.0 - - - - - - - - 4

Various commercial 1 50.0 1 50.0 - - - - - - - - - - - - - - - - - - 2

Life insurance 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Non-life insurance 1 50.0 1 50.0 - - - - - - - - - - - - - - - - - - 2

Finance 7 70.0 2 20.0 1 10.0 - - - - - - - - - - - - - - - - 10 Real estate - - - - - - - - - - - - - - - - - - - - - - -

Transportation / Warehouse 1 33.3 1 33.3 1 33.3 - - - - - - - - - - - - - - - - 3

103

1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of QISIA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising 1 25.0 2 50.0 1 25.0 - - - - - - - - - - - - - - - - 4

Electric / Gas - - 1 100.0 - - - - - - - - - - - - - - - - - - 1

Services 8 66.7 3 25.0 1 8.3 - - - - - - - - - - - - - - - - 12




1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Total (# of Organizations) 49 18 8 - 1 1 1 - - - - 78 Ratio (%) 62.8 23.1 10.3 - 1.3 1.3 1.3 - - - -

104

<Table 19> Number of CFIA (Certified Financial Internal Auditor) holders (by industry)


1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of CFIA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Construction - - - - - - - - - - - - - - - - - - - - - - -

Fishing / Food - - - - - - - - - - - - - - - - - - - - - - -

Textile / Paper / Pulp - - - - - - - - - - - - - - - - - - - - - - -

Chemical - - - - - - - - - - - - - - - - - - - - - - - Medicine - - - - - - - - - - - - - - - - - - - - - - -

Oil / Coal / Mining - - - - - - - - - - - - - - - - - - - - - - -

Rubber - - - - - - - - - - - - - - - - - - - - - - -

Glass / Soil & Stone - - - - - - - - - - - - - - - - - - - - - - -

Steel - - - - - - - - - - - - - - - - - - - - - - - Metal - - - - - - - - - - - - - - - - - - - - - - -

Machine - - - - 1 100.0 - - - - - - - - - - - - - - - - 1

Electric equipment - - - - - - - - - - - - - - - - - - - - - - -

Transportation equipment - - - - - - - - - - - - - - - - - - - - - - -

Precision equipment - - - - - - - - - - - - - - - - - - - - - - - Misc. manufacturing - - - - - - - - - - - - - - - - - - - - - - -

Trading - - - - - - - - - - - - - - - - - - - - - - -

Department store / Super market - - - - - - - - - - - - - - - - - - - - - - -

Various commercial - - - - - - - - - - - - - - - - - - - - - - -

Life insurance 1 16.7 2 33.3 - - 1 16.7 1 16.7 - - 1 16.7 - - - - - - - - 6

Non-life insurance 1 14.3 2 28.6 1 14.3 1 14.3 1 14.3 - - - - - - - - - - 1 14.3 7

Finance 20 40.0 10 20.0 8 16.0 4 8.0 1 2.0 - - 1 2.0 - - 1 2.0 3 6.0 2 4.0 50 Real estate 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Transportation / Warehouse - - - - - - - - - - - - - - - - - - - - - - -

105

1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of CFIA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Electric / Gas - - - - - - - - - - - - - - - - - - - - - - -

Services 1 100.0 - - - - - - - - - - - - - - - - - - - - 1




- - - - - - - - - - - - - - - - - - - - - - -

Total (# of Organizations) 25 14 10 6 3 - 2 - 1 3 3 67 Ratio (%) 37.3 20.9 14.9 9.0 4.5 - 3.0 - 1.5 4.5 4.5 -

106

<Table 20> Number of CIA (Certified Internal Auditor) holders (by industry)


1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of CIA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Construction 4 80.0 1 20.0 - - - - - - - - - - - - - - - - - - 5

Fishing / Food 1 16.7 1 16.7 2 33.3 - - - - 1 16.7 - - 1 16.7 - - - - - - 6

Textile / Paper / Pulp - - - - - - 1 100.0 - - - - - - - - - - - - - - 1

Chemical 6 60.0 2 20.0 2 20.0 - - - - - - - - - - - - - - - - 10 Medicine 6 50.0 3 25.0 3 25.0 - - - - - - - - - - - - - - - - 12

Oil / Coal / Mining 1 33.3 2 66.7 - - - - - - - - - - - - - - - - 3

Rubber 1 50.0 - - 1 50.0 - - - - - - - - - - - - - - - - 2

Glass / Soil & Stone - - - - 1 100.0 - - - - - - - - - - - - - - - - 1

Steel 2 100.0 - - - - - - - - - - - - - - - - - - - - 2 Metal - - - - - - - - - - - - - - - - - - - - - - -

Machine 10 100.0 - - - - - - - - - - - - - - - - - - - - 10

Electric equipment 8 42.1 4 21.1 3 15.8 1 5.3 1 5.3 - - - - - - - - - - 2 10.5 19

Transportation equipment 4 57.4 1 14.3 1 14.3 - - 1 14.3 - - - - - - - - - - - - 7

Precision equipment 4 100.0 - - - - - - - - - - - - - - - - - - - - 4 Misc. manufacturing 4 100.0 - - - - - - - - - - - - - - - - - - - - 4

Trading 2 22.2 2 22.2 - - 1 11.1 - - 1 11.1 - - - - 1 11.1 1 11.1 1 11.1 9

Department store / Super market 1 33.3 2 66.7 - - - - - - - - - - - - - - - - - - 3

Various commercial 6 75.0 1 12.5 1 12.5 - - - - - - - - - - - - - - - - 8

Life insurance 3 27.3 4 36.4 1 9.1 - - 1 9.1 - - 1 9.1 - - - - 1 9.1 - - 11

Non-life insurance 2 25.0 2 25.0 - - 1 12.5 - - - - 1 12.5 1 12.5 - - 1 12.5 - - 8

Finance 20 62.5 3 9.4 3 9.4 - - 1 3.1 1 3.1 - - 1 3.1 - - 1 3.1 2 6.3 32 Real estate 5 71.4 2 28.6 - - - - - - - - - - - - - - - - - - 7

Transportation / Warehouse 7 63.6 4 36.4 - - - - - - - - - - - - - - - - - - 11

107


Industry # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising 5 62.5 1 12.5 2 25.0 - - - - - - - - - - - - - - - - 8

Electric / Gas 5 55.6 - - 3 33.3 - - 1 11.1 - - - - - - - - - - - - 9

Services 24 72.7 7 21.2 - - - - 2 6.1 - - - - - - - - - - 33




3 75.0 - - 1 25.0 - - - - - - - - - - - - - - - - 4

Total (# of Organizations) 134 42 24 4 5 5 2 3 1 4 5 229 Ratio (%) 58.5 18.3 10.5 1.7 2.2 2.2 0.9 1.3 0.4 1.7 2.2

108

<Table 21> Number of CIA (Certified Internal Auditor) holders (by Number of Employees)



Number of Employees # % # % # % # % # % # % # % # % # % # % # % #

� 100 7 87.5 1 12.5 - - - - - - - - - - - - - - - - - - 8

101 � 200 11 84.6 - - 1 7.7 - - - - - - - - - - - - 1 7.7 - - 13

201 � 300 5 100.0 - - - - - - - - - - - - - - - - - - - - 5

301 � 500 8 88.9 1 11.1 - - - - - - - - - - - - - - - - - - 9

501 � 1,000 17 85.0 2 10.0 - - - - - - - - - - 1 5.0 - - - - - - 20

1,001 � 2,000 22 73.3 4 13.3 2 6.7 - - - - 2 6.7 - - - - - - - - - - 30

2,001 � 3,000 17 60.7 7 25.0 2 7.1 - - - - 1 3.6 - - - - 1 3.6 - - - - 28

3,001 � 5,000 20 64.5 7 22.6 1 3.2 1 3.2 - - - - - - - - - - 2 6.5 - - 31

5,001 � 10,000 11 25.0 15 34.1 11 25.0 1 2.3 2 4.5 1 2.3 1 2.3 1 2.3 - - - - 1 2.3 44

10,001 � 30,000 10 38.5 3 11.5 4 15.4 1 3.8 3 11.5 1 3.8 1 3.8 1 3.8 - - 1 3.8 1 3.8 26

30,001 � 100,000 3 30.3 2 20.0 2 20.0 1 10.0 - - - - - - - - - - - - 2 20.0 10

100,000 � - - - - 1 50.0 - - - - - - - - - - - - - - 1 50.0 2

Total (# of Organizations) 131 42 24 4 5 5 2 3 1 4 5 226

Ratio (%) 58.4 18.5 10.3 1.7 2.1 2.1 0.9 1.3 0.4 2.1 2.1


109

<Table 22> Number of CCSA (Certification in Control Self-Assessment) holders (by industry)


1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of CCSA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Construction - - - - - - - - - - - - - - - - - - - - - - -

Fishing / Food 1 100.0 - - - - - - - - - - - - - - - - - - - - 1


Chemical 1 100.0 - - - - - - - - - - - - - - - - - - - - 1 Medicine 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Oil / Coal / Mining - - - - - - - - - - - - - - - - - - - - - - -

Rubber - - - - - - - - - - - - - - - - - - - - - - -

Glass / Soil & Stone - - - - - - - - - - - - - - - - - - - - - - -

Steel - - - - - - - - - - - - - - - - - - - - - - - Metal - - - - - - - - - - - - - - - - - - - - - - -

Machine - - - - - - - - - - - - - - - - - - - - - - -

Electric equipment 2 50.0 2 50.0 - - - - - - - - - - - - - - - - - - 4

Transportation equipment - - - - - - 1 100.0 - - - - - - - - - - - - - - 1

Precision equipment - - - - - - - - - - - - - - - - - - - - - - - Misc. manufacturing 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Trading 2 100.0 - - - - - - - - - - - - - - - - - - - - 2


Various commercial 1 100.0 - - - - - - - - - - - - - - - - - - - - 1

Life insurance 2 66.7 1 33.3 - - - - - - - - - - - - - - - - - - 3

Non-life insurance - - 1 100.0 - - - - - - - - - - - - - - - - - - 1

Finance 3 75.0 1 25.0 - - - - - - - - - - - - - - - - - - 4 Real estate - - - - - - - - - - - - - - - - - - - - - - -


110

1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of CCSA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising - - - - - - - - - - - - - - - - - - - - - - -

Electric / Gas 2 100.0 - - - - - - - - - - - - - - - - - - - - 2

Services 2 50.0 1 25.0 1 25.0 - - - - - - - - - - - - - - - - 4




- - - - - - - - - - - - - - - - - - - - - - -

Total (# of Organizations) 18 6 1 1 - - - - - - - 26 Ratio (%) 69.2 23.1 3.8 3.8 - - - - - - -

111

<Table 23> Number of CFSA (Certified Financial Services Auditor) holders (by industry)


1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of CFSA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Construction - - - - - - - - - - - - - - - - - - - - - - -

Fishing / Food - - - - - - - - - - - - - - - - - - - - - - -


Chemical - - - - - - - - - - - - - - - - - - - - - - - Medicine - - - - - - - - - - - - - - - - - - - - - - -

Oil / Coal / Mining - - - - - - - - - - - - - - - - - - - - - - -

Rubber - - - - - - - - - - - - - - - - - - - - - - -

Glass / Soil & Stone - - - - - - - - - - - - - - - - - - - - - - -

Steel - - - - - - - - - - - - - - - - - - - - - - - Metal - - - - - - - - - - - - - - - - - - - - - - -

Machine - - - - - - - - - - - - - - - - - - - - - - -

Electric equipment - - - - - - - - - - - - - - - - - - - - - - -

Transportation equipment - - - - - - - - - - - - - - - - - - - - - - -

Precision equipment - - - - - - - - - - - - - - - - - - - - - - - Misc. manufacturing - - - - - - - - - - - - - - - - - - - - - - -

Trading 1 100.0 - - - - - - - - - - - - - - - - - - - - 1


Various commercial - - - - - - - - - - - - - - - - - - - - - - -

Life insurance 1 20.0 3 60.0 1 20.0 - - - - - - - - - - - - - - - - 5

Non-life insurance - - 2 50.0 - - 1 25.0 - - - - - - - - - - - - 1 25.0 4

Finance 15 60.0 5 20.0 2 8.0 - - - - - - - - - - 1 4.0 2 8.0 - - 25 Real estate - - - - - - - - - - - - - - - - - - - - - - -


112

1 2 3 4 5 6 7 8 9 10 � 19 20 � Total Number of CFSA

Industry # % # % # % # % # % # % # % # % # % # % # % #

Telecom / Advertising - - - - - - - - - - - - - - - - - - - - - - -

Electric / Gas - - - - - - - - - - - - - - - - - - - - - - -

Services 2 100.0 - - - - - - - - - - - - - - - - - - - - 2




- - - - - - - - - - - - - - - - - - - - - - -

Total (# of Organizations) 19 10 3 1 - - - - 1 2 1 37 Ratio (%) 51.4 27.0 8.1 2.7 - - - - 2.7 5.4 2.7

113

<Table 24> Prior experiences of internal auditors (by industry)


Prior experiences

Industry

Accounting / F

inan

ce

Ma

terials /

Pu

rchasing

Productio

n

Sa

les / M

arke

ting

Ge

neral A

ffairs /

Hum

an R

esources

Adm

inistra

tion

Informatio

n Syste

m

Techno

logy /

Develop

men

t

Intern

al Aud

it since

new

gra

duate

Intern

al Aud

it since

mid

-career

employm

ent

Tran

sferred fro

m

parent / a

ffiliate

compa

ny

Others

Total

Construction 36 9 21 18 19 38 6 3 2 2 5 3 162

Fishing / Food 26 9 14 29 18 24 14 6 4 2 5 5 156

Textile / Paper / Pulp 9 1 3 14 8 11 8 1 2 2 - 1 60

Chemical 39 9 13 35 23 32 14 17 1 9 9 16 217

Medicine 17 - 12 21 13 15 9 14 - - 4 3 108

Oil / Coal / Mining 7 - 5 6 7 4 - 3 1 1 - 2 36

Rubber 3 1 1 3 1 2 2 1 - - - - 14

Glass / Soil & Stone 6 2 6 8 4 8 2 3 - 2 2 1 44

Steel 10 1 2 4 8 9 2 1 - 1 2 2 42

Metal 12 4 4 10 6 8 4 3 - 5 1 3 60

Machine 28 9 18 26 21 27 11 17 5 7 2 2 173

Electric equipment 45 19 20 39 30 44 31 15 1 13 5 13 275

Transportation equipment 20 9 13 13 16 21 11 13 3 6 4 2 131

Precision equipment 15 2 3 8 11 9 4 4 1 1 4 5 67

Misc. manufacturing 23 5 16 22 15 23 6 6 - 4 2 7 129

Trading 30 5 1 39 22 28 14 2 2 7 3 4 157

Department store / Super market 16 2 - 27 15 11 4 3 1 6 2 2 89

Various commercial 34 6 3 48 20 30 15 6 2 12 3 4 183

Life insurance 5 - - 12 4 14 8 1 - 11 4 - 59

114

Prior experiences

Industry

Accou

nting / F

inance

Materia

ls /

Purch

asing

Prod

uction

Sale

s / Ma

rketing

Ge

neral A

ffairs /

Hum

an Re

sources

Ad

ministration

Informa

tion S

ystem

Tech

nolog

y /

De

velopm

ent

Internal A

udit since

new

grad

uate

Internal A

udit since

mid-care

er

em

ployme

nt

Tra

nsferred from

parent / affiliate

com

pany

Others

Total

Non-life insurance 9 - 2 10 6 12 8 1 2 6 3 1 60

Finance 33 4 1 119 38 96 58 5 7 27 31 10 429

Real estate 9 2 4 24 17 18 2 1 1 15 6 1 100

Transportation / Warehouse 33 6 8 38 38 32 15 3 2 4 12 5 196

Telecom / Advertising 21 3 1 22 11 15 11 7 - 9 6 1 107

Electric / Gas 6 4 6 12 11 9 8 2 1 1 1 1 62

Services 55 15 21 71 48 57 47 9 8 41 17 8 397




14 5 3 8 22 17 5 6 1 3 2 5 91


Ratio (%) 39.2 9.2 14.0 47.9 31.6 42.9 22.3 10.7 3.3 13.8 9.4 7.5




� Others include “legal (compliance)”, “quality assurance”, “kansayaku”, “logistics”, “ISO / environment”, “public relations”, etc.

(Note) This survey examined the tendency to select internal auditors from other departments. Therefore, the survey did not examine the number of internal auditors from

each department.

116

<Table 25> Special considerations when internal auditors are transferred to other departments (by industry)


Take internal audit

experience into

considerations

Not take internal audit

experience into

considerations

Total Considerations

Industry

# % # % #

Construction 35 53.8 30 46.2 65

Fishing / Food 27 55.1 22 44.9 49


Chemical 50 58.1 36 41.9 86

Medicine 16 51.6 15 48.4 31

Oil / Coal / Mining 5 55.6 4 44.4 9

Rubber 5 100.0 - - 5

Glass / Soil & Stone 7 58.3 5 41.7 12

Steel 10 62.5 6 37.5 16

Metal 9 33.3 18 66.7 27

Machine 33 54.1 28 45.9 61





Trading 30 44.8 37 55.2 67





Finance 81 50.6 79 49.4 160

Real estate 25 61.0 16 39.0 41



Electric / Gas 10 58.8 7 41.2 17

Services 103 57.5 76 42.5 179




11 27.5 29 72.5 40

Total (# of Organizations) 734 597 1,331

Ratio (%) 55.1 44.9


117

<Table 26> Establishment of the internal audit charter and the procedure manual (by industry)


Charter only Procedure

Manual only

Both Charter

and Procedure

Manual

Neither Total Structure

Industry # % # % # % # % #

Construction 38 55.1 1 1.4 28 40.6 2 2.9 69

Fishing / Food 17 32.7 3 5.8 32 61.5 - - 52

Textile / Paper / Pulp 11 45.8 2 8.3 11 45.8 - - 24

Chemical 42 45.7 1 1.1 44 47.8 5 5.4 92

Medicine 8 24.2 1 3.0 24 72.7 - - 33

Oil / Coal / Mining 3 30.0 1 10.0 6 60.0 - - 10

Rubber 3 60.0 - - 2 40.0 - - 5

Glass / Soil & Stone 4 28.6 - - 10 71.4 - - 14

Steel 8 47.1 - - 9 52.9 - - 17

Metal 16 50.0 - - 15 46.9 1 3.1 32

Machine 27 39.1 1 1.4 40 58.0 1 1.4 69


Transportation equipment 20 45.5 2 4.5 21 47.7 1 2.3 44

Precision equipment 14 51.9 - - 13 48.1 - - 27

Misc. manufacturing 28 45.9 - - 32 52.5 1 1.6 61

Trading 37 49.3 3 4.0 35 46.7 - - 75

Department store / Super market 23 57.5 2 5.0 15 37.5 - - 40


Life insurance - - - - 17 100.0 - - 17

Non-life insurance - - - - 13 100.0 - - 13

Finance 18 10.8 3 1.8 146 87.4 - - 167

Real estate 30 60.0 1 2.0 18 36.0 1 2.0 50


Telecom / Advertising 17 42.5 - - 23 57.5 - - 40

Electric / Gas 4 22.2 - - 14 77.8 - - 18

Services 79 41.1 10 5.2 99 51.6 4 2.1 192




17 39.5 1 2.3 25 58.1 - - 43


Ratio (%) 39.8 2.7 56.3 1.3


Ratio (%) 98.7 1.3


118

<Table 27> Approval of the internal audit charter (by industry)


Approval

Industry

President

Board

Executive

Com

mittee

Executive in

charge of Audit

Kansayaku or

Audit C

omm

ittee

Others

Total

Construction 36 20 5 2 - - 63

Fishing / Food 14 25 9 1 - - 49

Textile / Paper / Pulp 7 10 3 2 - - 22

Chemical 43 26 11 1 - 4 85

Medicine 14 12 2 3 - 1 32

Oil / Coal / Mining 4 2 2 1 - - 9

Rubber 2 1 - 2 - - 5

Glass / Soil & Stone 9 2 3 - - - 14

Steel 10 4 1 1 - 1 17

Metal 8 16 4 2 - - 30

Machine 29 26 7 2 - 2 66

Electric equipment 52 27 11 6 - 3 99

Transportation equipment 21 5 8 6 - - 40

Precision equipment 14 9 1 1 1 - 27

Misc. manufacturing 21 30 4 3 - 1 59

Trading 23 38 8 1 - 1 70

Department store / Super market 15 17 4 - - - 37

Various commercial 33 37 7 1 1 1 79

Life insurance - 15 - 1 1 - 17

Non-life insurance - 10 3 - - - 13

Finance 18 132 8 1 1 1 161

Real estate 20 24 2 1 - - 47

Transportation / Warehouse 31 24 10 2 - - 67

Telecom / Advertising 22 13 3 - 1 39

Electric / Gas 16 1 - 1 18

Services 70 79 20 4 - - 173




18 17 5 1 - - 41

Total (# of Organizations) 550 622 141 45 4 17 1,379

Ratio (%) 39.9 45.1 10.2 3.3 0.3 1.2


� Others include “executive in charge of internal rules”, “CAE”, “executive officer committee”, ”executive

committee”, ”management committee”, “parent company in overseas”, etc.

119

<Table 28> Approval of the internal audit procedure manual (by industry)


Approval

Industry

President

Board

Executive C

omm

ittee

Executive in charge of

Internal Audit

Kansayaku or A

udit

Com

mittee

Executive O

fficer

Chief A

udit Executive

Others

Total

Construction 8 1 2 5 - - 10 1 27

Fishing / Food 4 3 2 3 - - 23 - 35

Textile / Paper / Pulp 4 1 1 1 - - 5 - 12

Chemical 11 3 - 2 - 1 26 1 43

Medicine 2 1 - 3 - - 16 2 25

Oil / Coal / Mining 1 - 1 - - - 5 - 7

Rubber - - - 2 - - - - 2

Glass / Soil & Stone 5 - - 1 - - 4 - 10

Steel 1 - 1 2 - - 5 - 9

Metal 2 3 1 3 - - 6 - 15

Machine 13 2 1 8 - - 16 1 41

Electric equipment 8 3 2 3 - 1 40 - 57

Transportation equipment 1 - - 2 - - 19 - 22

Precision equipment 1 1 - 1 - - 10 - 13

Misc. manufacturing 9 5 - 2 - - 14 1 31

Trading 8 9 - 1 1 - 17 1 37

Department store / Super market 4 1 2 2 - - 7 1 17

Various commercial 15 10 2 1 - - 10 1 39

Life insurance 2 3 3 5 1 - 3 - 17

Non-life insurance 2 2 2 3 - - 3 1 13

Finance 19 39 34 15 1 - 38 1 147

Real estate 10 2 - 1 - - 6 - 19

Transportation / Warehouse 10 2 - 7 1 - 18 1 39

Telecom / Advertising 2 1 - 2 - - 17 - 22

Electric / Gas - - - 2 - - 11 1 14

Services 37 7 8 6 - - 44 4 106




8 2 4 3 - - 8 - 25

Total (# of Organizations) 187 101 66 86 4 2 381 17 844

Ratio (%) 22.2 12.0 7.8 10.2 0.5 0.2 45.1 2.0


� Others include “senior executive”, “administration executive”, “audit activity management meeting”,

“standard staff meeting”, “operational audit committee”, “CAE of parent company”, etc.

120

<Table 29> Adherence to the Standards when the internal audit charter and the procedure manual were

established (by industry)


Guidance of the

Standards for

Japan

The Standards Both the

Standards and

Guidance of the

Standards for

Japan

Neither Total Adhered

Industry

# % # % # % # % #

Construction 35 58.3 1 1.7 2 3.3 22 36.7 60

Fishing / Food 26 55.3 2 4.3 4 8.5 15 31.9 47

Textile / Paper / Pulp 12 60.0 - - 4 20.0 4 20.0 20

Chemical 55 68.8 2 2.5 8 10.0 15 18.8 80

Medicine 19 61.3 - - 9 29.0 3 9.7 31

Oil / Coal / Mining 6 66.7 - - 2 22.2 1 11.1 9

Rubber 3 60.0 - - 2 40.0 - - 5

Glass / Soil & Stone 11 78.6 1 7.1 1 7.1 1 7.1 14

Steel 5 35.7 - - 3 21.4 6 42.9 14

Metal 7 26.9 - - 3 11.5 16 61.5 26

Machine 35 53.8 1 1.5 7 10.8 22 33.8 65



Precision equipment 14 56.0 1 4.0 6 24.0 4 16.0 25

Misc. manufacturing 37 66.1 1 1.8 2 3.6 16 28.6 56

Trading 36 55.4 - - 10 15.4 19 29.2 65



Life insurance 2 11.8 1 5.9 10 58.8 4 23.5 17

Non-life insurance 4 33.3 - - 6 50.0 2 16.7 12

Finance 46 28.4 8 4.9 30 18.5 78 48.1 162

Real estate 25 56.8 1 2.3 7 15.9 11 25.0 44

Transportation / Warehouse 35 51.5 - - 11 16.2 22 32.4 68

Telecom / Advertising 16 41.0 - - 13 33.3 10 25.6 39

Electric / Gas 9 50.0 - - 3 16.7 6 33.3 18

Services 94 56.0 5 3.0 22 13.1 47 28.0 168




16 38.1 1 2.4 2 4.8 23 54.8 42


Ratio (%) 52.6 2.3 15.2 30.0


Ratio (%) 70.0 30.0


3. Internal Audit Plan (Tables 30 to 42)

121

<Table 30> Business risk / control risk assessment by the IAA (by industry)


Conducting Not conducting Total Risk assessment

Industry # % # % #

Construction 43 62.3 26 37.7 69

Fishing / Food 32 62.7 19 37.3 51


Chemical 57 62.0 35 38.0 92

Medicine 21 63.6 12 36.4 33

Oil / Coal / Mining 7 70.0 3 30.0 10

Rubber 3 60.0 2 40.0 5

Glass / Soil & Stone 5 35.7 9 64.3 14

Steel 10 62.5 6 37.5 16

Metal 17 53.1 15 46.9 32

Machine 36 53.7 31 46.3 67





Trading 44 58.7 31 41.3 75



Life insurance 17 100.0 - - 17


Finance 114 67.9 54 32.1 168

Real estate 25 52.1 23 47.9 48



Electric / Gas 7 38.9 11 61.1 18

Services 118 61.8 73 38.2 191




17 39.5 26 60.5 43


Ratio (%) 61.2 38.8


122

<Table 31> Timing of risk assessment (by industry)


Annual Audit

Planning

Each

engagement

planning

After each

engagement

completed

Others Total Timing

Industry # % # % # % # % #

Construction 28 48.3 20 34.5 10 17.2 - - 58

Fishing / Food 19 38.8 22 44.9 7 14.3 1 2.0 49


Chemical 30 39.5 32 42.1 13 17.1 1 1.3 76

Medicine 14 56.0 8 32.0 2 8.0 1 4.0 25

Oil / Coal / Mining 5 41.7 5 41.7 1 8.3 1 8.3 12

Rubber 2 50.0 1 25.0 1 25.0 - - 4

Glass / Soil & Stone 5 55.6 3 33.3 1 11.1 - - 9

Steel 6 42.9 4 28.6 4 28.6 - - 14

Metal 10 43.5 7 30.4 5 21.7 1 4.3 23

Machine 22 50.0 18 40.9 4 9.1 - - 44




Misc. manufacturing 19 38.0 19 38.0 10 20.0 2 4.0 50

Trading 21 40.4 14 26.9 17 32.7 - - 52



Life insurance 13 41.9 14 45.2 4 12.9 - - 31

Non-life insurance 8 47.0 5 29.4 3 17.6 1 5.9 17

Finance 72 44.7 49 30.4 37 23.0 3 1.9 161

Real estate 10 30.3 15 45.5 8 24.2 - - 33



Electric / Gas 6 50.0 4 33.3 2 16.7 - - 12

Services 77 51.3 50 33.3 23 15.3 - - 150




12 50.0 7 29.2 5 20.8 - - 24


Ratio (%) 62.7 48.3 24.3 1.7


� Multiple answers were allowed. The ratio is calculated using the following formula: number of responses to

each item / number of usable responses (877 organizations) * 100

� Others include “after completion of audits of all audit universe”, “based on a request from management”, “at

the beginning of the year”, etc.

124

<Table 32> Sources to determine audit universe (by industry)


Sources

Industry

Fro

m key m

anagemen

t objectives

Consu

lt with to

p man

agem

ent

Review

prio

r wo

rking papers / au

dit reports

Consu

lt with

othe

r depa

rtmen

ts

Based

on resu

lts of risk assessm

ent

Based

on o

n-site

review

Review

meeting

min

utes / App

roval requ

ests

Attend

interna

l meetings

Review

business process flow

chart

Exam

ine m

anag

ement in

form

ation data

Ru

mo

r / letters / wh

istle-blowing

Select large expen

diture d

epartm

ents

Bench

mark co

mp

arison to co

mp

etitors

Fro

m resu

lts of self-ch

eck / CS

A

Consu

lt with K

ansayaku / Au

dit Co

mm

ittee

Based

on “Insp

ection M

anual o

f Fin

ancial S

ervices Agency”

Ba

sed on

“Practice

Sta

ndard

s for Ma

nagem

ent A

ssessm

ent a

nd Audit

concerning In

tern

al Contro

l Ove

r Fina

ncial R

eportin

g”

Oth

ers

Total

Construction 56 36 43 15 32 12 9 10 8 8 10 4 2 3 23 - 16 - 287 Fishing / Food 42 31 35 15 25 14 9 3 2 2 6 4 1 12 17 - 8 2 228

Textile / Paper / Pulp 17 8 13 5 11 1 4 2 2 1 3 2 - 4 10 - 3 1 87

Chemical 70 35 56 10 43 11 14 16 13 10 12 11 2 12 30 1 27 1 374

Medicine 23 12 18 7 18 3 5 4 - - 2 5 3 4 11 - 6 3 124

Oil / Coal / Mining 8 8 4 3 6 1 1 1 - - 1 - - 2 4 - 1 - 40 Rubber 3 2 4 1 3 - - 2 2 - - - - 1 1 - - 19

Glass / Soil & Stone 12 4 10 1 5 1 3 3 - 1 2 - - 2 5 - 5 - 54

Steel 13 11 10 5 9 - 3 2 2 1 2 1 - 1 6 - 4 - 70

Metal 19 7 21 5 8 8 7 5 3 5 5 5 1 1 13 - 6 1 120

Machine 54 30 40 16 24 12 16 13 13 10 9 3 1 5 25 - 25 2 298

Electric equipment 78 45 69 21 46 14 19 25 17 16 24 4 1 19 41 1 34 6 480

125

Sources

Industry

Fro

m key m

anagemen

t objectives

Consu

lt with to

p man

agem

ent

Review

prio

r wo

rking papers / au

dit reports

Consu

lt with oth

er dep

artmen

ts

Based

on resu

lts of risk assessm

ent

Based

on o

n-site review

Review

meeting

min

utes / App

roval requ

ests

Attend

internal m

eetings

Review


chart

Exam

ine m

anag

ement in

form

ation data

Ru

mo

r / letters / wh

istle-blowing

Se

lect large expen

diture d

epartm

ents

Ben

chm

ark com

parison

to com

petito

rs

Fro

m resu

lts of self-ch

eck / CS

A

Consu

lt with K

ansayaku / Au

dit Co

mm

ittee

Based

on “Insp

ection M

anual o

f Fin

ancial S

ervices Agency”

Ba

sed on

“Pra

ctice Sta

ndard

s for M

ana

gement A

ssessm

ent a

nd Audit

concerning Inte

rnal Con

trol O

ver Fina

ncial R

eportin

g”

Oth

ers

Total

Transportation equipment 33 22 24 7 22 3 7 5 5 5 5 - 1 5 12 1 16 4 177

Precision equipment 20 14 19 8 13 6 2 5 2 1 3 4 - 3 10 - 6 - 116

Misc. manufacturing 48 29 34 24 29 20 21 18 10 8 9 6 - 2 26 1 6 1 292

Trading 48 34 51 17 34 13 8 12 10 12 10 6 1 9 18 1 10 3 297

Department store / Super market 31 25 22 8 26 9 3 13 2 5 7 2 2 5 16 - 3 - 179 Various commercial 64 38 54 22 37 28 17 19 13 14 15 4 1 12 28 1 10 - 377

Life insurance 15 8 13 7 14 2 9 9 2 5 5 3 3 6 4 16 7 2 130 Non-life insurance 11 6 9 7 9 4 4 5 3 2 4 3 1 4 5 10 7 1 95

Finance 122 45 111 36 102 31 27 27 11 7 21 4 - 43 31 123 51 4 796

Real estate 33 26 25 9 22 6 19 13 13 2 4 2 1 3 16 6 8 1 209

Transportation / Warehouse 54 33 45 17 29 20 16 4 5 5 11 4 - 12 18 1 13 3 290 Telecom / Advertising 31 18 27 10 27 4 9 4 4 4 9 2 3 4 13 - 12 1 182 Electric / Gas 16 11 12 9 10 7 3 4 3 1 2 1 - 5 6 - 3 - 93

Services 151 87 112 39 86 40 36 39 30 22 20 14 4 24 61 4 33 7 809

126

Sources

Industry

Fro

m key m

anagemen

t objectives

Consu

lt with to

p man

agem

ent

Review

prio

r wo

rking papers / au

dit reports

Consu

lt with oth

er dep

artmen

ts

Based

on resu

lts of risk assessm

ent

Based

on o

n-site review

Review

meeting

min

utes / App

roval requ

ests

Attend

internal m

eetings

Review


chart

Exam

ine m

anag

ement in

form

ation data

Ru

mo

r / letters / wh

istle-blowing

Se

lect large expen

diture d

epartm

ents

Ben

chm

ark com

parison

to com

petito

rs

Fro

m resu

lts of self-ch

eck / CS

A

Consu

lt with K

ansayaku / Au

dit Co

mm

ittee

Based

on “Insp

ection M

anual o

f Fin

ancial S

ervices Agency”

Ba

sed on

“Pra

ctice Sta

ndard

s for M

ana

gement A

ssessm

ent a

nd Audit

concerning Inte

rnal Con

trol O

ver Fina

ncial R

eportin

g”

Oth

ers

Total




Association etc.

29 25 23 8 17 7 8 4 6 1 6 5 1 5 14 2 3 4 168

Total (# of Organizations) 1,101 650 904 332 707 277 279 267 181 148 207 99 29 208 464 168 323 47 6,391

Ratio (%) 75.5 44.6 62.0 22.8 48.5 19.0 19.1 18.3 12.4 10.2 14.2 6.8 2.0 14.3 31.8 11.5 22.2 3.2




� Others include “revision of laws/regulations”, “review of internal rules”, “from prior irregularities”, “from group management policies”, etc.

128

<Table 33> Method to determine audit universe (by industry)


Method

Industry

Instructed by top

managem

ent

Selected by C

AE

and

supported by top

managem

ent

Determ

ined by

Internal Audit

Activity

Requested by other

departments

Discussed w

ith

Kansayaku / A

udit

Com

mittee

Others

Total

Construction 11 48 25 7 10 - 101

Fishing / Food 7 42 15 7 8 - 79

Textile / Paper / Pulp 4 18 7 1 6 - 36

Chemical 20 70 29 4 16 1 140

Medicine 10 24 8 1 5 - 48

Oil / Coal / Mining 6 9 - - - - 15

Rubber - 2 2 - 1 - 5

Glass / Soil & Stone 4 10 5 - 2 - 21

Steel 7 16 2 2 3 - 30

Metal 8 20 13 1 9 - 51

Machine 12 44 24 1 16 2 99

Electric equipment 28 72 43 6 31 3 183

Transportation equipment 9 33 12 1 11 1 67


Misc. manufacturing 10 48 14 2 16 1 91

Trading 18 56 27 10 11 - 122

Department store / Super market 13 28 16 2 6 - 65

Various commercial 25 57 35 12 21 - 150

Life insurance 5 11 6 3 4 - 29

Non-life insurance 4 9 6 2 2 - 23

Finance 41 131 62 20 17 1 272

Real estate 12 37 12 1 12 - 74

Transportation / Warehouse 20 53 16 6 11 2 108

Telecom / Advertising 8 31 18 5 8 - 70

Electric / Gas 2 14 5 1 - - 22

Services 40 147 65 8 34 2 296




9 37 10 3 9 - 68

Total (# of Organizations) 337 1,087 487 108 276 13 2,308

Ratio (%) 23.1 74.4 33.3 7.4 18.9 0.9



each item / number of usable responses (1,462 organizations) * 100

� Others include “discussed with external auditors”, “to comply with laws such as J-SOX and SOX”,

“requested by parent company”, “discussed with executives”, etc.

<Table 34> Development of internal audit checklist (by industry)

129


Timing of development

Industry

Developed

standardized

checklist

Developing for

each

engagement

Not develop a

checklist Total

Construction 39 36 4 79

Fishing / Food 26 28 6 60

Textile / Paper / Pulp 9 9 6 24

Chemical 40 57 8 105

Medicine 13 19 4 36

Oil / Coal / Mining 5 7 - 12

Rubber 2 4 - 6

Glass / Soil & Stone 4 9 2 15

Steel 5 9 3 17

Metal 11 15 9 35

Machine 29 38 8 75

Electric equipment 62 64 9 135

Transportation equipment 19 28 5 52

Precision equipment 12 17 2 31

Misc. manufacturing 28 36 7 71

Trading 43 25 14 82

Department store / Super market 24 20 3 47

Various commercial 51 35 9 95

Life insurance 12 12 1 25

Non-life insurance 10 9 - 19

Finance 123 74 12 209

Real estate 18 25 13 56

Transportation / Warehouse 35 35 8 78

Telecom / Advertising 17 21 7 45

Electric / Gas 8 11 - 19

Services 93 98 20 211




14 23 10 47

Total (# of Organizations) 752 764 170 1,686

Ratio (%) 51.7 52.5 11.7




130

<Table 35> Format of standardized internal audit checklist (by industry)


Format

Industry

List engagement objectives

List engagement objectives and

engagement w

ork program

List engagement objectives,

engagement w

ork program and

findings

Point rating system

based on an

importance of engagem

ent

objectives

List engagement objectives,

engagement w

ork program and

findings, and add point rating

system

Others

Total

Construction 17 7 11 - 4 - 39

Fishing / Food 10 4 6 1 5 - 26

Textile / Paper / Pulp 6 - 1 1 1 - 9

Chemical 18 5 12 1 4 - 40

Medicine 7 2 3 1 - - 13

Oil / Coal / Mining 3 - 1 1 - - 5

Rubber - 1 - - 1 - 2

Glass / Soil & Stone 2 - 2 - - - 4

Steel 4 - 1 - - - 5

Metal 2 3 5 1 - - 11

Machine 13 4 10 - 1 1 29


Transportation equipment 5 2 9 1 2 - 19

Precision equipment 6 2 3 - 1 - 12

Misc. manufacturing 16 3 9 - - - 28

Trading 13 8 18 - 2 - 41


Various commercial 13 7 13 4 13 - 50

Life insurance - 3 4 - 4 - 11

Non-life insurance 1 - 5 - 4 - 10

Finance 26 8 29 23 32 1 119

Real estate 9 2 4 1 2 - 18

Transportation / Warehouse 12 2 16 2 3 - 35

Telecom / Advertising 4 1 12 - - - 17

Electric / Gas 3 - 4 - 1 - 8

Services 32 9 41 3 6 2 93




6 1 7 - - - 14

Total (# of Organizations) 258 88 250 45 97 5 743

Ratio (%) 34.7 11.8 33.6 6.1 13.1 0.7


� Others include “refer INTERNAL AUDIT PRACTICE BOOK”, “add item / judgment / status of

implementation / comments”, etc.

131

<Table 36> Development of internal audit plan (by industry)


Long-term plan

(exceeding 1

year)

Annual plan Engagement plan Not develop

audit plan

Total Classification

Industry # % # % # % # % #

Construction 6 5.3 61 53.5 45 39.5 2 1.8 114

Fishing / Food 12 12.4 52 53.6 33 34.0 - - 97


Chemical 15 9.5 85 53.8 57 36.1 1 0.6 158

Medicine 8 13.1 30 49.2 23 37.7 - - 61

Oil / Coal / Mining 2 11.1 10 55.6 6 33.3 - - 18

Rubber - - 5 83.3 1 16.7 - - 6

Glass / Soil & Stone 2 10.0 12 60.0 6 30.0 - - 20

Steel 2 6.7 16 53.3 11 36.7 1 3.3 30

Metal 4 8.0 28 56.0 17 34.0 1 2.0 50

Machine 13 11.2 65 56.0 38 32.8 - - 116




Misc. manufacturing 7 6.9 58 56.9 37 36.3 - - 102

Trading 7 6.5 68 63.6 32 29.9 - - 107



Life insurance 5 13.9 16 44.4 15 41.7 - - 36

Non-life insurance 1 4.5 13 59.1 8 36.4 - - 22

Finance 25 8.2 152 50.0 125 41.1 2 0.7 304

Real estate 9 10.6 46 54.1 30 35.3 - - 85

Transportation / Warehouse 11 9.3 64 54.2 41 34.7 2 1.7 118


Electric / Gas 4 12.1 18 54.5 11 33.3 - - 33

Services 25 7.5 176 52.5 131 39.1 3 0.9 335




6 9.0 38 56.7 22 32.8 1 1.5 67

Total (# of Organizations) 231 1,351 911 18 2,511

Ratio (%) 15.9 93.2 62.8 1.2




132

<Table 37> Length of long-term (exceeding 1 year) internal audit plan (by industry)


Length

Industry 2 years 3 years 4�5 years Others Total

Construction - 4 2 - 6

Fishing / Food 2 8 2 - 12

Textile / Paper / Pulp 1 1 1 - 3

Chemical - 12 3 - 15

Medicine - 3 4 - 7

Oil / Coal / Mining - 1 1 - 2

Rubber - - - - -

Glass / Soil & Stone - 2 - - 2

Steel - 2 - - 2

Metal 2 1 1 - 4

Machine - 8 5 - 13

Electric equipment 3 18 8 - 29

Transportation equipment - 4 4 - 8

Precision equipment - 3 2 - 5

Misc. manufacturing - 6 1 - 7

Trading - 3 4 - 7

Department store / Super market - 2 1 - 3

Various commercial 1 7 5 - 13

Life insurance - 5 - - 5

Non-life insurance - - - 1 1

Finance 1 22 2 - 25

Real estate 1 6 1 1 9

Transportation / Warehouse 1 6 3 1 11

Telecom / Advertising - 3 2 - 5

Electric / Gas - 3 1 - 4

Services 4 17 4 - 25




- 3 3 - 6

Total (# of Organizations) 16 150 60 3 229

Ratio (%) 7.0 65.5 26.2 1.3


� Others include “no specific length determined”, “following to organization’s strategic plan length”, etc.

133

<Table 38> Approval of long-term internal audit plan (by industry)


Approved by

Industry

President

Board

Executive

Com

mittee

Executive in charge

of Audit

Kansayaku or

Audit C

omm

ittee

Others

Total

Construction 5 - - 1 - - 6

Fishing / Food 6 1 3 - - 1 11

Textile / Paper / Pulp 2 - 1 - - - 3

Chemical 6 4 1 2 - 2 15

Medicine 4 2 - 2 - - 8

Oil / Coal / Mining - - 1 - - - 1

Rubber - - - - - - -

Glass / Soil & Stone 1 - 1 - - - 2

Steel 1 - - 1 - - 2

Metal 4 - - - - - 4

Machine 7 1 - 5 - - 13


Transportation equipment 4 - 1 3 - - 8

Precision equipment 3 - - 2 - - 5

Misc. manufacturing 4 1 - 1 1 - 7

Trading 5 - 1 - - - 6

Department store / Super market 2 - - - - 1 3

Various commercial 11 1 1 - - - 13

Life insurance - 3 - 1 - 1 5

Non-life insurance - 1 - - - - 1

Finance 3 18 - 1 - 2 24

Real estate 4 3 1 1 - - 9

Transportation / Warehouse 8 1 2 - - - 11

Telecom / Advertising 5 - - - - - 5

Electric / Gas 2 - 1 - - 1 4

Services 19 2 2 - - 2 25




5 1 - - - - 6


Ratio (%) 55.5 18.9 7.5 11.9 0.9 5.3


� Others include “CAE”, “CAE of overseas head office”, “no approval”, etc.

134

<Table 39> Length of annual internal audit plan (by industry)


Length

Industry 1 year Others Total

Construction 59 2 61

Fishing / Food 51 - 51

Textile / Paper / Pulp 18 1 19

Chemical 82 3 85

Medicine 29 1 30

Oil / Coal / Mining 9 - 9

Rubber 5 - 5

Glass / Soil & Stone 12 - 12

Steel 15 1 16

Metal 27 - 27

Machine 63 1 64

Electric equipment 100 - 100

Transportation equipment 39 - 39

Precision equipment 25 1 26

Misc. manufacturing 57 - 57

Trading 67 1 68

Department store / Super market 37 1 38

Various commercial 73 - 73

Life insurance 16 - 16

Non-life insurance 12 - 12

Finance 147 2 149

Real estate 43 1 44

Transportation / Warehouse 63 - 63

Telecom / Advertising 39 - 39

Electric / Gas 18 - 18

Services 161 9 170

Independent administrative institution / Special public

institution / School corporation / Association etc.

37 - 37


Ratio (%) 98.2 1.8


� Others include “6 months”, “annual and 2nd half year after completion of 1st half year”, “revise 6 months

after development of annual plan”, “quarterly”, etc.

135

<Table 40> Approval of annual internal audit plan (by industry)


Approved by

Industry

President

Board

Executive

Com

mittee

Executive in charge

ofl Audit

Kansayaku or

Audit C

omm

ittee

Others

Total

Construction 47 1 3 7 - 3 61

Fishing / Food 38 4 6 2 1 1 52

Textile / Paper / Pulp 13 - 4 1 - 1 19

Chemical 65 7 7 5 1 - 85

Medicine 21 1 3 4 - 1 30

Oil / Coal / Mining 4 - 3 1 2 - 10

Rubber 5 - - - - - 5

Glass / Soil & Stone 10 - 2 - - - 12

Steel 13 1 - 2 - - 16

Metal 16 1 4 4 1 - 26

Machine 53 1 2 8 1 - 65



Precision equipment 19 3 - 2 1 - 25

Misc. manufacturing 45 5 1 5 1 1 58

Trading 61 2 1 2 1 1 68

Department store / Super market 26 2 3 4 2 1 38


Life insurance 1 13 - 1 1 - 16

Non-life insurance 1 10 1 1 - - 13

Finance 41 89 12 6 1 1 150

Real estate 38 4 2 1 - - 45

Transportation / Warehouse 47 5 5 5 - 1 63

Telecom / Advertising 34 1 4 - 1 - 40

Electric / Gas 15 - 3 - - - 18

Services 131 19 13 8 3 2 176




26 3 3 2 - - 34


Ratio (%) 69.2 14.0 7.1 6.6 1.5 1.6


� Others include “CAE”, “compliance / risk management committee”, “executive in charge of

administration”, “CAE of parent company”, “internal control meeting”, and “budget committee”.

136

<Table 41> Frequency to prepare internal audit engagement plan (by industry)


Frequency

Industry

Each engagem

ent

1 month

3 months

6 months

1 year

Others

Total

Construction 28 5 2 2 8 - 45

Fishing / Food 23 2 5 1 1 1 33

Textile / Paper / Pulp 8 - 1 3 1 - 13

Chemical 39 2 1 4 8 2 56

Medicine 15 2 2 2 2 - 23

Oil / Coal / Mining 6 - - - - - 6

Rubber - 1 - - - - 1

Glass / Soil & Stone 4 - - - 2 - 6

Steel 9 - 1 1 - - 11

Metal 12 1 - - 4 - 17

Machine 23 1 6 2 6 - 38

Electric equipment 46 3 2 4 9 - 64


Precision equipment 11 1 - 1 1 - 14

Misc. manufacturing 27 5 - 2 3 - 37

Trading 17 2 2 3 8 - 32

Department store / Super market 12 1 - 5 5 - 23


Life insurance 9 2 - - 4 - 15

Non-life insurance 4 - 1 1 2 - 8

Finance 65 30 3 11 15 - 124

Real estate 20 1 2 2 5 - 30


Telecom / Advertising 19 3 1 - 2 1 26

Electric / Gas 6 1 - 1 3 - 11

Services 93 13 2 10 11 - 129




13 1 - 1 7 - 22


Ratio (%) 64.4 9.6 4.5 7.3 13.6 0.6


� Others include “2 months”, “each audit item”, “both 1month and 3months”, and “arbitrarily”.

137

<Table 42> Approval internal audit engagement plan (by industry)


Approved by

Industry

President

Board

Executive C

omm

ittee


Audit

Kansayaku or A

udit

Com

mittee

Executive O

fficer

CA

E

Others

Total

Construction 20 - 1 4 - - 20 - 45

Fishing / Food 10 - - - - - 23 - 33

Textile / Paper / Pulp 4 - 1 1 - - 7 - 13

Chemical 20 - 1 3 - - 32 - 56

Medicine 1 1 - 4 1 - 14 2 23

Oil / Coal / Mining - - - - - - 6 - 6

Rubber - - - 1 - - - - 1

Glass / Soil & Stone 2 - - 1 - - 3 - 6

Steel 3 - - 1 - - 7 - 11

Metal 6 - 1 1 - - 9 - 17

Machine 16 - 1 5 - - 15 1 38

Electric equipment 20 - 1 6 1 - 37 - 65

Transportation equipment 6 - 1 4 - - 21 1 33

Precision equipment 6 1 - - 1 - 6 - 14

Misc. manufacturing 17 - 1 2 2 1 13 1 37

Trading 16 1 - 1 1 - 13 - 32

Department store / Super market 10 - - 1 - - 12 - 23

Various commercial 27 - 1 2 - - 17 - 47

Life insurance 4 3 - - - - 8 - 15

Non-life insurance 1 2 1 1 - - 3 - 8

Finance 49 6 2 12 1 2 52 1 125

Real estate 18 - - 1 - - 10 - 29

Transportation / Warehouse 10 2 - 2 - - 27 - 41

Telecom / Advertising 5 - - 3 - - 18 - 26

Electric / Gas 1 - - - - - 10 - 11

Services 56 4 2 11 - - 54 2 129




8 2 - 1 2 - 9 - 22


Ratio (%) 37.1 2.4 1.5 7.5 1.0 0.3 49.2 0.9


� Others include “CAE of parent company”, “audit department management meeting”, “risk management

committee ”, “ no approval”, etc.

138

4. Performing Internal Audit (Tables 43 to 57)

<Table 43> Compliance with the Standards (by industry)


Complying with the

Standards

Trying to comply

with the Standards

Not paying attention

at all

Total Compliance

Industry # % # % # % #

Construction 10 14.5 46 66.7 13 18.8 69

Fishing / Food 14 27.5 33 64.7 4 7.8 51

Textile / Paper / Pulp 4 16.7 14 58.3 6 25.0 24

Chemical 14 15.7 64 71.9 11 12.4 89

Medicine 8 24.2 24 72.7 1 3.0 33

Oil / Coal / Mining 3 30.0 6 60.0 1 10.0 10

Rubber 4 80.0 1 20.0 - - 5

Glass / Soil & Stone 5 35.7 8 57.1 1 7.1 14

Steel 3 17.6 11 64.7 3 17.6 17

Metal 5 15.6 17 53.1 10 31.3 32

Machine 12 17.6 45 66.2 11 16.2 68

Electric equipment 29 27.6 70 66.7 6 5.7 105

Transportation equipment 7 16.3 31 72.1 5 11.6 43

Precision equipment 4 14.8 22 81.5 1 3.7 27

Misc. manufacturing 6 9.8 51 83.6 4 6.6 61

Trading 17 22.4 46 60.5 13 17.1 76

Department store / Super market 13 32.5 22 55.0 5 12.5 40

Various commercial 16 19.5 56 68.3 10 12.2 82

Life insurance 8 47.1 7 41.2 2 11.8 17

Non-life insurance 5 38.5 7 53.8 1 7.7 13

Finance 33 19.9 92 55.4 41 24.7 166

Real estate 14 28.0 30 60.0 6 12.0 50

Transportation / Warehouse 13 18.6 47 67.1 10 14.3 70

Telecom / Advertising 15 38.5 22 56.4 2 5.1 39

Electric / Gas 3 16.7 12 66.7 3 16.7 18

Services 50 25.9 118 61.1 25 13.0 193



Association etc.

5 11.6 28 65.1 10 23.3 43


Ratio (%) 22.0 63.9 14.1


Ratio (%) 85.9 14.1


140

<Table 44> Type of internal audit engagements (by industry)


Financial audit only Operational audit

only

Same weight on

financial and

operational audit

Primarily financial

audit

Primarily

operational audit

Total Type

Industry

# % # % # % # % # % #

Construction 1 1.4 13 18.6 23 32.9 6 8.6 27 38.6 70

Fishing / Food - - 13 24.5 12 22.6 - - 28 52.8 53

Textile / Paper / Pulp - - 2 8.3 5 20.8 1 4.2 16 66.7 24

Chemical 1 1.1 22 24.4 18 20.0 6 6.7 43 47.8 90

Medicine - - 11 33.3 6 18.2 1 3.0 15 45.5 33

Oil / Coal / Mining - - 4 40.0 2 20.0 - - 4 40.0 10

Rubber - - 2 40.0 2 40.0 - - 1 20.0 5

Glass / Soil & Stone - - 5 35.7 4 28.6 - - 5 35.7 14

Steel 1 5.9 7 41.2 3 17.6 1 5.9 5 29.4 17

Metal - - 5 16.1 11 35.5 1 3.2 14 45.2 31

Machine 1 1.5 20 29.9 20 29.9 1 1.5 25 37.3 67

Electric equipment 2 1.9 25 24.0 19 18.3 5 4.8 53 51.0 104

Transportation equipment - - 19 44.2 10 23.3 1 2.3 13 30.2 43

Precision equipment - - 9 33.3 4 14.8 - - 14 51.9 27

Misc. manufacturing 1 1.6 17 27.4 15 24.2 2 3.2 27 43.5 62

Trading 1 1.3 14 18.4 22 28.9 4 5.3 35 46.1 76

Department store / Super market - - 14 35.0 7 17.5 - - 19 47.5 40

Various commercial - - 17 20.5 18 21.7 10 12.0 38 45.8 83

Life insurance - - 3 17.6 4 23.5 - - 10 58.8 17

Non-life insurance - - 4 30.8 3 23.1 - - 6 46.2 13

Finance 1 0.6 75 44.6 16 9.5 1 0.6 75 44.6 168

Real estate 1 2.0 17 34.7 3 6.1 2 4.1 26 53.1 49

141

Financial audit only Operational audit

only

Same weight on

financial and

operational audit

Primarily financial

audit

Primarily

operational audit

Total Type

Industry

# % # % # % # % # % #

Transportation / Warehouse - - 15 21.1 23 32.4 4 5.6 29 40.8 71

Telecom / Advertising - - 12 30.8 10 25.6 2 5.1 15 38.5 39

Electric / Gas - - 7 43.8 4 25.0 1 6.3 4 25.0 16

Services 2 1.0 59 30.7 34 17.7 2 1.0 95 49.5 192




- - 11 25.6 11 25.6 3 7.0 18 41.9 43

Total (# of Organizations) 12 422 309 54 660 1,457

Ratio (%) 0.8 29.0 21.2 3.7 45.3


143

<Table 45> Classification of audit entities (by industry)


By department By function Both department and

function

Total Classification

Industry # % # % # % #

Construction 49 71.0 1 1.4 19 27.5 69

Fishing / Food 33 62.3 - - 20 37.7 53

Textile / Paper / Pulp 17 70.8 1 4.2 6 25.0 24

Chemical 52 57.1 4 4.4 35 38.5 91

Medicine 18 54.5 - - 15 45.5 33

Oil / Coal / Mining 4 40.0 2 20.0 4 40.0 10

Rubber 3 60.0 - - 2 40.0 5

Glass / Soil & Stone 7 53.8 2 15.4 4 30.8 13

Steel 6 35.3 2 11.8 9 52.9 17

Metal 24 75.0 1 3.1 7 21.9 32

Machine 36 53.7 3 4.5 28 41.8 67

Electric equipment 61 58.1 1 1.0 43 41.0 105

Transportation equipment 25 58.1 3 7.0 15 34.9 43

Precision equipment 14 51.9 5 18.5 8 29.6 27

Misc. manufacturing 34 54.8 2 3.2 26 41.9 62

Trading 64 84.2 1 1.3 11 14.5 76

Department store / Super market 16 41.0 5 12.8 18 46.2 39

Various commercial 59 70.2 2 2.4 23 27.4 84

Life insurance 4 23.5 - - 13 76.5 17

Non-life insurance 5 38.5 - - 8 61.5 13

Finance 96 57.1 5 3.0 67 39.9 168

Real estate 30 60.0 1 2.0 19 38.0 50

Transportation / Warehouse 41 58.6 3 4.3 26 37.1 70

Telecom / Advertising 25 64.1 1 2.6 13 33.3 39

Electric / Gas 8 44.4 1 5.6 9 50.0 18

Services 116 60.7 6 3.1 69 36.1 191




20 46.5 4 9.3 19 44.2 43


Ratio (%) 59.4 3.8 36.7


145

<Table 46> Name on internal audit engagement notice letter


Chief Audit

Executive

Executive in

charge of Audit

President Board Both Executive in

charge of Audit and

Chief Audit

Executive

Both President and

Chief Audit

Executive

Others Total Name

Industry # % # % # % # % # % # % # % #

Construction 63 90.0 1 1.4 5 7.1 - - - - - - 1 1.4 70

Fishing / Food 48 90.6 1 1.9 3 5.7 - - 1 1.9 - - - - 53

Textile / Paper / Pulp 21 91.3 2 8.7 - - - - - - - - - - 23

Chemical 83 91.2 2 2.2 2 2.2 - - 1 1.1 2 2.2 1 1.1 91

Medicine 27 81.8 2 6.1 1 3.0 - - 1 3.0 - - 2 6.1 33

Oil / Coal / Mining 9 100.0 - - - - - - - - - - - - 9

Rubber 4 80.0 - - - - - - - - 1 20.0 - - 5

Glass / Soil & Stone 13 92.9 - - 1 7.1 - - - - - - - - 14

Steel 14 93.3 - - 1 6.7 - - - - - - - - 15

Metal 25 78.1 2 6.3 2 6.3 - - 2 6.3 1 3.1 - - 32

Machine 61 89.7 1 1.5 3 4.4 - - 1 1.5 1 1.5 1 1.5 68

Electric equipment 92 87.6 4 3.8 5 4.8 - - 1 1.0 1 1.0 2 1.9 105

Transportation equipment 37 86.0 4 9.3 - - - - 2 4.7 - - - - 43

Precision equipment 25 92.6 - - 2 7.4 - - - - - - - - 27

Misc. manufacturing 54 88.5 3 4.9 3 4.9 - - - - - - 1 1.6 61

Trading 62 81.6 3 3.9 5 6.6 - - 1 1.3 2 2.6 3 3.9 76

Department store / Super market 36 90.0 1 2.5 3 7.5 - - - - - - - - 40

Various commercial 68 81.9 2 2.4 5 6.0 1 1.2 1 1.2 2 2.4 4 4.8 83

Life insurance 14 82.4 - - 3 17.6 - - - - - - - - 17

Non-life insurance 12 92.3 - - - - - - - - - - 1 7.7 13

Finance 96 57.8 8 4.8 54 32.5 - - - - 1 0.6 7 4.2 166

146

Chief Audit

Executive

Executive in

charge of Audit

President Board Both Executive in

charge of Audit and

Chief Audit

Executive

Both President and

Chief Audit

Executive

Others Total Name

Industry # % # % # % # % # % # % # % #

Real estate 48 96.0 1 2.0 - - - - - - 1 2.0 - - 50

Transportation / Warehouse 57 81.4 5 7.1 5 7.1 1 1.4 1 1.4 1 1.4 70

Telecom / Advertising 37 94.9 1 2.6 - - - - - - 1 2.6 39

Electric / Gas 16 88.9 1 5.6 1 5.6 18

Services 167 87.0 5 2.6 10 5.2 1 0.5 2 1.0 4 2.1 3 1.6 192




32 76.2 2 4.8 3 7.1 - - - - 1 2.4 4 9.5 42

Total (# of Organizations) 1,221 51 116 2 14 19 32 1,455

Ratio (%) 83.9 3.5 8.0 0.1 1.0 1.3 2.2


� Others include “person in charge of the engagement”, “name of IAA”, “name of specific department’s head”, “both kansayaku and A”, “senior executive”, “CAE of

parent company”, “no notification (surprise audit)”, etc.

148

<Table 47> Notification of internal audit engagement to audit clients (by industry)


Notifying Not notifying

(surprise)

Total Notification

Industry

# % # % #

Construction 70 100.0 - - 70

Fishing / Food 53 100.0 - - 53

Textile / Paper / Pulp 24 100.0 - - 24

Chemical 89 97.8 2 2.2 91

Medicine 33 100.0 - - 33

Oil / Coal / Mining 10 100.0 - - 10

Rubber 5 100.0 - - 5

Glass / Soil & Stone 14 100.0 - - 14

Steel 15 100.0 - - 15

Metal 30 93.8 2 6.3 32

Machine 68 100.0 - - 68


Transportation equipment 43 100.0 - - 43


Misc. manufacturing 61 100.0 - - 61

Trading 73 98.6 1 1.4 74





Finance 72 43.4 94 56.6 166

Real estate 48 96.0 2 4.0 50


Telecom / Advertising 39 100.0 - - 39

Electric / Gas 18 100.0 - - 18

Services 182 94.8 10 5.2 192




40 93.0 3 7.0 43


Ratio (%) 90.0 10.0


149

<Table 48> Reasons of surprise audit (by industry)


Reason

Industry

To prevent destruction of facts

and evidences

To conduct fraud audit

To let audit client have sense

of tension

In case of special audit

requested by President

In case of urgency

The audit is based on rum

or /

anonymous letter /

whistle-blow

ing

To conduct physical inspection

Others

Total

Construction - - - - - - - - -

Fishing / Food - - - - - - - - -

Textile / Paper / Pulp - - - - - - - - -

Chemical - - 1 - - - - - 1

Medicine - - - - - - - - -

Oil / Coal / Mining - - - - - - - - -

Rubber - - - - - - - - -

Glass / Soil & Stone - - - - - - - - -

Steel - - - - - - - - -

Metal - - - - - - - - -

Machine - - - - - - - - -

Electric equipment 1 1 - - - - - 1 3

Transportation equipment - - - - - - - - -

Precision equipment 1 - - - - - 1 - 2

Misc. manufacturing - - - - - - - - -

Trading 1 - - - - - 1 - 2

Department store / Super market 6 3 3 1 2 - 5 - 20

Various commercial 7 5 2 1 1 4 - 20

Life insurance 5 1 3 - - - 5 - 14

Non-life insurance 4 3 5 - - - 3 - 15

Finance 66 58 48 9 2 4 73 3 263

Real estate 1 1 - - 1 - - - 3

Transportation / Warehouse 1 - 1 1 - - 2 - 5

Telecom / Advertising - - - - - - - - -

Electric / Gas - - - - - - - - -

Services 5 4 8 - - - 6 - 23



/ Association etc.

2 2 2 - - - 2 - 8


Ratio (%) 71.4 55.7 52.1 7.9 4.3 3.6 72.9 2.9




� Others include “to confirm normal operation”, “depends on audited function / operation”, etc.

151

<Table 49> Order of the importance of the internal control objectives (by industry)


Order

Industry

(1)

(2)

(3)

(4)

(1)

(2)

(4)

(3)

(1)

(3)

(2)

(4)

(1)

(3)

(4)

(2)

(1)

(4)

(2)

(3)

(1)

(4)

(3)

(2)

(2)

(1)

(3)

(4)

(2)

(1)

(4)

(3)

(2)

(3)

(4)

(1)

(2)

(3)

(1)

(4)

(2)

(4)

(1)

(3)

(2)

(4)

(3)

(1)

(3)

(1)

(2)

(4)

(3)

(1)

(4)

(2)

(3)

(2)

(1)

(4)

(3)

(2)

(4)

(1)

(3)

(4)

(1)

(2)

(3)

(4)

(2)

(1)

(4)

(1)

(2)

(3)

(4)

(1)

(3)

(2)

(4)

(2)

(1)

(3)

(4)

(2)

(3)

(1)

(4)

(3)

(1)

(2)

(4)

(3)

(2)

(1)

Total

Construction 7 7 1 - 3 1 4 8 - 2 15 7 - 2 - - - - 5 - 2 2 - - 66

Fishing / Food 9 4 - - - - 5 4 1 1 3 8 - 4 1 2 1 1 - 3 3 - - 50

Textile / Paper / Pulp 2 1 1 - 1 - 3 5 1 2 1 1 - - - - - - 2 - 1 - - - 21

Chemical 12 10 2 - - - 9 7 3 7 10 4 1 1 - - - - 4 3 4 9 - 2 88

Medicine 5 2 - 1 - - - 3 3 - 11 1 - - - 1 - - 1 1 3 - - 32

Oil / Coal / Mining 1 - - - - - 1 - 2 2 1 2 - - - - - - - - - - 9

Rubber - - - - - - - - - 1 - 1 2 - - - - - - - 1 - - 5

Glass / Soil & Stone 3 - - - - - 1 1 1 1 1 1 - - - - - - - - 1 - - 10

Steel - 2 - - - - 7 - - - 1 4 - - - - - - - - 1 - - 15

Metal - 2 1 2 2 - 6 6 1 1 2 - - 1 1 - 1 - 2 3 - - 31

Machine 7 7 2 - 2 1 9 6 1 3 3 3 1 1 1 1 - 1 1 1 5 4 1 - 61

Electric equipment 14 6 5 1 3 - 21 13 3 4 3 2 - 1 2 - 1 6 1 6 6 1 4 103

Transportation equipment 5 - 1 - - - 10 4 1 2 5 3 - 1 - 1 - - 1 1 5 2 - - 42

Precision equipment 2 4 - 1 1 - 5 3 1 - 2 3 - - - - - - - - - 4 - 1 27

Misc. manufacturing 1 4 1 - 1 2 10 6 4 4 7 4 1 - 1 1 - - 1 1 5 6 1 - 61

Trading 5 6 3 1 5 2 7 10 2 2 2 7 - - 1 1 1 2 - - 3 7 2 3 72

Department store / Super market 4 2 - - 1 - 5 5 3 2 5 3 - - 2 1 - - - 1 3 - - - 37

Various commercial 7 7 2 1 5 - 9 6 3 3 9 5 1 1 2 1 - 3 1 3 3 6 1 2 81

Life insurance 1 - - - - - 1 6 1 - 4 1 - - - - - - - - 2 - - - 16

Non-life insurance 1 - - - 1 - 2 1 1 - 4 1 - - - - - - 1 - - 1 - - 13

Finance 5 5 - - 1 - 11 19 7 8 37 30 - - 1 3 - 1 4 4 12 7 1 1 157

Real estate 3 4 1 1 - 1 4 9 - 2 8 9 - - - 1 - - 1 - - 5 - - 49

152

Order

Industry

(1)

(2)

(3)

(4)

(1)

(2)

(4)

(3)

(1)

(3)

(2)

(4)

(1)

(3)

(4)

(2)

(1)

(4)

(2)

(3)

(1)

(4)

(3)

(2)

(2)

(1)

(3)

(4)

(2)

(1)

(4)

(3)

(2)

(3)

(4)

(1)

(2)

(3)

(1)

(4)

(2)

(4)

(1)

(3)

(2)

(4)

(3)

(1)

(3)

(1)

(2)

(4)

(3)

(1)

(4)

(2)

(3)

(2)

(1)

(4)

(3)

(2)

(4)

(1)

(3)

(4)

(1)

(2)

(3)

(4)

(2)

(1)

(4)

(1)

(2)

(3)

(4)

(1)

(3)

(2)

(4)

(2)

(1)

(3)

(4)

(2)

(3)

(1)

(4)

(3)

(1)

(2)

(4)

(3)

(2)

(1)

Total

Transportation / Warehouse 8 3 - - 2 - 11 9 2 1 9 7 - - 1 - - - 3 - 7 3 - - 66

Telecom / Advertising 2 2 1 - 1 - 8 4 3 1 5 3 - 2 - - - 1 2 - - 1 - 1 37

Electric / Gas 1 1 - - - 3 - - 3 1 5 - - - - - - - - - 2 - - 16

Services 17 8 4 1 3 2 15 35 11 5 24 20 2 - 1 - - 1 5 4 11 14 2 4 189




Association etc.

- - 1 - - - 3 6 2 1 6 6 1 - - 1 - - - - 4 6 - 3 40

Total (# of Organizations) 122 87 26 9 32 9 170 176 57 57 178 143 9 13 14 15 3 9 39 20 79 97 9 21 1,394

Ratio (%) 8.8 6.2 1.9 0.6 2.3 0.6 12.2 12.6 4.1 4.1 12.8 10.3 0.6 0.9 1.0 1.1 0.2 0.6 2.8 1.4 5.7 7.0 0.6 1.5


<Note> (1) Reliability of financial reporting (2) Compliance with applicable laws and regulations (3) Safeguard of assets (4) Effectiveness and efficiency of operations

154

<Table 50> Implementation of self-assessment by audit clients (by industry)


Self-Assessment by clients

Industry

Implementing Partially

implementing

Not

implementing

Total





Medicine 8 10 15 33

Oil / Coal / Mining 2 2 4 8

Rubber - 1 4 5


Steel 5 5 6 16

Metal 5 4 23 32

Machine 7 22 37 66





Trading 20 8 46 74





Finance 141 15 12 168




Electric / Gas 7 8 3 18

Services 43 53 97 193




7 11 24 42


Ratio (%) 28.9 27.3 43.8


Ratio (%) 56.2 43.8


155

<Table 51> Development of self-assessment checklist (by industry)


Who develop the check list?

Industry

IAA

Audit clients

Adm

inistration dept.

Together with IA

A and audit

clients

Together with IA

A and

Adm

inistration Dept

Together with audit client and

Adm

inistration dept.

Total

Construction 13 9 5 3 5 2 37

Fishing / Food 12 9 3 4 6 - 34

Textile / Paper / Pulp 3 3 - - 1 - 7

Chemical 21 9 6 4 2 4 46

Medicine 6 8 1 - - 3 18

Oil / Coal / Mining 1 2 - - - 1 4

Rubber 1 - - - - - 1

Glass / Soil & Stone 1 1 1 3 1 - 7

Steel 5 1 1 2 1 - 10

Metal 8 - 1 - - - 9

Machine 9 5 6 4 5 - 29



Precision equipment 5 2 1 1 - - 9

Misc. manufacturing 10 7 2 1 2 - 22

Trading 13 5 4 1 3 2 28



Life insurance - 4 7 - 1 3 15

Non-life insurance 1 2 7 - - 3 13

Finance 41 25 50 10 19 11 156

Real estate 3 8 1 2 2 2 18


Telecom / Advertising 11 2 2 3 2 2 22

Electric / Gas 3 5 3 2 2 - 15

Services 35 26 14 7 12 2 96




2 7 4 2 1 2 18


Ratio (%) 35.3 23.4 17.1 8.1 10.2 5.9


156

<Table 52> Audit techniques used by the IAA at field work (by industry)


Techniques

Industry

Interview general

condition with responsible

person

Interview details w

ith person in

charge

Exam

ine information and

ledgers

Observe w

orking

condition and working

environment

Count cash and securities

Count non-cash item

s

Others

Total

Construction 59 64 69 30 38 23 1 284

Fishing / Food 50 50 52 38 36 28 1 255

Textile / Paper / Pulp 21 19 22 10 14 7 1 94

Chemical 85 82 89 46 50 41 - 393

Medicine 30 27 28 16 13 7 - 121

Oil / Coal / Mining 9 8 10 4 5 5 - 41

Rubber 5 5 5 2 2 2 - 21

Glass / Soil & Stone 14 12 13 4 7 4 - 54

Steel 15 14 15 8 8 8 - 68

Metal 25 25 29 15 21 9 1 125

Machine 63 57 66 31 38 31 - 286

Electric equipment 99 91 98 63 58 46 1 456

Transportation equipment 33 39 42 18 15 8 1 156

Precision equipment 24 22 26 13 13 14 - 112

Misc. manufacturing 56 48 59 36 31 16 1 247

Trading 65 65 72 41 48 31 - 322

Department store / Super market 36 37 39 27 28 16 - 183

Various commercial 73 69 80 56 64 43 1 386

Life insurance 17 17 17 17 10 12 - 90

Non-life insurance 12 13 12 11 8 9 - 65

Finance 142 148 167 130 128 116 2 833

Real estate 46 45 49 29 30 18 - 217

Transportation / Warehouse 59 66 69 40 45 26 - 305

Telecom / Advertising 35 37 39 26 22 17 - 176

Electric / Gas 15 17 18 9 8 8 - 75

Services 169 153 187 124 99 73 3 808


Special public institution / School corporation /

Association etc.

35 35 43 20 16 13 - 162

Total (# of Organizations) 1,292 1,265 1,415 864 855 631 13 6,335

Ratio (%) 88.7 86.8 97.1 59.3 58.7 43.3 0.9




� Others include “evaluate controls and test samples”, “send out questionnaire”, “examine organization’s

public information”, etc.

157

<Table 53> Format of working papers (by industry)


Format

Industry

Established

standardized

format

Established

for specific

audit subject

Not

established

Others Total

Construction 50 10 10 - 70

Fishing / Food 42 1 10 - 53


Chemical 58 9 23 - 90

Medicine 25 2 6 - 33

Oil / Coal / Mining 7 - 3 - 10

Rubber 3 - 2 - 5

Glass / Soil & Stone 8 1 4 - 13

Steel 7 1 7 - 15

Metal 22 4 6 - 32

Machine 39 10 19 - 68


Transportation equipment 26 3 14 - 43

Precision equipment 21 2 3 1 27

Misc. manufacturing 39 6 14 1 60

Trading 52 3 18 1 74

Department store / Super market 24 7 9 - 40

Various commercial 61 7 14 1 83

Life insurance 17 - - - 17

Non-life insurance 11 2 - - 13

Finance 139 11 17 - 167


Transportation / Warehouse 50 4 16 - 70

Telecom / Advertising 32 2 5 - 39

Electric / Gas 11 3 4 - 18

Services 146 18 28 1 193




27 2 13 1 43

Total (# of Organizations) 1,030 123 293 7 1,453

Ratio (%) 70.9 8.5 20.2 0.5


� Others include “under consideration”, “established but not always used”, “attached to audit report as

information”, and “not yet implementation phase”.

158

<Table 54> Use of Computer Assisted Audit Techniques (by industry)


Use of CAAT

Industry

Using Not using Total


Fishing / Food 2 51 53


Chemical 7 83 90

Medicine 2 31 33

Oil / Coal / Mining 2 8 10

Rubber - 4 4

Glass / Soil & Stone - 14 14

Steel - 16 16

Metal 2 30 32

Machine 5 63 68

Electric equipment 9 96 105

Transportation equipment 1 42 43

Precision equipment - 27 27

Misc. manufacturing 4 57 61

Trading 4 69 73


Various commercial 6 77 83

Life insurance 4 12 16

Non-life insurance 1 12 13

Finance 25 143 168

Real estate - 48 48

Transportation / Warehouse 8 62 70

Telecom / Advertising 6 33 39

Electric / Gas 2 16 18

Services 11 180 191




1 42 43

Total (# of Organizations) 114 1,337 1,451

Ratio (%) 7.9 92.1


159

<Table 55> Purpose of use of Computer Assisted Audit Techniques (by industry)


Purpose

Industry

General support tool

Data analysis tool

Internal controls

evaluation tool

Continuous

monitoring tool

Managem

ent tool of

Internal Audit

Activities

Others

Total

Construction 1 1 - - 1 - 3

Fishing / Food 1 - - - 1 - 2

Textile / Paper / Pulp 1 - 1 - - - 2

Chemical - 5 - 1 - - 6

Medicine 1 - - 1 - - 2

Oil / Coal / Mining 1 - - - 1 - 2

Rubber - - - - - - -

Glass / Soil & Stone - - - - - - -

Steel - - - - - - -

Metal 1 - - - - - 1

Machine 1 1 1 1 - 1 5

Electric equipment 2 4 2 - 1 - 9

Transportation equipment - 1 - - - - 1

Precision equipment - - - - - - -

Misc. manufacturing 1 2 - 1 - - 4

Trading 3 - - 1 - 4

Department store / Super market 1 - 1 - 2 - 4

Various commercial 2 2 1 1 - - 6

Life insurance 3 - - - 1 - 4

Non-life insurance 1 - - - - - 1

Finance 16 1 2 2 3 1 25

Real estate - - - - - - -

Transportation / Warehouse 3 2 1 1 - - 7

Telecom / Advertising 3 1 1 1 - - 6

Electric / Gas 1 1 - - - - 2

Services 4 5 - - 2 - 11




1 - - - - 1


Ratio (%) 43.5 25.0 9.3 9.3 11.1 1.9


� Others include “sampling tool” and “follow-up tool”.

160

<Table 56> Outsourcing of the IAA (by industry)


Outsourcing

Industry

Outsourcing e

ntire IAA

Outsourcing p

artially

Not

Outsourcing

Total

Construction - 3 67 70

Fishing / Food - 3 48 51

Textile / Paper / Pulp - 4 20 24

Chemical - 5 84 89

Medicine - 1 32 33

Oil / Coal / Mining - 1 9 10

Rubber - - 5 5

Glass / Soil & Stone - - 14 14

Steel - 2 14 16

Metal - 1 30 31

Machine - 4 63 67

Electric equipment - 8 97 105

Transportation equipment - 5 39 44

Precision equipment - 2 25 27

Misc. manufacturing - 3 57 60

Trading - 8 65 73

Department store / Super market - 3 36 39

Various commercial - 4 76 80

Life insurance - 8 9 17

Non-life insurance - 5 8 13

Finance - 41 126 167

Real estate - 8 42 50

Transportation / Warehouse - 9 61 70

Telecom / Advertising - 5 32 37

Electric / Gas - 1 17 18

Services - 16 172 188




- 6 36 42

Total (# of Organizations) - 156 1,284 1,440

Ratio (%) - 10.8 89.2


Ratio (%) 10.8 89.2


161

<Table 57> Method of outsourcing of the IAA (by industry)


Outsourcing

Industry

Outsourcing IA

A to

specific person

within organization

Co-w

orking with

specific person within organiz

ation and

IAA

Co-sourcing w

ith

third-party and IAA

Outsourcing IA

A to

their-party

Total

Construction - 2 1 - 3

Fishing / Food - - 2 1 3

Textile / Paper / Pulp - 1 1 1 3

Chemical - 2 3 - 5

Medicine - - 1 - 1

Oil / Coal / Mining - 1 - - 1

Rubber - - - - -

Glass / Soil & Stone - - - - -

Steel - 1 1 - 2

Metal - 1 - - 1

Machine - 1 1 2 4

Electric equipment 1 3 3 1 8

Transportation equipment - 2 1 2 5

Precision equipment - - 2 - 2

Misc. manufacturing 1 1 - 1 3

Trading 1 2 2 3 8

Department store / Super market - 1 1 1 3

Various commercial - 1 2 1 4

Life insurance - 1 6 1 8

Non-life insurance - - 3 2 5

Finance - 3 11 25 39

Real estate - 2 4 1 7


Telecom / Advertising - 1 2 2 5

Electric / Gas - - 1 - 1

Services 1 2 7 5 15




- 1 3 2 6


Ratio (%) 4.6 19.9 41.1 34.4


162

5. Internal Audit Report and Follow-up (Tables 58 to 74)

<Table 58> Confirming findings with audit clients before issuing internal audit report (by industry)


Method of confirmation

Industry

Confirm

ing

during

fieldwork

Confirm

ing by fax

/

email

Confirm

ing

both during

fieldwork and by fa

x / email

Confirm

ing by oth

er

methods

Not

confirming

Total

Construction 28 11 26 3 2 70

Fishing / Food 27 8 16 2 - 53

Textile / Paper / Pulp 8 4 10 - 1 23

Chemical 34 16 39 - 2 91

Medicine 8 6 15 2 2 33

Oil / Coal / Mining 2 3 4 1 - 10

Rubber 2 - 2 - - 4

Glass / Soil & Stone 4 5 5 - - 14

Steel 3 5 8 - - 16

Metal 13 4 13 - 2 32

Machine 30 15 21 - 2 68

Electric equipment 39 20 41 4 - 104


Precision equipment 11 7 8 1 - 27

Misc. manufacturing 29 13 19 - 1 62

Trading 39 10 21 1 4 75



Life insurance 9 - 6 2 - 17

Non-life insurance 4 1 8 - - 13

Finance 119 4 34 7 4 168

Real estate 30 5 12 1 1 49


Telecom / Advertising 19 4 13 2 38

Electric / Gas 6 3 8 1 18

Services 110 21 49 6 5 191




19 3 17 2 1 42


Ratio (%) 48.8 13.4 32.3 3.0 2.6


Ratio (%) 97.4 2.6


<Table 59> Timing of the reporting of engagement outcomes (by industry)

163


Timing

Industry

After each

engagement

At the end of

fiscal year

Not consistent

- D

epends on

audit theme

Periodically

(Quarterly, S

emi-ann

ually, etc)

Total

Construction 54 3 5 8 70

Fishing / Food 43 - 2 8 53

Textile / Paper / Pulp 20 - 2 1 23

Chemical 75 - 4 12 91

Medicine 28 - 2 2 32

Oil / Coal / Mining 8 - 1 1 10

Rubber 3 - - 2 5

Glass / Soil & Stone 14 - - - 14

Steel 10 2 1 3 16

Metal 29 - - 3 32

Machine 53 1 5 9 68

Electric equipment 95 - 5 5 105

Transportation equipment 36 1 2 4 43



Trading 67 - 1 8 76

Department store / Super market 29 1 3 7 40


Life insurance 15 - 1 1 17

Non-life insurance 11 - 1 1 13

Finance 150 2 2 14 168

Real estate 45 - 1 4 50



Electric / Gas 12 1 - 5 18

Services 163 5 7 15 190




26 7 3 6 42

Total (# of Organizations) 1,214 31 60 153 1,458

Ratio (%) 83.3 2.1 4.1 10.5


164

<Table 60> Format of internal audit report (by industry)


Format

Industry

Summary

only

Detailed

Only

Both

summary

and detailed

Total





Medicine 4 10 19 33


Rubber 1 2 2 5


Steel 4 3 8 15

Metal 9 8 15 32

Machine 21 12 34 67





Trading 14 14 47 75




Non-life insurance 1 2 10 13

Finance 18 34 115 167





Services 36 39 114 189




10 8 25 43


Ratio (%) 21.1 20.6 58.2


165

<Table 61> Distribution of summary report if only summary report was issued (by industry)


Distribution to

Industry

President

Board

Executive C

omm

ittee


Internal Audit

Kansayaku or A

udit

Com

mittee

Executive O

fficer

Executive in charge

of audit client

Others

Total

Construction 14 - 6 4 7 2 3 1 37

Fishing / Food 10 - - - 3 - 2 - 15

Textile / Paper / Pulp 5 - - 1 1 - 1 - 8

Chemical 19 4 1 1 2 - 6 - 33

Medicine 4 - - - - - 1 - 5

Oil / Coal / Mining 3 - 2 - 2 - 2 - 9

Rubber 1 - - - - - - - 1

Glass / Soil & Stone 4 - - - - - 3 - 7

Steel 3 - - 1 1 - - - 5

Metal 8 - 2 1 2 - 2 - 15

Machine 18 1 - 4 2 - 6 - 31

Electric equipment 19 2 1 3 5 1 10 - 41

Transportation equipment 6 2 4 2 6 - 5 1 26

Precision equipment 6 - - - 1 - 1 1 9

Misc. manufacturing 14 1 - 1 1 - 3 - 20

Trading 14 - - 2 3 1 3 2 25

Department store / Super market 7 - - 1 1 - 2 - 11

Various commercial 24 5 1 - 7 2 6 1 46

Life insurance 2 1 - - - - 1 - 4

Non-life insurance - - - - - - - - -

Finance 13 7 3 4 8 - 5 1 41

Real estate 10 - - 2 2 - 2 - 16

Transportation / Warehouse 13 2 1 2 3 - 1 1 23

Telecom / Advertising 6 - 1 1 2 - 1 - 11

Electric / Gas 3 - 2 - - - - - 5

Services 30 5 3 3 10 1 12 1 65


institution / Special public institution

/ School corporation / Association

etc.

9 1 1 - - - 1 - 12


Ratio (%) 88.6 10.4 9.4 11.0 23.1 2.3 26.4 3.0




� Others include “administration executive”, “parent company”, “management committee”, “board and

kansayaku”, “internal control meeting”, and “general manager of head office”.

166

<Table 62> Distribution of detailed report if only detailed report was issued (by industry)


Distribution to

Industry

President

Board

Executive C

omm

ittee


Internal Audit

Kansayaku or A

udit

Com

mittee

Executive O

fficer

Executive in charge

of audit client

Others

Total

Construction 9 - 1 4 2 1 1 - 18

Fishing / Food 5 - 2 2 1 1 2 1 14

Textile / Paper / Pulp 2 - - - - - 1 - 3

Chemical 18 2 - 5 7 1 11 2 46

Medicine 10 3 1 1 6 - 5 - 26

Oil / Coal / Mining 2 - 1 - 1 - 1 - 5

Rubber 2 1 - 1 1 - 2 - 7

Glass / Soil & Stone 2 - - 1 1 - 1 - 5

Steel 3 - 1 2 1 - 2 - 9

Metal 8 - 1 3 3 - 3 - 18

Machine 10 - - 1 3 - 5 1 20

Electric equipment 22 1 - 4 7 - 10 2 46

Transportation equipment 5 1 1 1 3 - 2 - 13

Precision equipment 3 - - 2 - - - - 5

Misc. manufacturing 14 1 2 3 6 1 5 - 32

Trading 12 2 - 2 4 - 5 1 26

Department store / Super market 4 - - - 1 - - - 5

Various commercial 14 3 - 1 5 - 6 - 29

Life insurance 1 1 - 1 1 - 1 1 6

Non-life insurance - 1 2 - - - - - 3

Finance 26 11 5 8 7 2 8 4 71

Real estate 12 1 - 1 3 - 2 - 19

Transportation / Warehouse 14 2 - 1 4 - 7 1 29

Telecom / Advertising 8 1 - 2 1 - 4 - 16

Electric / Gas 1 - - 1 1 - 1 - 4

Services 34 5 2 5 11 2 12 1 72




etc.

6 3 2 1 3 - 1 - 16


Ratio (%) 84.6 13.4 7.2 18.2 28.4 2.7 33.6 4.8




� Others include “executive”, “administration executive”, “administration related departments”, “head of

audit client”, “parent company”, etc.

167

<Table 63> Distribution of audit reports if both summary and detailed reports were issued (by industry)


Distribution to

Industry

President

Board

Executive C

omm

ittee


Internal Audit

Kansayaku or A

udit

Com

mittee

Executive O

fficer

Executive in charge

of audit client

Others

Total

Construction 31 7 9 7 15 - 16 1 86

Fishing / Food 32 10 5 10 18 - 16 - 91

Textile / Paper / Pulp 13 1 1 4 6 - 9 - 34

Chemical 42 9 5 18 19 2 32 1 128

Medicine 14 4 5 6 8 1 11 1 50

Oil / Coal / Mining 4 - - 2 1 - 1 - 8

Rubber 2 - - 1 1 - 1 - 5

Glass / Soil & Stone 7 - - 1 4 - 4 1 17

Steel 8 - 3 4 7 1 4 1 28

Metal 12 3 3 5 8 - 9 - 40

Machine 29 7 - 10 19 5 20 5 95

Electric equipment 47 10 3 13 23 1 30 2 129

Transportation equipment 18 2 3 11 12 2 20 - 68

Precision equipment 14 3 1 2 7 - 8 1 36

Misc. manufacturing 27 8 2 5 13 3 13 1 72

Trading 43 8 3 10 20 2 21 7 114

Department store / Super market 21 9 5 4 13 3 16 3 74

Various commercial 36 6 3 8 21 - 24 3 101

Life insurance 7 4 3 7 6 1 9 - 37

Non-life insurance 4 5 7 6 2 - 5 - 29

Finance 86 45 36 35 60 9 54 4 329

Real estate 24 3 7 5 12 2 13 - 66

Transportation / Warehouse 32 8 10 13 16 3 23 1 106

Telecom / Advertising 21 - 5 6 12 - 8 - 52

Electric / Gas 9 2 5 2 5 1 8 - 32

Services 100 18 19 16 50 7 60 4 274




etc.

17 6 6 7 6 1 11 3 57

Total (# of Organizations) 700 178 149 218 384 44 446 39 2,158

Ratio (%) 84.8 21.6 18.1 26.4 46.5 5.3 54.1 4.7




� Others include “head of related department”, “compliance committee”, “head of accounting department”,

“administration department”, etc.

168

<Table 64> Distribution of copy of summary report if summary report was issued (by industry)


Distribution to

Industry

President

Board

Executive C

omm

ittee


Internal Audit

Kansayaku or A

udit

Com

mittee

Executive O

fficer


audit client


related department

External A

uditor

Others

Total

Construction 13 7 12 6 29 2 22 10 1 4 106

Fishing / Food 7 5 4 5 14 3 23 11 3 1 76

Textile / Paper / Pulp 3 1 1 2 6 - 8 4 1 1 27

Chemical 13 7 4 9 36 4 28 18 3 5 127

Medicine 7 2 3 1 11 1 11 2 - - 38

Oil / Coal / Mining - - 2 - 4 - 7 5 - 1 19

Rubber 1 - 1 - 2 - 1 - - 5

Glass / Soil & Stone 3 - - 2 8 - 4 2 - - 19

Steel - 1 1 - 3 - 7 3 - - 15

Metal 5 2 2 5 9 1 11 1 1 3 40

Machine 12 3 2 8 24 2 24 8 3 2 88

Electric equipment 22 6 4 11 39 3 27 14 - 4 130

Transportation equipment 10 2 4 8 18 2 19 5 2 1 71

Precision equipment 6 3 2 5 14 - 13 3 2 2 50

Misc. manufacturing 10 5 - 7 15 4 28 9 2 1 81

Trading 17 5 1 5 27 2 32 17 4 5 115

Department store / Super market 12 1 4 7 11 1 14 4 - - 54


Life insurance 5 4 2 4 6 - 6 3 - 2 32

Non-life insurance 2 1 3 3 3 1 3 2 - - 18

Finance 30 21 22 23 38 6 38 19 3 6 206

Real estate 7 2 4 3 15 2 12 3 1 2 51

Transportation / Warehouse 16 8 7 11 21 1 21 12 1 2 100

Telecom / Advertising 10 1 5 7 17 1 11 3 1 - 56

Electric / Gas 4 1 3 1 5 1 4 1 1 2 23

Services 43 21 14 11 65 11 62 28 5 8 268



Association etc.

5 6 8 2 8 2 13 5 2 2 53


Ratio (%) 35.9 15.8 14.8 18.9 60.0 6.8 59.5 26.2 4.9 7.3




� Others include “board member and kansayaku etc.”, “compliance committee”, “open”, “open for internal

audit staff”, etc.

169

<Table 65> Distribution of copy of detailed report if detailed report was issued (by industry)


Distribution to

Industry

President

Board

Executive C

omm

ittee


Internal Audit

Kansayaku or A

udit

Com

mittee

Executive O

fficer


audit client


related department

External A

uditor

Others

Total

Construction 12 4 5 4 19 1 22 10 2 5 84

Fishing / Food 4 3 2 7 15 1 20 12 - 1 65

Textile / Paper / Pulp 2 1 - 4 8 1 6 4 1 1 28

Chemical 18 6 - 13 31 5 37 19 8 4 141

Medicine 7 3 3 3 16 2 16 1 2 2 55

Oil / Coal / Mining - - 1 - 4 - 6 2 - 1 14

Rubber - - 1 1 3 - 2 - - - 7

Glass / Soil & Stone 2 - 3 6 - 7 4 - 1 23

Steel 1 - 1 1 5 - 8 2 1 - 19

Metal 9 1 - 3 10 1 13 2 - 3 42

Machine 15 3 - 6 22 2 24 11 2 3 88

Electric equipment 18 6 4 9 38 2 39 18 - 7 141

Transportation equipment 7 - 1 5 15 2 13 5 1 - 49

Precision equipment 5 1 1 5 11 - 11 2 1 2 39

Misc. manufacturing 7 2 2 4 13 - 24 5 4 4 65

Trading 15 2 1 4 28 2 32 14 3 7 108

Department store / Super market 8 2 3 6 8 1 18 8 - - 54

Various commercial 25 4 2 4 26 2 24 13 - - 107

Life insurance 5 2 1 5 4 1 7 5 3 1 34

Non-life insurance 1 - 2 4 3 - 6 3 - - 19

Finance 30 19 16 16 26 4 59 33 - 11 214

Real estate 5 - 3 2 15 1 21 5 1 3 56

Transportation / Warehouse 19 3 4 10 24 - 29 10 3 4 106

Telecom / Advertising 2 - 1 4 13 - 16 5 1 1 43

Electric / Gas 3 1 - 2 6 1 8 3 1 - 25

Services 39 14 5 12 60 6 75 31 3 10 255



Association etc.

11 5 4 3 11 1 15 6 2 2 60


Ratio (%) 32.3 9.8 7.5 16.7 52.6 4.3 66.7 27.9 5.1 9.1




� Others include “executives (include board members)”, “head of administration”, “head of department”, etc.

170

<Table 66> Description of recommendations in internal audit report (by industry)


Recommendations

Industry

Describing Describing

as necessary

Not

describing

Total




Chemical 53 35 3 91

Medicine 19 12 2 33


Rubber 2 3 - 5


Steel 5 10 1 16

Metal 17 11 3 31

Machine 36 26 6 68





Trading 36 31 9 76





Finance 86 64 18 168





Services 106 74 10 190




16 23 4 43


Ratio (%) 52.3 40.3 7.4


Ratio (%) 92.6 7.4


171

<Table 67> Preparation of recommendations separately from internal audit report (by industry)


Separate Recommendation

Industry Preparing

Not

Preparing Total




Chemical 35 56 91

Medicine 14 19 33


Rubber - 5 5

Glass / Soil & Stone 4 10 14

Steel 3 13 16

Metal 9 23 32

Machine 33 35 68





Trading 39 35 74





Finance 89 78 167

Real estate 24 24 48




Services 104 87 191




17 26 43


Ratio (%) 47.1 52.9


173

<Table 68> Average days to prepare internal audit report (by industry)


Days

Industry

1 2 3 4 5 6 7 8�15 16�21 22�1M 1M�

1.5M

1.5M�

2M

2M� Total

Construction 3 5 6 2 6 - 12 13 7 8 3 3 1 69

Fishing / Food 4 2 5 1 2 - 4 19 7 5 1 2 1 53

Textile / Paper / Pulp 2 4 3 - 1 - 3 5 1 1 - - 1 21

Chemical 7 7 13 1 6 1 10 23 5 10 2 1 3 89

Medicine - 3 - - 1 - 4 13 4 8 - - - 33

Oil / Coal / Mining - - 2 1 1 - - 1 1 3 1 - - 10

Rubber - - - 1 - - 1 3 - - - - - 5

Glass / Soil & Stone - - - 1 1 - - 7 1 3 - - - 13

Steel - 3 1 - - - - 5 1 5 - - 1 16

Metal 2 4 2 - 3 1 6 7 4 1 1 - - 31

Machine 5 5 8 1 7 - 4 20 6 8 2 - 1 67

Electric equipment 6 9 7 - 14 1 5 35 7 18 2 - - 104

Transportation equipment 4 2 4 2 4 - 3 10 4 6 1 - 1 41

Precision equipment - - 5 - 3 - 1 6 4 4 1 - 2 26

Misc. manufacturing 3 6 11 2 8 - 7 12 6 5 1 - - 61

Trading 6 9 4 2 6 1 7 22 8 4 2 - 4 75

Department store / Super market 3 1 7 2 - 6 10 1 5 1 - 1 37

Various commercial 12 14 6 3 1 - 11 16 6 6 1 - 2 78

Life insurance - - 1 1 - - 1 5 3 5 - 1 - 17

Non-life insurance - - - - - - 1 7 2 3 - - - 13

Finance 6 24 29 10 22 1 11 35 8 14 2 - 3 165

Real estate 2 2 2 2 9 - 8 10 3 8 2 - 1 49

Transportation / Warehouse 7 6 5 6 - 6 21 4 11 - 2 - 68

Telecom / Advertising 3 2 4 2 2 - 5 11 4 4 - - 1 38

174

Days

Industry

1 2 3 4 5 6 7 8�15 16�21 22�1M 1M�

1.5M

1.5M�

2M

2M� Total

Electric / Gas 2 - 2 - 1 - 2 2 - 3 2 - 4 18

Services 16 13 23 2 27 1 23 49 9 19 1 1 3 187




3 3 3 - 3 1 3 12 5 6 1 - 1 41


Ratio (%) 6.7 8.8 10.7 2.3 9.4 0.6 10.1 26.6 7.8 12.2 1.9 0.7 2.2


176

<Table 69> Style of internal audit report (by industry)


Style

Industry

Developed

standardized style

Developed

Standardized

style for some aud

its

Not

Developed

Total



Textile / Paper / Pulp 18 6 - 24

Chemical 75 9 6 90

Medicine 32 - 1 33


Rubber 4 1 - 5


Steel 8 7 1 16

Metal 27 5 - 32

Machine 55 10 3 68





Trading 61 9 2 72



Life insurance 17 - - 17

Non-life insurance 12 - 1 13

Finance 149 9 9 167





Services 163 13 16 192




31 8 3 42

Total (# of Organizations) 1,200 171 79 1,450

Ratio (%) 82.8 11.8 5.4


Ratio (%) 94.6 5.4


178

<Table 70> Route to instruct corrective actions on audit findings (by industry)


Route

Industry

President to a

udit client

Executive in charge to

audit client

Chief A

udit Exe

cutive to

audit client


audit client to au

dit client

Departm

ent in charge to

audit client

Kansa

yaku to au

dit client

Audit C

omm

ittee to

audit client

Executive O

fficer to

audit client

Others

Total

Construction 13 2 47 3 4 - 1 - - 70

Fishing / Food 14 - 35 2 1 - - - - 52

Textile / Paper / Pulp 3 1 14 2 1 1 - - - 22

Chemical 8 5 67 5 5 1 - - - 91

Medicine 4 1 24 1 2 - - 1 - 33

Oil / Coal / Mining - - 9 1 - - - - - 10

Rubber - - 5 - - - - - - 5

Glass / Soil & Stone 1 - 11 - 1 - - - - 13

Steel 2 - 14 - - - - - - 16

Metal 8 - 20 1 2 1 - - - 32

Machine 11 4 43 8 2 - - - - 68

Electric equipment 19 4 70 8 2 - - 1 - 104

Transportation equipment 6 3 29 3 2 - - - - 43

Precision equipment 5 1 17 3 1 - - - - 27

Misc. manufacturing 13 3 43 1 2 - - - - 62

Trading 15 3 50 2 6 - - - - 76

Department store / Super market 4 4 25 5 2 - - - - 40

Various commercial 18 1 53 6 4 - - 1 1 84

Life insurance 1 - 13 1 - - - - 1 16

Non-life insurance - 2 11 - - - - - - 13

179

Route

Industry

President to a

udit client

Executive in charge to

audit client

Chief A

udit Executive to

audit client


audit client to au

dit client

Departm

ent in charge to

audit client

Kansa

yaku to au

dit client

Audit C

omm

ittee to

audit client

Executive O

fficer to

audit client

Others

Total

Finance 34 9 116 4 3 - - 1 - 167

Real estate 8 3 36 1 - - - 1 1 50

Transportation / Warehouse 9 7 47 3 5 - - - - 71

Telecom / Advertising 5 2 31 1 - - - - - 39

Electric / Gas 2 1 12 1 2 - - - - 18

Services 43 7 125 9 2 1 2 2 1 192




12 5 23 - 2 - 1 - - 43

Total (# of Organizations) 258 68 990 71 51 4 4 7 4 1,457

Ratio (%) 17.7 4.7 67.9 4.9 3.5 0.3 0.3 0.5 0.3


� Others include combination use of “from president”, “from executive in charge of audit”, “from CAE”, and “from department in charge".

181

<Table 71> Method to confirm the status of corrective actions on audit findings (by industry)


Method

Industry

Directly

confirming

field work

place

Confirming b

y report

Both directly

confirming field

work place and

by report

Not

confirming Total


Fishing / Food 11 22 19 1 53


Chemical 19 36 33 2 90

Medicine 6 15 12 - 33

Oil / Coal / Mining 2 4 4 - 10

Rubber 1 3 1 - 5


Steel 3 5 8 - 16

Metal 10 7 15 - 32

Machine 10 28 29 1 68



Precision equipment 8 10 9 - 27


Trading 16 41 18 1 76

Department store / Super market 9 15 16 - 40


Life insurance 1 7 9 - 17

Non-life insurance 1 6 6 - 13

Finance 22 68 73 5 168

Real estate 16 8 25 - 49

Transportation / Warehouse 19 22 30 - 71


Electric / Gas 3 8 7 - 18

Services 36 71 82 3 192




11 17 14 1 43


Ratio (%) 20.3 39.4 38.9 1.4


Ratio (%) 98.6 1.4


182

<Table 72> Timing to confirm the status of corrective actions on audit findings (by industry)


Timing

Industry

At the next

audit

Follow

-up

audit after

certain

period of time

As necessary

By report after certai

n period of time

Total


Fishing / Food 9 14 11 15 49

Textile / Paper / Pulp 6 12 3 2 23

Chemical 21 31 14 22 88

Medicine 3 13 8 9 33

Oil / Coal / Mining 1 4 - 5 10

Rubber 1 2 - 2 5

Glass / Soil & Stone 2 5 5 1 13

Steel 4 4 5 3 16

Metal 7 14 8 3 32

Machine 8 25 17 17 67





Trading 20 24 17 13 74



Life insurance 3 7 1 6 17

Non-life insurance - 5 1 7 13

Finance 20 55 18 68 161





Services 46 73 27 35 181




9 12 12 9 42


Ratio (%) 19.5 38.9 17.8 23.8


183

<Table 73> Preparation of follow-up report (by industry)


Follow-up report

Industry

Preparing Preparing

as

necessary

Not

preparing

Total





Medicine 12 10 11 33

Oil / Coal / Mining 8 - 2 10

Rubber 1 3 1 5


Steel 3 8 5 16

Metal 12 7 13 32

Machine 23 23 22 68





Trading 27 16 32 75





Finance 85 35 48 168





Services 79 46 65 190




13 13 16 42


Ratio (%) 41.6 27.2 31.3


Ratio (%) 68.9 31.3


184

<Table 74> Retention period of the internal audit report (by industry)


Stipulated Period

Industry

Perm

anently

10�30 years

7�10 years

5�7 years

3�5 years

�3 years Others

Not stipulated

Total

Construction 3 4 20 7 9 - - 26 69

Fishing / Food 7 8 12 3 1 2 - 19 52

Textile / Paper / Pulp 2 3 9 3 1 - - 5 23

Chemical 10 8 26 8 9 - 1 28 90

Medicine 2 3 13 3 1 1 - 10 33

Oil / Coal / Mining 1 1 3 2 1 - - 2 10

Rubber 1 - 1 1 - - - 2 5

Glass / Soil & Stone 4 - 3 1 - - - 6 14

Steel 3 1 7 - - - - 5 16

Metal 2 2 5 4 7 - 1 11 31

Machine 7 6 21 7 4 - 1 22 68

Electric equipment 16 9 31 15 13 - - 19 104

Transportation equipment 4 3 17 1 5 - - 13 43

Precision equipment 7 5 6 1 3 - - 5 27

Misc. manufacturing 9 5 20 6 7 4 - 11 62

Trading 10 5 20 10 5 2 - 22 74

Department store / Super market 8 1 9 6 3 - - 13 40

Various commercial 5 2 24 6 14 1 1 27 80

Life insurance 1 1 6 4 3 1 - - 16

Non-life insurance 1 1 4 3 2 - - 1 12

Finance 18 7 45 24 41 10 - 20 165

Real estate 5 1 15 7 5 1 - 15 49

Transportation / Warehouse 19 3 15 4 5 3 - 21 70

Telecom / Advertising 3 3 8 3 9 6 - 7 39

Electric / Gas 4 1 4 1 1 - 1 6 18

Services 17 22 53 14 32 7 - 46 191 Independent administrative institution / Special public


4 6 9 3 4 3 - 14 43


Ratio (%) 12.0 7.7 28.1 10.2 12.8 2.8 0.3 26.0


Ratio (%).0 74.0 26.0


� Others include “5 or more years”, “5 years and 10 years”, “permanently 5 or more years”, “adequate period”,

and “indefinite period”.

185

6. Information System Audit (Tables 75 to 81)

<Table 75> Conducting information system audit (by industry)


Conducting

Industry

Conducting Not

Conducting

Total




Chemical 47 44 91

Medicine 15 17 32


Rubber 1 3 4


Steel 5 11 16

Metal 17 14 31

Machine 30 38 68





Trading 37 38 75





Finance 119 45 164





Services 101 89 190




19 23 42


Ratio (%) 51.4 48.6


186

<Table 76> Entity to conducting information system audit (by industry)


Entity

Industry

Internal Audit A

ctivity (IAA

)

Together with IA

A and

Information S

ystem

department

C-sourcing w

ith IAA

and

third-party vendor

Outsourcing to third-party vendor

Information S

ystem departm

ent

Together with Inform

ation

System

department and

third-party vendor

Others

Total

Construction 14 2 - 1 6 - 1 24

Fishing / Food 15 1 2 1 - - - 19

Textile / Paper / Pulp 5 3 1 2 2 - - 13

Chemical 28 4 - 6 4 1 1 44

Medicine 9 - 2 1 2 1 - 15

Oil / Coal / Mining 1 1 - - 2 1 - 5

Rubber - - - - 1 - - 1

Glass / Soil & Stone 3 1 1 - - - - 5

Steel 2 1 - - 2 - - 5

Metal 14 2 - - 1 - - 17

Machine 15 8 - 4 1 1 - 29

Electric equipment 29 15 2 3 11 1 - 61

Transportation equipment 14 3 3 3 - 1 - 24

Precision equipment 11 2 2 - 1 1 1 18

Misc. manufacturing 19 - 1 5 1 - - 26

Trading 21 3 3 4 3 2 1 37

Department store / Super market 6 2 - 3 - 1 - 12

Various commercial 19 5 1 6 2 1 - 34

Life insurance 9 1 4 - - - - 14

Non-life insurance 9 - 3 1 - - - 13

Finance 69 8 21 14 1 - 4 117

Real estate 8 3 1 4 1 - 1 18


Telecom / Advertising 10 3 2 2 1 - - 18

Electric / Gas 7 - - - 2 1 - 10

Services 59 11 10 8 5 3 2 98

Independent administrative institution / Special public


9 3 - 6 1 - - 19

Total (# of Organizations) 416 87 64 77 51 16 11 722

Ratio (%) 57.5 12.0 8.9 10.7 7.1 2.2 1.5


� Others include “separately by the IAA and third-party vendor”, “parent company”, “ISO quality assurance

department”, “security audit committee”, “became a member of the Regional Bank Integrated Services

Center”, “executive who is knowledgeable about information system”, etc.

<Table 77> Staffing of information system auditors in the IAA (by industry)

187


IS Auditor

Industry

Allocated Not

Allocated

Total




Chemical 2 28 30

Medicine 5 4 9

Oil / Coal / Mining - 2 2

Rubber - - -


Steel - 2 2

Metal 1 13 14

Machine 3 13 16





Trading 5 17 22





Finance 48 39 87

Real estate 1 7 8




Services 30 40 70




1 8 9

Total (# of Organizations) 159 320 479

Ratio (%) 33.2 66.8


188

<Table 78> Alternative method if there is no information system auditor in the IAA (by industry)


Alternative method

Industry

Limit audit scope

and conduct

possible audit only

Review

self-assessment by

Information S

ystem depa

rtment

Ask support to

Information S

ystem depa

rtment

Ask support to

third-party

Total

Construction 9 1 2 - 12

Fishing / Food 11 - 4 15

Textile / Paper / Pulp 4 - 1 - 5

Chemical 16 7 5 - 28

Medicine 3 - - - 3

Oil / Coal / Mining 2 - - - 2

Rubber - - - - -

Glass / Soil & Stone 3 - - - 3

Steel 2 - - - 2

Metal 10 - 2 - 12

Machine 8 3 1 - 12


Transportation equipment 10 - 1 2 13

Precision equipment 8 - 3 - 11

Misc. manufacturing 15 - 2 - 17

Trading 12 - 4 1 17

Department store / Super market 3 - 3 1 7

Various commercial 10 1 4 - 15

Life insurance 1 - 1 2 4

Non-life insurance 3 - - 2 5

Finance 26 - 5 8 39

Real estate 7 - - - 7

Transportation / Warehouse 7 3 - - 10


Electric / Gas 3 1 - - 4

Services 25 2 11 2 40




5 1 1 1 8


Ratio (%) 69.6 7.0 17.4 6.0


189

<Table 79> Approach of information system audit (by industry)


Approach

Industry

Information Sys

tem Audit only

As a part of op

erational

audit

Both

Information Sys

tem Audit and

as a

part of

operational

audit

Total



Textile / Paper / Pulp - 4 2 6

Chemical 3 20 6 29

Medicine - 7 2 9

Oil / Coal / Mining - 1 1 2

Rubber - - - -

Glass / Soil & Stone - 2 1 3

Steel - 2 1 3

Metal 3 9 12

Machine 4 11 2 17





Trading 1 17 4 22





Finance 15 30 39 84

Real estate - 7 1 8




Services 11 34 19 64




2 5 2 9

Total (# of Organizations) 76 248 140 464

Ratio (%) 16.4 53.4 30.2


190

<Table 80> Development of information system audit checklist (by industry)



Industry

Developed a

standard

checklist

Developing for

each

engagement

Not develop a

checklist Total




Chemical 7 14 8 29

Medicine 1 7 1 9

Oil / Coal / Mining - 2 - 2

Rubber - - - -

Glass / Soil & Stone - 3 - 3

Steel 1 - 2 3

Metal 1 8 4 13

Machine 2 8 6 16





Trading 4 11 7 22





Finance 45 32 6 83

Real estate 4 4 - 8




Services 24 32 8 64




3 4 2 9


Ratio (%) 36.8 46.6 16.6


Ratio (%) 83.4 16.6


192

<Table 81> Areas of information system audit (by industry)


Areas

Industry

Con

form

ity of in

formation

system strateg

y

with

organization

al policy

Org

anization

/ structure o

f Info

rmation

System

depa

rtmen

t

System

plannin

g / d

esignin

g / d

evelopment

managem

ent

Inpu

t control

Do

cum

entation contro

l

Mainten

ance o

f equip

men

t

Con

tingency plan

ning

Outp

ut contro

l

On

-line system

control

Co

mpu

ter usage of ea

ch d

epartm

ent

Utilization

of o

utput data

Exp

ense man

agem

ent of In

form

ation

System

depa

rtmen

t

End

-user co

mp

uting m

anage

men

t

Netw

ork m

anagem

ent

Ou

tsou

rcing

Individu

al application

system

Info

rmation

security m

anagem

ent (virus /

privacy in

form

ation)

Total

Construction 13 11 6 7 3 12 9 5 4 9 2 5 5 14 5 3 20 133

Fishing / Food 7 11 5 1 3 16 12 1 5 5 3 4 4 11 8 1 13 110

Textile / Paper / Pulp 8 8 10 5 5 6 8 4 5 1 2 2 1 9 3 3 9 89

Chemical 23 30 23 8 11 24 24 9 17 13 6 18 7 30 20 6 30 299

Medicine 9 8 8 6 7 9 10 5 3 4 1 2 3 8 4 6 12 105 Oil / Coal / Mining 2 3 2 3 3 2 2 2 2 2 1 1 1 4 3 2 4 39

Rubber - - - - - - - - - - - - - - - - - -

Glass / Soil & Stone 3 4 1 1 1 3 3 1 1 - - 1 - 1 - - 3 23

Steel 3 3 3 1 - 1 2 - - 1 - 3 1 1 1 1 3 24

Metal 12 13 9 2 2 9 8 2 2 2 1 5 1 8 1 4 8 89 Machine 16 18 14 13 10 20 19 13 12 1 2 7 8 21 9 8 28 219

Electric equipment 35 35 36 20 24 42 46 16 23 18 9 13 11 44 29 17 51 469

Transportation equipment 13 14 13 6 7 14 20 8 6 4 1 4 4 17 9 6 20 166

Precision equipment 10 11 9 6 7 15 12 5 5 5 1 6 3 12 7 1 15 130

Misc. manufacturing 15 15 14 8 9 17 18 4 4 4 5 4 19 6 4 21 167

Trading 15 13 21 19 12 21 21 11 10 9 3 7 2 19 13 7 26 229 Department store / Super market 3 3 2 5 4 6 7 5 2 1 1 - 3 6 5 2 7 62

193

Areas

Industry

Con

form

ity of in

form

ation system

strategy

with o

rganization

al policy

Org

anization

/ structure o

f Info

rmation

Syste

m d

epartm

ent

System

plannin

g / design

ing

/ developm

ent

manage

men

t

Inpu

t control

Do

cum

entation

control

Mainten

ance

of equip

ment

Con

tingency plannin

g

Ou

tput con

trol

On

-line system

control

Co

mpu

ter usage o

f each

dep

artmen

t

Utilization

of ou

tput data

Exp

ense man

agem

ent o

f Info

rmation

Syste

m d

epartm

ent

End

-user co

mp

uting m

anagem

ent

Netw

ork m

anagem

ent

Ou

tsou

rcing

Individu

al application

system

Info

rmation

security m

anagem

ent (virus /

privacy in

form

ation)

Total

Various commercial 17 20 15 13 15 22 18 12 7 4 5 8 7 20 13 3 20 219

Life insurance 10 10 13 9 10 6 13 8 9 4 2 7 6 9 12 4 11 143

Non-life insurance 7 10 9 4 8 8 10 5 6 2 1 3 7 9 9 4 8 110

Finance 64 86 80 51 60 92 94 45 55 46 14 26 51 73 78 38 100 1,053

Real estate 7 9 7 5 5 9 7 5 4 6 3 1 3 8 3 1 12 95

Transportation / Warehouse 12 15 11 9 10 15 14 10 8 7 1 5 6 17 10 4 17 171

Telecom / Advertising 7 10 10 4 10 13 12 4 5 8 3 5 7 13 8 4 14 137

Electric / Gas 4 5 7 2 2 4 6 2 2 2 3 4 3 6 5 3 7 67

Services 42 50 41 26 27 59 54 26 24 26 8 15 20 60 41 17 77 613 Independent administrative



Association etc.

6 9 9 6 7 9 9 5 3 7 2 4 5 12 9 - 16 118

Total (# of Organizations) 363 424 378 240 262 454 458 213 224 191 75 161 173 451 311 149 552 5,079

Ratio (%) 51.6 60.2 53.7 34.1 37.2 64.5 65.1 30.3 31.8 27.1 10.7 22.9 24.6 64.1 44.2 21.2 78.4


� Multiple answers were allowed. The ratio is calculated using the following formula: number of responses to each item / number of usable responses (704 organizations)

* 100

195

7. Audit of Subsidiary companies and Affiliated companies (Tables 82 to 89)

<Table 82> Conducting audits of subsidiaries / affiliates (by industry)


Conducting Subsidiaries / affiliates audits

Industry Domestic o

nly

Overseas on

ly

Both

domestic an

d

overseas

Not

conducting Total

Construction 39 - 16 14 69

Fishing / Food 21 - 21 10 52


Chemical 30 4 43 15 92

Medicine 15 1 7 9 32

Oil / Coal / Mining 2 - 5 3 10

Rubber 1 - 3 1 5


Steel 5 - 8 3 16

Metal 7 2 15 7 31

Machine 24 5 31 8 68





Trading 22 4 28 19 73

Department store / Super market 24 - 2 13 39

Various commercial 44 - 10 27 81



Finance 78 1 17 52 148

Real estate 29 - 5 14 48


Telecom / Advertising 22 - 9 6 37

Electric / Gas 10 - 3 5 18

Services 79 4 25 76 184




10 - - 30 40


Ratio (%) 40.3 3.0 29.7 27.0


Ratio (%) 73.0 27.0


196

<Table 83> Criteria to audit domestic subsidiaries / affiliates (by industry)


Criteria

Industry

Wholly-ow

ned company

Majority-ow

ned company

Sending E

xecutives

Investing company

Manufacture of com

pany’s

product / parts

Sales com

pany

All subsidiaries and affiliates

Consolidated com

pany

No internal audit com

pany

Others

Total

Construction 23 15 2 - - 2 17 17 5 - 81

Fishing / Food 11 9 2 1 2 1 11 15 3 1 56

Textile / Paper / Pulp 5 3 1 - - - 6 8 2 - 25

Chemical 35 27 5 - 6 4 13 31 8 - 129

Medicine 10 6 2 - - - 6 5 - 1 30

Oil / Coal / Mining 2 4 - - - - 2 2 - 2 12

Rubber 1 - - - - - - 2 - - 3

Glass / Soil & Stone 5 3 2 - - - 1 6 - - 17

Steel 4 5 1 - - - 5 4 - - 19

Metal 11 10 3 - 2 1 7 9 2 - 45

Machine 27 12 2 - 2 1 10 18 5 1 78

Electric equipment 41 20 6 1 7 7 15 30 9 1 137

Transportation equipment 14 7 3 - 1 1 10 15 1 - 52

Precision equipment 8 2 - - - - 3 8 3 - 24

Misc. manufacturing 17 10 2 - 1 1 15 12 4 - 62

Trading 24 15 6 1 2 2 11 18 7 - 86

Department store / Super market 17 6 3 - - - 3 6 3 - 38

Various commercial 32 13 5 - 2 10 17 10 - 89

Life insurance 1 - - - - - 7 2 2 - 12

Non-life insurance 4 2 1 1 - - 5 1 1 - 15

Finance 40 12 3 - - - 23 42 6 2 128

Real estate 16 5 5 1 - - 9 14 6 1 57

Transportation / Warehouse 23 19 7 - - - 17 12 10 2 90

Telecom / Advertising 17 7 1 - - 1 5 11 3 2 47

Electric / Gas 4 4 1 - - - 3 6 - - 18

Services 61 25 4 1 2 - 25 38 14 - 170 Independent administrative institution / Special public


3 1 1 - - - 3 2 - - 10


Ratio (%) 49.4 26.2 7.4 0.7 2.9 2.3 26.2 38.0 11.3 1.4




� Others include “materiality”, “specified by contract”, “equity method affiliate”, “high risk company”, etc.

197

<Table 84> Criteria to audit overseas subsidiaries / affiliates (by industry)


Criteria

Industry

Wholly-ow

ned company

Majority-ow

ned company

Sending E

xecutives

Investing company

Manufacture of com

pany’s

product / parts

Sales com

pany

All subsidiaries and affiliates

Consolidated group

No internal audit com

pany

Others

Total

Construction 4 1 2 - - - 7 3 1 - 18

Fishing / Food 3 7 1 - 1 1 4 7 1 1 26

Textile / Paper / Pulp 4 - - 1 - - 2 4 1 - 12

Chemical 16 13 6 - 3 - 7 21 3 2 71

Medicine 3 2 - - - 1 2 - 1 9

Oil / Coal / Mining 1 2 - - 1 - 2 1 - - 7

Rubber 1 - - - - 2 - - 3

Glass / Soil & Stone 2 3 - - 1 - 1 1 - - 8

Steel 1 3 1 - - 2 4 - - 11

Metal 7 8 1 - 2 - 4 5 - 1 28

Machine 14 12 1 - 2 3 7 14 1 1 55

Electric equipment 27 16 4 1 8 7 15 24 6 - 108

Transportation equipment 9 6 3 1 1 - 8 13 - - 41

Precision equipment 10 5 - 1 1 3 8 3 1 32

Misc. manufacturing 12 6 3 - 2 - 3 7 1 - 34

Trading 13 12 5 1 1 1 7 8 3 - 51

Department store / Super market - - 1 - - - - 1 - - 2

Various commercial 4 1 - - - - 2 4 - - 11

Life insurance 2 - - - - 3 1 1 - 7

Non-life insurance 2 2 1 1 - - 1 2 1 1 11

Finance 5 4 - - - - 4 5 1 2 21

Real estate - - - - - - 1 3 1 5

Transportation / Warehouse 6 7 4 - - - 6 7 1 2 33

Telecom / Advertising 5 3 1 - - - 1 6 1 1 18

Electric / Gas 2 1 - - - - - - - 1 4

Services 16 3 1 1 1 - 9 11 5 - 47 Independent administrative institution / Special public


- - - - - - - - - - -

Total (# of Organizations) 169 117 35 6 24 13 100 164 31 14 673

Ratio (%) 40.7 28.2 8.4 1.4 5.8 3.1 24.1 39.5 7.5 3.4




� Others include “materiality”, “corporate group rule”, “outsourcing company”, “high risk company”, etc.

198

<Table 85> Priority area of subsidiaries / affiliates audit (by industry)


Area

Industry

Pro

fitability as a g

roup

Investm

ent effect

Safegu

ard o

f receivables

Re

liability o

f finan

cial

statements

Op

erational im

provemen

t

Sales resu

lts

Intern

al contro

ls

Hea

lth and safety

Qu

ality con

trol

Enviro

nm

ent manag

ement

Tra

nsaction w

ith parent

com

pany

Secu

rity / fire-protection

Invento

ry manage

ment

Risk m

anagem

ent

Co

mp

liance

Ad

equa

cy of m

anagem

ent

Overall op

eration

Oth

ers

Total

Construction 25 3 27 32 36 11 41 9 6 5 14 5 12 26 45 11 26 - 334

Fishing / Food 14 4 19 14 24 10 31 28 24 15 8 15 28 24 33 9 28 - 328

Textile / Paper / Pulp 7 3 8 9 8 2 13 8 3 6 3 7 11 9 14 2 9 - 122

Chemical 29 9 39 36 43 17 66 31 23 18 21 21 41 39 62 16 43 2 556

Medicine 6 - 5 5 11 3 19 6 2 1 5 6 5 11 19 2 14 - 120

Oil / Coal / Mining 2 2 5 4 5 2 5 4 3 3 4 4 4 5 7 4 5 - 68 Rubber 1 1 3 1 4 - 4 2 1 1 1 1 3 2 2 1 1 - 29

Glass / Soil & Stone 3 - 9 6 11 2 14 5 1 3 4 2 5 6 12 5 7 - 95

Steel 4 - 7 6 8 - 9 6 4 6 1 3 6 6 13 3 3 - 85

Metal 7 1 10 7 14 3 15 5 6 3 3 4 9 10 17 1 14 - 129

Machine 22 1 29 27 34 9 44 16 10 14 11 10 26 26 39 8 32 - 358 Electric equipment 37 6 40 41 44 13 73 26 23 14 27 18 51 39 62 29 60 1 604

Transportation equipment 15 2 12 14 14 6 28 14 8 9 11 8 12 18 23 10 19 - 223

Precision equipment 6 2 6 7 12 4 15 9 6 6 4 6 13 7 17 3 13 - 136

Misc. manufacturing 11 4 19 16 29 11 35 18 12 14 13 13 23 22 27 6 27 3 303

Trading 26 7 34 26 34 12 41 23 11 11 16 19 39 27 37 15 35 - 413 Department store / Super market 5 1 6 9 14 4 15 11 7 3 1 8 8 10 25 5 6 1 139

Various commercial 18 5 23 19 36 9 31 23 11 11 12 16 32 20 39 10 38 1 354

Life insurance 2 1 2 - 4 - 9 1 - - 1 - 1 6 8 - 5 - 40

Non-life insurance 1 1 1 3 6 1 9 4 3 1 3 1 - 5 9 5 7 - 60

199

Area

Industry

Pro

fitability as a g

roup

Investm

ent effect

Safegu

ard o

f receivables

Reliab

ility of fin

ancial

statements

Op

erational im

provem

ent

Sales resu

lts

Intern

al contro

ls

Health an

d safety

Qua

lity control

Enviro

nm

ent m

anag

ement

Tra

nsaction w

ith parent

com

pany

Secu

rity / fire-protection

Inve

ntory m

anagem

ent

Risk m

anagem

ent

Co

mp

liance

Ad

equacy o

f man

agemen

t

Ove

rall operation

Othe

rs

Total

Finance 15 4 23 35 48 11 74 14 9 7 21 19 10 61 91 21 65 - 528

Real estate 11 1 14 10 21 8 28 8 5 3 4 8 7 22 26 6 21 - 203

Transportation / Warehouse 17 4 22 27 34 9 46 26 15 12 15 14 14 33 54 13 35 - 390

Telecom / Advertising 11 5 10 13 19 8 26 6 - 1 10 4 7 22 23 10 23 - 198

Electric / Gas 2 2 4 4 4 1 9 3 3 2 4 2 3 7 10 4 3 - 67 Services 31 6 23 46 66 16 82 20 18 14 22 17 28 45 81 26 68 1 610




Association etc.

2 - 1 4 8 1 8 4 3 - - 3 3 5 9 2 7 - 60

Total (# of Organizations) 330 75 401 421 591 173 790 330 217 183 239 234 401 513 804 227 614 9 6,552 Ratio (%) 32.2 7.3 39.1 41.0 57.6 16.9 77.0 32.2 21.2 17.8 23.3 22.8 39.1 50.0 70.8 22.1 59.8 0.9




� Others include “cash and securities”, “purchasing”, “human resource management”, “transfer pricing”, “information management”, etc.

201

<Table 86> Who requested audit of subsidiaries / affiliates? (by industry)


Who requested?

Industry

President

President of subsidiary / affiliate

Executive in charge of A

udit

Kansayaku or

Audit C

omm

ittee

Kansayaku of subsidiary / affiliate

Subsidiary / A

ffiliate managem

ent

department

Based on Internal A

udit plan

Others

Total

Construction 16 - 3 2 - 28 1 4 54

Fishing / Food 9 - - - - 31 - 1 41

Textile / Paper / Pulp 3 - 1 - - 14 - - 18

Chemical 21 2 1 3 - 48 - 1 76

Medicine 3 - 1 - - 18 - - 22

Oil / Coal / Mining 4 - - 1 - 2 - - 7

Rubber 1 - - - - 2 - - 3

Glass / Soil & Stone 5 - - 1 1 7 - - 14

Steel 5 - - - - 8 - - 13

Metal 7 - 2 2 - 13 - - 24

Machine 17 1 2 2 1 33 - 3 59

Electric equipment 19 - 3 2 - 55 1 2 82

Transportation equipment 6 1 1 - 2 25 - - 35

Precision equipment 7 - 1 - - 13 - 1 22

Misc. manufacturing 17 - 3 1 - 23 - - 44

Trading 19 1 2 2 2 27 1 - 54

Department store / Super market 4 2 1 2 1 16 - - 26

Various commercial 17 2 1 2 1 30 - - 53

Life insurance 2 1 - - - 7 - - 10

Non-life insurance - - - - - 10 - 1 11

Finance 25 2 3 1 3 54 1 9 98

Real estate 11 - - - - 23 - - 34

Transportation / Warehouse 19 - 3 - - 35 - 1 58

Telecom / Advertising 9 - - - - 20 - 2 31

Electric / Gas 5 - - - - 7 - 1 13

Services 43 4 3 - 2 53 - 1 106 Independent administrative institution / Special public


3 1 1 - - 5 - - 10


Ratio (%) 29.2 1.7 3.1 2.1 1.3 59.6 0.4 2.7


� Others include “based on internal audit charter”, “instruction from parent company”, “intention of external

auditor”, “agreement (including contract)”, group internal audit committee”, “as a part of risk management

activities”, “discussion with department in charge of subsidiary / affiliate companies”, “approval of

management committee”, and “embedded in periodical audit entities”.

<Table 87> Timing of reporting of subsidiaries / affiliates audits (by industry)


202

Timing

Industry

After each

engagement

At the end of

fiscal year

Not consistent

- D

epends on

audit univers

e

Periodically

(Quarterly,

Sem

i-annually, et

c)

Total


Fishing / Food 34 - - 8 42


Chemical 63 2 3 9 77

Medicine 19 - 1 2 22

Oil / Coal / Mining 6 - 1 - 7

Rubber 4 - - - 4

Glass / Soil & Stone 13 - 1 - 14

Steel 11 1 - 1 13

Metal 22 - 1 1 24

Machine 48 1 3 8 60



Precision equipment 22 - - 1 23

Misc. manufacturing 40 - 1 4 45

Trading 47 1 - 4 52



Life insurance 9 - - 1 10


Finance 88 3 - 5 96

Real estate 28 1 - 5 34

Transportation / Warehouse 47 - 3 9 59

Telecom / Advertising 29 1 - 1 31


Services 93 4 3 4 104




7 1 1 1 10


Ratio (%) 85.9 2.1 3.6 8.4


203

<Table 88> Distribution of audit report of subsidiaries / affiliates (by industry)


Distribution to

Industry

President

Board

Executive C

omm

ittee


Executive in charge of Internal

Audit

Kansayaku or A

udit Com

mittee

Subsidiary / A

ffiliate

managem

ent department

Others

Total

Construction 45 1 8 18 12 14 4 2 104

Fishing / Food 38 8 5 13 10 12 7 1 94

Textile / Paper / Pulp 15 1 1 8 5 4 6 40

Chemical 67 9 7 36 15 20 16 2 172

Medicine 16 3 5 10 4 6 4 1 49

Oil / Coal / Mining 6 - 1 1 2 3 1 1 15

Rubber 4 1 - 3 - 1 - - 9

Glass / Soil & Stone 11 - - 8 2 2 4 - 27

Steel 12 - 1 8 2 3 2 - 28

Metal 21 1 6 6 7 7 3 3 54

Machine 50 8 1 23 14 16 11 - 123

Electric equipment 69 9 6 56 15 23 15 2 195

Transportation equipment 25 3 4 23 12 16 11 - 94

Precision equipment 22 - - 8 1 5 2 - 38


Trading 52 4 4 20 12 18 12 2 124

Department store / Super market 22 3 1 15 7 7 8 - 63

Various commercial 43 8 3 14 7 13 8 2 98

Life insurance 5 3 - 6 3 2 2 - 21

Non-life insurance 2 4 6 5 3 1 2 - 23

Finance 68 30 23 43 29 32 21 4 250

Real estate 30 3 2 8 2 10 7 - 62

Transportation / Warehouse 47 8 7 26 16 19 9 3 135

Telecom / Advertising 24 - 4 12 7 10 2 3 62

Electric / Gas 9 - 5 5 2 3 1 - 25

Services 90 8 8 56 14 28 18 2 224 Independent administrative institution / Special public


6 2 1 4 2 2 1 - 18


Ratio (%) 82.2 12.1 10.9 44.9 20.9 28.7 18.1 2.9




� Others include “executives”, “executive in charge of subsidiary / affiliate”, “parent company”, “kansayaku

of subsidiaris / affiliates”, “head of administration”, etc.

204

<Table 89> Distribution of copy of report of subsidiaries / affiliates audit (by industry)


Distribution to

Industry

President

Board

Executive C

omm

ittee


Executive in charge of Internal

Audit

Kansayaku or A

udit Com

mittee

Subsidiary / A

ffiliate

managem

ent department

Head of all related departm

ents

Others

Total

Construction 17 4 6 33 9 30 18 6 1 124

Fishing / Food 9 9 5 21 4 21 24 15 1 109

Textile / Paper / Pulp 3 - - 11 2 8 9 6 - 39

Chemical 10 5 2 39 11 37 31 16 3 154

Medicine 3 2 2 9 3 9 6 1 - 35

Oil / Coal / Mining 1 - 2 5 - 4 5 1 - 18

Rubber 1 - - 1 1 3 1 1 - 8

Glass / Soil & Stone 2 - - 5 3 9 7 3 1 30

Steel - - - 5 3 8 7 4 - 27

Metal 5 4 1 13 1 10 4 1 4 43

Machine 13 7 - 31 9 30 27 13 2 132

Electric equipment 20 5 5 38 11 39 33 16 5 172

Transportation equipment 9 2 3 19 4 20 13 7 3 80

Precision equipment 1 3 1 13 5 13 3 1 4 44


Trading 13 3 2 27 6 25 18 15 5 114

Department store / Super market 6 3 1 12 11 14 8 5 - 60

Various commercial 13 11 3 26 4 27 22 10 6 122

Life insurance 3 2 1 2 2 3 4 2 2 21

Non-life insurance 1 1 - 3 3 4 7 4 - 23

Finance 24 16 11 50 18 28 28 19 1 195

Real estate 7 1 2 18 4 12 7 6 2 59

Transportation / Warehouse 13 7 5 25 10 24 19 10 1 114

Telecom / Advertising 5 1 4 14 3 10 11 5 1 54

Electric / Gas 2 - 3 5 1 6 6 2 1 26

Services 31 14 7 53 12 57 37 15 8 234 Independent administrative institution / Special public


4 1 2 4 2 2 1 - - 16

Total (# of Organizations) 224 108 68 502 153 469 374 191 54 2,143

Ratio (%) 24.3 11.7 7.4 54.4 16.6 50.8 40.5 20.7 5.9




� Others include “based on instruction of president”, “executives”, “head of administration”, “external

auditor”, “audit client”, “kansayaku of subsidiary”, “parent company”, “accounting department”, etc.

9. Environment Audit (Tables 90 to 96)

205

<Table 90> Conducting environment audit (by industry)


Environment audit

Industry

Conducting Not

Conducting

Total




Chemical 70 22 92

Medicine 24 9 33


Rubber 4 1 5


Steel 12 5 17

Metal 23 9 32

Machine 47 22 69





Trading 49 26 75





Finance 22 140 162





Services 66 124 190




18 24 42


Ratio (%) 52.5 47.5


206

<Table 91> Who conducted environment audit? (by industry)


Who

Industry IAA

General A

ffairs

Quality C

ontrol

Departm

ent in charge of

environment

Together with IA

A and

department in charge of

environment

Outsourcing

Others

Total

Construction 6 1 18 11 2 2 2 42

Fishing / Food 11 2 2 12 6 - 3 36

Textile / Paper / Pulp 1 2 2 4 1 1 - 11

Chemical 9 1 20 33 1 3 1 68

Medicine 4 3 1 14 - 2 - 24

Oil / Coal / Mining 1 - 1 4 1 - - 7

Rubber 1 - 1 2 - - - 4

Glass / Soil & Stone 3 - 1 6 - - - 10

Steel 3 - 1 6 2 - - 12

Metal 6 1 3 8 2 - 2 22

Machine 5 5 11 21 2 - 3 47

Electric equipment 9 4 20 48 6 2 - 89

Transportation equipment 2 5 3 22 2 4 - 38

Precision equipment 5 3 2 12 1 - 1 24

Misc. manufacturing 9 2 6 14 4 - 1 36

Trading 4 9 9 16 5 2 3 48

Department store / Super market 1 4 - 9 6 - 1 21

Various commercial 10 3 4 7 6 - 1 31

Life insurance - 1 - - - - 1 2

Non-life insurance - - - 3 - - - 3

Finance 10 3 - 5 1 1 1 21

Real estate 5 - - 4 1 - - 10


Telecom / Advertising 3 7 1 4 1 - 2 18

Electric / Gas 4 1 1 4 1 1 1 13

Services 25 9 10 11 6 1 4 66 Independent administrative institution / Special public


6 2 1 3 2 - 4 18

Total (# of Organizations) 151 71 126 296 61 20 31 756

Ratio (%) 20.0 9.4 16.7 39.2 8.1 2.6 4.1


� Others include “ISO auditor”, “environment audit team”, “temporary function”, “self-assessment by each

office”, “parent company”, etc.

207

<Table 92> Staffing of environment auditors in the IAA (by industry)


Environment auditor

Industry

Allocating Not

Allocating

Total

Construction - 5 5


Textile / Paper / Pulp 1 - 1

Chemical 2 7 9

Medicine 1 3 4


Rubber - 1 1


Steel 1 2 3

Metal 2 5 7

Machine 3 2 5





Trading 2 5 7



Life insurance - - -

Non-life insurance - - -

Finance 1 9 10

Real estate - 5 5

Transportation / Warehouse - 7 7


Electric / Gas - 4 4

Services 8 19 27




1 5 6


Ratio (%) 24.4 75.6


208

<Table 93> Alternative method if there is no environment auditor in the IAA (by industry)


Alternative method

Industry

Limit audit scope and co

nduct

possible audit only

Ask support to

third-party

Ask support to

Departm

ent in

charge of

environment

Total

Construction 3 - 2 5


Textile / Paper / Pulp - - - -

Chemical 5 - 2 7

Medicine 3 - - 3

Oil / Coal / Mining - - 1 1

Rubber 1 - - 1

Glass / Soil & Stone 2 - - 2

Steel 2 - - 2

Metal 3 1 - 4

Machine - - 2 2

Electric equipment 4 - - 4

Transportation equipment 1 - - 1

Precision equipment 3 - 1 4

Misc. manufacturing 8 - - 8

Trading 2 2 1 5

Department store / Super market - - 1 1

Various commercial 8 - 1 9

Life insurance - - - -

Non-life insurance - - - -

Finance 7 1 1 9

Real estate 4 - - 4

Transportation / Warehouse 5 - 2 7

Telecom / Advertising 2 - - 2

Electric / Gas 4 - - 4

Services 17 - 1 18




4 - 1 5


Ratio (%) 82.1 3.4 14.5


209

<Table 94> Development of environment audit checklist (by industry)



Industry

Developed a

standardized

checklist

Developing for

each

engagement

Not develop a

checklist Total

Construction 4 2 - 6


Textile / Paper / Pulp 1 - - 1

Chemical - 5 4 9

Medicine 1 3 - 4

Oil / Coal / Mining - - - -

Rubber - 1 - 1

Glass / Soil & Stone 1 2 - 3

Steel 2 - 1 3

Metal 1 2 3 6

Machine 1 3 1 5


Transportation equipment 2 - - 2

Precision equipment 3 2 - 5


Trading 5 - - 5

Department store / Super market 1 1 - 2


Life insurance - - - -

Non-life insurance - - - -

Finance 6 4 - 10

Real estate - 5 - 5

Transportation / Warehouse 3 4 - 7

Telecom / Advertising 3 1 - 4

Electric / Gas - 4 - 4

Services 14 9 5 28




1 3 2 6


Ratio (%) 43.6 41.0 15.4


Ratio (%) 84.6 15.4


210

<Table 95> Priority area of environment audit conducted by the IAA (by industry)


Area

Industry

Environm

ent

managem

ent

structure

Policy on

environment

managem

ent

Effort to conserve

and recycle

resources

Handling of

industrial waste

Maintenance of

ISO

14001

Others

Total


Fishing / Food 6 3 4 9 6 2 30


Chemical 8 6 5 5 5 - 29

Medicine 3 3 2 4 - - 12

Oil / Coal / Mining - - - - 1 - 1

Rubber 1 1 1 1 - - 4

Glass / Soil & Stone 3 2 - 2 - 1 8

Steel 2 1 - 2 1 - 6

Metal 3 3 4 5 4 - 19

Machine 4 4 1 5 2 - 16




Misc. manufacturing 5 5 3 6 4 - 23

Trading 4 2 2 3 4 - 15



Life insurance - - - - - - -

Non-life insurance - - - - - - -

Finance 4 3 1 3 5 1 17

Real estate 3 1 3 3 - - 10



Electric / Gas 1 2 1 1 1 2 8

Services 19 9 16 15 12 1 72 Independent administrative institution / Special public


3 2 2 2 2 - 11


Ratio (%) 65.8 50.0 45.6 64.6 41.8 7.0




� Others include “compliance to applicable laws”, “according to environmental issues at that time”,

“environment management system operation”, “health of employees and safety of workplace”, “according

to administrative direction from regulatory agencies”, “effluent treatment”, and “contribution to

environment”.

211

<Table 96> Report to the IAA if other functions / departments conducted environment audit (by industry)


Report to IAA

Industry

Reporting Not

Reporting

Total




Chemical 20 28 48

Medicine 9 7 16


Rubber 1 1 2


Steel 1 3 4

Metal 3 8 11

Machine 19 13 32





Trading 15 18 33



Life insurance - 1 1


Finance 2 6 8

Real estate 2 1 3




Services 12 17 29




4 4 8


Ratio (%) 41.1 58.9


212

<Relationship with Other Audits>

1. Relationship between Internal Audit and Kansayaku (Corporate Auditors) Audit (Tables 97 to 103)

<Table 97> Communication (transfer of information) from the kansayaku to the IAA (by industry)


Communication

Industry

Communicating Not

Communicating

Total




Chemical 70 17 87

Medicine 28 3 31


Rubber 4 1 5


Steel 14 1 15

Metal 29 3 32

Machine 56 11 67





Trading 51 21 72





Finance 108 40 148

Real estate 41 8 49




Services 153 32 185




25 6 31


Ratio (%) 82.2 17.8


213

<Table 98> Contents of information from the kansayaku to the IAA (by industry)


Contents

Industry

Audit

policy

Audit

location

Audit

schedule

Audit

results Others Total


Fishing / Food 33 29 30 33 2 127

Textile / Paper / Pulp 14 10 15 15 - 54

Chemical 55 38 35 42 4 174

Medicine 20 19 20 18 1 78

Oil / Coal / Mining 7 6 5 4 - 22

Rubber 3 1 1 1 - 6

Glass / Soil & Stone 7 9 8 10 2 36

Steel 12 10 9 10 - 41

Metal 17 15 14 17 1 64

Machine 37 30 30 36 2 135





Trading 35 29 28 35 3 130




Non-life insurance 8 6 6 6 - 26

Finance 70 54 69 80 3 276

Real estate 33 25 23 29 - 110


Telecom / Advertising 26 19 19 25 - 89

Electric / Gas 15 13 14 12 1 55

Services 121 76 87 99 3 386 Independent administrative institution / Special public


21 20 19 21 1 82


Ratio (%) 74.3 58.5 60.6 69.0 3.5




� Others include “minutes of kansayaku meeting”, “contents of Board meeting”, “contents of other important

meetings”, “organizational issues”, “relationship between management priority and audit”, “audit plan of

kansayaku audit”, “advice to internal audit”, etc.

214

<Table 99> Contents of information from the IAA to the kansayaku (by industry)


Contents

Industry Audit plan Audit status

Audit

results Others

Not

communica

ting

Total


Fishing / Food 44 29 52 - - 125

Textile / Paper / Pulp 19 13 19 - - 51

Chemical 65 54 79 2 3 203

Medicine 27 20 29 1 1 78

Oil / Coal / Mining 9 4 10 - - 23

Rubber 4 2 4 - - 10


Steel 14 9 15 - 1 39

Metal 21 18 30 - 1 70

Machine 57 33 64 1 3 158


Transportation equipment 41 32 41 - 1 115

Precision equipment 21 16 23 - - 60


Trading 58 45 66 1 2 172

Department store / Super market 30 22 33 - 2 87


Life insurance 14 9 15 - - 38


Finance 115 108 146 2 1 372

Real estate 41 25 47 2 1 116

Transportation / Warehouse 61 39 63 - 3 166


Electric / Gas 18 13 18 1 1 51



25 22 29 - 2 78

Total (# of Organizations) 1,150 876 1,304 24 49 3,403

Ratio (%) 83.9 63.9 95.2 1.8 3.6




� Others include “status of improvement”, “internal control”, “as necessary”, “risk”, “activity report”,

“internal audit items”, etc.

215

<Table 100> Timing (frequency) of reporting of internal audit results from the IAA to the kansayaku (by industry)


Timing (frequency)

Industry

Each

engagemen

t


annually Annually Others Total


Fishing / Food 28 9 10 2 1 1 51

Textile / Paper / Pulp 15 3 - 1 - - 19

Chemical 52 6 9 7 - 4 78

Medicine 20 6 1 - - - 27

Oil / Coal / Mining 8 - 2 - - - 10

Rubber 3 1 - - - - 4

Glass / Soil & Stone 11 1 1 1 - - 14

Steel 10 - 3 2 - - 15

Metal 22 3 3 - - 2 30

Machine 53 3 3 4 - - 63

Electric equipment 65 15 9 5 1 - 95


Precision equipment 18 2 1 1 - - 22

Misc. manufacturing 44 5 2 2 - 1 54

Trading 51 7 5 - 2 - 65

Department store / Super market 20 5 5 3 - - 33


Life insurance 12 2 1 - - - 15

Non-life insurance 8 2 1 - - - 11

Finance 110 23 3 6 2 2 146

Real estate 32 4 5 3 1 1 46


Telecom / Advertising 19 7 4 4 - 2 36

Electric / Gas 10 1 3 4 - - 18



14 3 2 5 3 2 29


Ratio (%) 70.5 11.4 8.9 6.3 1.4 1.5


� Others include “every 2 months”, “upon request from kansayaku”, “certain period of time”, “weekly”, “as

necessary”, and “on an irregular base”.

216

<Table 101> Coordination of audit work between the IAA and the kansayaku (by industry)


IA and Kansayaku audit

Industry

Coordinating Not

Coordinating

Total




Chemical 51 33 84

Medicine 21 9 30


Rubber 1 4 5


Steel 11 4 15

Metal 21 9 30

Machine 41 26 67





Trading 37 36 73





Finance 67 80 147





Services 115 67 182




21 12 33


Ratio (%) 60.6 39.4


217

<Table 102> Contents of coordination of audit work between the IAA and the kansayaku (by industry)


Contents

Industry

Audit

policy

Audit

location

Audit

schedule

Audit scope

/ items Others Total

Construction 10 24 39 17 - 90

Fishing / Food 16 19 28 19 - 82

Textile / Paper / Pulp 4 11 15 8 - 38

Chemical 18 32 40 24 1 115

Medicine 6 15 18 15 - 54

Oil / Coal / Mining - 1 6 2 - 9

Rubber 1 - - - - 1

Glass / Soil & Stone 3 5 7 6 - 21

Steel 4 5 9 8 - 26

Metal 3 12 17 11 - 43

Machine 10 27 35 20 1 93


Transportation equipment 12 17 19 14 - 62


Misc. manufacturing 13 28 27 23 - 91

Trading 14 23 26 21 2 86

Department store / Super market 8 9 4 14 - 35

Various commercial 19 33 37 24 - 113

Life insurance 2 3 4 5 - 14

Non-life insurance - - 3 1 - 4

Finance 17 24 49 33 - 123

Real estate 12 12 15 20 - 59

Transportation / Warehouse 13 20 28 20 - 81


Electric / Gas 6 10 13 11 1 41



9 14 13 14 1 51


Ratio (%) 35.7 55.3 74.0 56.2 1.3




� Others include “joint audit”, “responses to audit results”, “overall role-sharing”, etc.

218

<Table 103> Conducting joint audit by the IAA and the kansayaku (by industry)


Joint audit

Industry

Conducting Not

Conducting

Total




Chemical 30 54 84

Medicine 9 22 31


Rubber - 5 5


Steel 5 10 15

Metal 18 13 31

Machine 28 38 66





Trading 21 51 72





Finance 26 113 139





Services 62 119 181




11 19 30


Ratio (%) 32.7 67.3


219

2. Relationship between Internal Audit and Audit Committee (Tables 104 to 110)

<Table 104> Establishment of the audit committee charter (by industry)


Charter

Industry

Established Not

Established

Total

Construction 2 7 9



Chemical 7 6 13

Medicine 1 2 3

Oil / Coal / Mining - - -

Rubber 1 1 2

Glass / Soil & Stone 1 - 1

Steel 2 - 2

Metal 1 4 5

Machine 2 2 4


Transportation equipment - 1 1



Trading 6 7 13





Finance 19 21 40

Real estate 2 2 4




Services 9 22 31




3 4 7


Ratio (%) 42.8 57.2


220

<Table 105> Audit committee’s authority to order / instruct the IAA (by industry)


Authority

Industry

Having authority to

order / instruct

Not having

authority to order /

instruct

Total

Construction 1 3 4



Chemical 5 6 11

Medicine - 1 1


Rubber - 2 2


Steel 1 1 2

Metal - 3 3

Machine 1 - 1


Transportation equipment - 1 1



Trading 4 6 10





Finance 14 12 26

Real estate - 1 1



Electric / Gas - - -

Services 6 14 20




1 4 5


Ratio (%) 38.1 61.9


221

<Table 106> Dedicated staff members for the audit committee (by industry)


Dedicated staff

Industry

Dedicated staff exist

Som

e of internal audit

staff concurrently serve

All of internal audit staff

concurrently serve

Som

e of other

department staff

concurrently serve

No dedicated staff exist

Total

Construction - - 1 - 3 4

Fishing / Food 1 1 - - 4 6

Textile / Paper / Pulp 1 - - - - 1

Chemical 2 1 1 1 5 10

Medicine 1 - - - - 1

Oil / Coal / Mining - - - - - -

Rubber - - - - 2 2

Glass / Soil & Stone - - - - 1 1

Steel 1 1 - - - 2

Metal 1 - - - 2 3

Machine - - 1 - - 1

Electric equipment 4 - 1 - 10 15

Transportation equipment - - - - - -

Precision equipment - 2 - - 3 5

Misc. manufacturing - 1 - - 3 4

Trading 3 1 - - 6 10

Department store / Super market 1 2 - - 1 4

Various commercial 1 - 1 - 6 8

Life insurance 1 - 1 - 2 4

Non-life insurance 1 - 1 - - 2

Finance 9 4 1 - 12 26

Real estate 1 - - - - 1

Transportation / Warehouse - - 1 1 1 3

Telecom / Advertising - 1 - - 1 2

Electric / Gas 1 - - - - 1

Services 5 1 2 12 20 Independent administrative institution / Special public


- 2 - 1 2 5


Ratio (%) 24.1 12.1 7.8 2.1 53.9


Ratio (%) 46.1 53.9


222

<Table 107> Contents of information from the IAA to the audit committee (by industry)


Contents

Industry Audit plan Audit status

Audit

results Others

Not

communica

ting

Total

Construction - 1 - - 2 3

Fishing / Food 2 2 3 - 3 10

Textile / Paper / Pulp 1 1 1 - - 3

Chemical 6 4 7 - 3 20

Medicine 1 - 1 - - 2


Rubber - 1 - - 1 2

Glass / Soil & Stone - - - - 1 1

Steel 1 - 2 - - 3

Metal 1 - 1 - 3 5

Machine 1 1 1 - - 3

Electric equipment 10 8 12 - 3 33


Precision equipment 4 2 3 - 1 10


Trading 4 2 5 - 4 15


Various commercial 2 3 3 - 4 12

Life insurance 3 3 3 - 1 10


Finance 12 12 16 - 7 47

Real estate 1 1 1 - - 3



Electric / Gas - - - - 1 1

Services 9 8 11 - 7 35 Independent administrative institution / Special public


3 3 4 - - 10

Total (# of Organizations) 70 59 83 - 45 257

Ratio (%) 52.6 44.4 62.4 - 33.8




223

<Table 108> Timing (frequency) of the reporting of internal audit results from the IAA to the audit committee (by

industry)


Timing (frequency)

Industry

Each

engageme

nt


annually Annually Others Total

Construction - - - - - - -

Fishing / Food 1 1 - 1 3

Textile / Paper / Pulp - 1 - - - - 1

Chemical 2 2 2 1 - - 7

Medicine 1 - - - - - 1


Rubber - - - - - -

Glass / Soil & Stone - - - - - -

Steel 1 - 1 - - - 2

Metal 1 - - - - - 1

Machine 1 - - - - - 1

Electric equipment 8 3 - 1 - - 12

Transportation equipment - - - - - - -

Precision equipment 3 - - - - - 3

Misc. manufacturing 1 - - - - - 1

Trading 3 2 - - - - 5

Department store / Super market 1 1 1 - - - 3

Various commercial 2 - 1 - - - 3

Life insurance - - 3 - - - 3

Non-life insurance - 1 - - 1 - 2

Finance 5 5 3 - - 2 15

Real estate - - 1 - - - 1

Transportation / Warehouse 2 - - - - 2

Telecom / Advertising - - 1 - - - 1

Electric / Gas - - - - - -

Services 6 1 1 2 - - 10 Independent administrative institution / Special public


3 - - - 1 - 4


Ratio (%) 50.6 21.0 17.3 6.2 2.5 2.5


� Others include “February, April, May, August, and November”, and “every 2 months”.

224

<Table 109> Contents of instruction from the audit committee to the IAA (by industry)


Instruction

Industry

Risk

assessment Audit policy Audit scope

Audit

universe Others Total

Construction 1 - - - - 1

Fishing / Food 2 - - 1 - 3

Textile / Paper / Pulp 1 - 1 - - 2

Chemical - 1 2 4 1 8

Medicine - - - - - -

Oil / Coal / Mining - - - - -

Rubber 1 - - - 1

Glass / Soil & Stone - - - 1 1

Steel 1 - 1 - 2

Metal - - - 1 1

Machine - 1 1 1 - 3



Precision equipment - 2 1 2 - 5

Misc. manufacturing - - - - - -

Trading 1 1 - 2 1 5

Department store / Super market 1 1 - - - 2


Life insurance 1 - 2 1 1 5

Non-life insurance - - - 1 - 1

Finance 3 8 9 8 1 29

Real estate - - - - - -


Telecom / Advertising - 1 - 1 - 2




2 3 3 2 - 10


Ratio (%) 33.8 44.2 42.9 50.6 10.4




� Others include “no instruction from audit committee”, and “additional investigation to audit results”.

225

<Table 110> Approval by the audit committee on the IAA (by industry)


Approval matters

Industry Audit plan Budget

Human

resources

Charter /

manuals Others Total

Construction - - - 1 - 1

Fishing / Food 3 - - - - 3

Textile / Paper / Pulp 1 - - - - 1

Chemical 1 - - - - 1



Rubber 1 - - - - 1

Glass / Soil & Stone 1 1 - - - 2

Steel 1 - - - - 1

Metal - - - 1 - 1

Machine 1 - - - - 1

Electric equipment 7 - 1 - - 8



Misc. manufacturing - - - - - -

Trading 1 2 - 3 - 6

Department store / Super market 1 - 1 - - 2

Various commercial 1 - - 1 - 2

Life insurance 2 - - 1 - 3

Non-life insurance 1 - - 1 - 2

Finance 7 1 3 4 1 16

Real estate 1 - - - - 1

Transportation / Warehouse - 1 1 - - 2



Services 7 1 2 3 - 13 Independent administrative institution / Special public


3 1 1 3 - 8


Ratio (%) 80.4 16.1 19.6 35.7 1.8




� Others : “ corrective actions to findings”

226

3. Relationship between Internal Audit and External Auditors (CPAs) (Tables 111 to 114)

<Table 111> Coordination of audit work between the IAA and the external auditors (CPAs) (by industry)


Coordination

Industry

Coordinating Not

Coordinating

Total




Chemical 17 72 89

Medicine 2 30 32


Rubber - 5 5


Steel 5 11 16

Metal 3 28 31

Machine 22 46 68





Trading 20 54 74





Finance 34 125 159

Real estate 9 41 50




Services 41 142 183




14 26 40


Ratio (%) 21.7 78.3


227

<Table 112> Contents of coordination of audit work between the IAA and the external auditors (CPAs) (by

industry)


Contents

Industry

Audit schedule Audit scope /

items

Audit location Total




Chemical 13 8 7 28

Medicine 2 - 1 3

Oil / Coal / Mining 2 - - 2

Rubber - - - -

Glass / Soil & Stone 2 - 1 3

Steel 4 2 5 11

Metal 3 1 2 6

Machine 17 8 10 35





Trading 15 6 6 27





Finance 26 17 9 52









11 8 6 25


Ratio (%) 76.5 46.4 45.0




228

<Table 113> Communication of internal audit results to the external auditors (CPAs) (by industry)


Communication

Industry

Always

communicating

Communicating if

requested

Communicating

depends on matters

Not

communicating Total


Fishing / Food 4 29 5 14 52

Textile / Paper / Pulp 2 11 4 6 23

Chemical 6 48 4 30 88

Medicine 3 15 2 11 31

Oil / Coal / Mining - 7 - 3 10

Rubber - 4 - 1 5

Glass / Soil & Stone 2 2 2 8 14

Steel 3 5 1 6 15

Metal 2 15 3 9 29

Machine 7 27 11 22 67





Trading 10 41 9 12 72




Non-life insurance 1 9 1 2 13

Finance 12 87 21 33 153





Services 15 78 22 56 171 Independent administrative institution / Special public


7 14 8 9 38


Ratio (%) 8.6 49.0 13.0 29.5


229

<Table 114> Documents that the external auditors (CPAs) request the IAA (by industry)


Documents

Industry

Audit report Working paper Not consistent Total




Chemical 39 6 3 48

Medicine 10 1 2 13


Rubber 3 1 2 6


Steel 8 - 1 9

Metal 15 2 1 18

Machine 33 8 5 46



Precision equipment 12 4 - 16


Trading 38 11 2 51





Finance 80 28 3 111









16 4 1 21


Ratio (%) 96.1 22.7 10.3




� Not consistent include “audit plan”, “internal control evaluation”, “summary of audit results”, “risk related”,

“improvement report”, “audit procedures”, “audit policies”, “evidence”, “necessary information”, etc.

230

<Recent implementation / revision of Laws and Regulations> (Tables 115 to 117)

<Table 115> Impact from recent implementation / revision of laws and regulations on internal audit (by

industry)


Impact

Industry

Some impacts No impact Total




Chemical 67 24 91

Medicine 26 7 33


Rubber 4 1 5


Steel 16 1 17

Metal 24 8 32

Machine 59 9 68





Trading 48 27 75





Finance 148 18 166





Services 132 56 188




20 23 43


Ratio (%) 75.6 24.4


231

<Table 116> Recent implementation / revision of laws and regulations which impacted on internal audit (by

industry)


Laws and Regulations

Industry

Corporation Law

Financial

Instruments and

Exchange Law and C

ouncil

Opinion (*1)

Financial S

ervices Agency’s

Inspection Manual

Basel II (*2)

Others

Total

Construction 47 35 2 - 3 87

Fishing / Food 24 32 1 - 1 58

Textile / Paper / Pulp 14 19 - - 1 34

Chemical 48 60 - - 3 111

Medicine 18 23 1 - 1 43

Oil / Coal / Mining 5 5 - - - 10

Rubber 2 3 - - - 5

Glass / Soil & Stone 7 8 - - - 15

Steel 12 16 - - - 28

Metal 17 18 1 - 1 37

Machine 46 56 1 - 2 105



Precision equipment 13 15 - - 1 29

Misc. manufacturing 29 28 - - 2 59

Trading 37 40 1 1 2 81

Department store / Super market 19 19 - - 4 42

Various commercial 36 40 2 - - 78



Finance 80 118 129 92 12 431

Real estate 29 31 8 - 1 69


Telecom / Advertising 27 26 - - 3 56

Electric / Gas 16 14 - - 1 31



9 4 3 - 8 24


Ratio (%) 72.2 79.8 17.2 8.7 6.7



each item / number of usable responses ( 1,086 organizations) * 100

� Others include “Private Information Protection Law”, “Sarbanes-Oxley Act”, “Subcontracting Law”,

“Moneylending control Law”, “Private School Law”, “Labor relations Law (including Worker Dispatch

Law)”, “Anti-monopoly Law”, “Insurance Business Law”, etc.

232

(*1) “Council Opinions” is “On the Setting of Standards and Practice Standards for Management Assessment and

Audit concerning Internal Control Over Financial Reporting (Council Opinions)”, which was published by

Business Accounting Council.

(*2) “Basel II” is “Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised

Framework - Comprehensive Version”, which was published by Basel Committee on Banking Supervision.

234

<Table 117> Contents of impact from recent implementation / revision of laws and regulations (by industry)


Area

Industry

Re

vision of Interna

l Audit C

harte

r

Re

vision of Interna

l Audit

Proce

dure

Ma

nuals

Imple

me

ntation of Inte

rnal C

ontrol

Audit

Stre

ngthening o

f collabora

tion

with K

ansa

yaku a

udit

Stre

ngthening o

f collabora

tion

with E

xterna

l Auditors (C

PA

s)

Stre

ngthening o

f collabora

tion

with A

udit Com

mitte

e

Increa

sing Interna

l Audit S

taff

De

creasing Inte

rnal A

udit Sta

ff

Increa

sing Interna

l Audit B

udget

De

creasing Inte

rnal A

udit Budge

t

Cha

nge of Inte

rnal A

udit’s nam

e

Othe

r

Total

Construction 19 12 26 22 11 1 14 - 10 - 4 5 124

Fishing / Food 7 4 23 9 8 - 17 1 5 - 2 3 79

Textile / Paper / Pulp 5 5 14 3 4 - 13 - 8 1 1 4 58

Chemical 24 13 47 22 22 - 27 - 12 - 4 8 179

Medicine 11 8 14 6 4 1 6 - 2 - 2 3 57

Oil / Coal / Mining 3 2 3 1 1 - 5 - 1 - 1 4 21

Rubber 1 1 3 - - - 2 - 1 - - - 8

Glass / Soil & Stone 6 2 6 4 4 - 5 - 4 - 1 - 32

Steel 4 2 11 5 8 - 8 - 3 - 2 2 45

Metal 9 3 12 7 5 - 9 - 3 - - 2 50

Machine 22 13 47 23 13 1 25 - 18 - 4 - 166

Electric equipment 30 18 54 36 18 1 38 - 19 - 10 7 231

Transportation equipment 15 7 22 10 6 - 14 1 7 - 4 4 90

Precision equipment 6 4 13 7 3 - 5 - 3 - 2 - 43

Misc. manufacturing 11 4 19 13 5 - 13 - 5 - 2 5 77

Trading 15 16 27 14 15 - 11 - 7 - 2 5 112

Department store / Super market 11 5 16 8 7 - 9 1 1 - 1 - 59

Various commercial 16 8 35 17 12 - 17 - 6 - 2 2 115

235

Area

Industry

Re

vision of Interna

l Audit C

harte

r

Re

vision of Interna

l Audit

Proce

dure

Ma

nuals

Imple

me

ntation of Inte

rnal C

ontrol

Audit

Stre

ngthening o

f collabora

tion

with K

ansa

yaku a

udit

Stre

ngthening o

f collabora

tion

with E

xterna

l Auditors (C

PA

s)

Stre

ngthening o

f collabora

tion

with A

udit Com

mitte

e

Increa

sing Interna

l Audit S

taff

De

crea

sing Interna

l Audit S

taff

Increa

sing Interna

l Audit B

udget

De

creasing Inte

rnal A

udit Budge

t

Cha

nge of Inte

rnal A

udit’s nam

e

Othe

r

Total

Life insurance 6 9 9 - 2 1 6 - 1 - - 2 36

Non-life insurance 3 6 8 2 2 - 7 - 3 - 1 - 32

Finance 87 108 82 24 15 4 46 - 11 - 8 13 398

Real estate 10 4 25 14 12 - 14 - 4 1 2 4 90

Transportation / Warehouse 19 8 33 19 14 - 20 1 9 1 6 12 142

Telecom / Advertising 12 4 19 12 10 - 11 - 3 - 1 1 73

Electric / Gas 7 6 9 7 6 - 11 - 3 - 3 3 55

Services 38 32 85 46 18 - 39 2 16 - 7 11 294




4 5 4 7 2 - 1 - - - 1 6 30


Ratio (%) 37.1 28.6 61.6 31.3 21.0 0.8 36.4 0.6 15.3 0.3 6.8 9.8


� Multiple answers were allowed. The ratio is calculated using the following formula: number of responses to each item / number of usable responses (1,081 organizations)

* 100

� Others include “Change of Internal Audit Universe / Items”, “Establishment of Internal Audit Activity”, “Involvement of establishment of Internal Control Systems”, etc.

237

<Internal Auditors’ role under the Internal Control Report System> (Tables 118 to 126)

<Table 118> Is your organization required to comply with the Internal Control Report System? (by industry)


Required?

Industry

Yes No Total




Chemical 79 10 89

Medicine 26 7 33

Oil / Coal / Mining 10 - 10

Rubber 4 1 5


Steel 17 - 17

Metal 29 3 32

Machine 63 5 68





Trading 55 21 76





Finance 81 85 166





Services 115 74 189




- 40 40


Ratio (%) 71.5 28.5


238

<Table 119> Did your organization establish a project to promote the Internal Control Report System? (by

industry)


Project established?

Industry

Yes No Total




Chemical 76 3 79

Medicine 24 2 26


Rubber 4 - 4


Steel 14 3 17

Metal 28 1 29

Machine 57 6 63



Precision equipment 22 - 22


Trading 51 4 55





Finance 68 12 80

Real estate 30 1 31




Services 101 13 114




- - -


Ratio (%) 91.8 8.2


239

<Table 120> IAA’s involvement to the project to promote the Internal Control Report System if your organization

established the project (by industry)


Level of involvement

Industry

Participating as

project leader

Participating as

project mem

ber

Participating as

observer

Transferred

Internal Audit

staff to project

Not involved to

project

Total

Construction 5 30 13 - 3 51

Fishing / Food 3 22 9 2 1 37


Chemical 8 42 19 1 5 75

Medicine 4 12 4 1 3 24

Oil / Coal / Mining 2 4 3 - - 9

Rubber - 3 1 - - 4

Glass / Soil & Stone 2 7 3 - 1 13

Steel 2 5 5 - 3 15

Metal - 16 5 - 7 28

Machine 6 29 17 2 3 57



Precision equipment 3 12 3 - 4 22


Trading 3 29 12 - 8 52


Various commercial 6 27 19 - 7 59

Life insurance - 5 1 - 2 8

Non-life insurance 1 2 2 - 1 6

Finance 6 33 24 - 6 69

Real estate 2 17 8 1 1 29



Electric / Gas 2 9 2 1 - 14



- - - - - -


Ratio (%) 11.7 50.5 25.8 1.9 10.0


240

<Table 121> IAA’s role under Internal Control Report System (by industry)


Role

Industry

Maintaining internal

controls

Operating internal

controls

Monitoring

maintenance of internal

controls

Monitoring

operation of internal

controls

Others

No role

Total

Construction 19 11 35 43 1 2 111

Fishing / Food 8 3 27 29 6 1 74


Chemical 24 12 57 59 8 7 167

Medicine 7 4 19 21 2 3 56

Oil / Coal / Mining 1 1 4 4 4 1 15

Rubber 1 - 3 1 - - 5

Glass / Soil & Stone 4 1 9 8 2 - 24

Steel 2 1 15 16 - - 34

Metal 8 4 15 17 2 3 49

Machine 20 8 50 55 2 1 136



Precision equipment 5 3 16 17 1 1 43

Misc. manufacturing 11 6 38 41 - - 96

Trading 15 11 31 40 5 6 108



Life insurance 1 - 6 7 2 1 17

Non-life insurance 1 - 6 6 1 - 14

Finance 10 11 61 61 8 1 152

Real estate 2 1 19 23 3 2 50



Electric / Gas 2 1 12 12 2 - 29



- - - - - - -


Ratio (%) 25.9 14.9 73.2 79.9 7.4 4.3




� Others include “not yet determined / under consideration”, “maintenance of internal control / evaluation of

operation of internal control / audit”, etc.

241

<Table 122> Structure of the IAA if IAA had some roles of the project to promote the Internal Control Report

System (by industry)


Structure

Industry

IAA is divided and

a separate head is

appointed

Established

separate team to

handling the

Internal Control

Report System

within IAA

Not separating as

IAA Total




Chemical 2 3 64 69

Medicine 2 3 18 23

Oil / Coal / Mining - - 5 5

Rubber 1 - 3 4

Glass / Soil & Stone - 1 10 11

Steel 1 1 15 17

Metal 1 2 20 23

Machine 5 3 51 59



Precision equipment - - 20 20


Trading 3 4 40 47

Department store / Super market - 2 24 26


Life insurance 1 - 8 9


Finance 4 21 49 74

Real estate 1 - 26 27



Electric / Gas - 4 8 12

Services 8 11 80 99 Independent administrative institution / Special public


- - - -


Ratio (%) 6.0 10.1 83.9


242

<Table 123> Impact from the Internal Control Report System to the IAA’s original activities (by industry)


Impact

Industry

Some impacts

(cannot complete

original audit plan)

No impact

(can complete original

audit plan)

Total




Chemical 33 45 78

Medicine 12 13 25


Rubber 3 1 4


Steel 7 9 16

Metal 13 16 29

Machine 31 32 63





Trading 22 32 54





Finance 40 39 79





Services 37 72 109




- - -


Ratio (%) 42.4 57.6


243

<Table 124> Change of human resources of the IAA due to the Internal Control Report System (by industry)


Human resources

Industry Increased Decreased No changes Total

Construction 16 - 36 52


Textile / Paper / Pulp 15 - 4 19

Chemical 32 2 42 76

Medicine 12 - 13 25


Rubber 2 - 2 4


Steel 9 - 8 17

Metal 8 - 21 29

Machine 30 2 31 63





Trading 14 3 37 54





Finance 31 2 45 78



Telecom / Advertising 11 - 17 28

Electric / Gas 9 - 5 14



- - - -


Ratio (%) 40.5 1.7 57.8


244

<Table 125> Change of management’s expectations to the IAA due to the Internal Control Report System (by

industry)


Expectations

Industry Heighten Lowered No changes Total



Textile / Paper / Pulp 17 - 4 21

Chemical 51 - 27 78

Medicine 14 - 11 25


Rubber 1 - 2 3


Steel 11 - 6 17

Metal 16 - 13 29

Machine 45 - 18 63

Electric equipment 73 - 22 95

Transportation equipment 16 - 20 36


Misc. manufacturing 21 - 20 41

Trading 27 - 26 53





Finance 49 - 30 79



Telecom / Advertising 21 - 7 28

Electric / Gas 10 - 3 13

Services 58 - 52 110 Independent administrative institution / Special public


- - - -


Ratio (%) 62.2 0.5 37.3


245

<Table 126> Did the Internal Control Report System make internal audit works easier? (by industry)


Works

Industry Easier Harder No changes Total





Medicine 14 3 8 25


Rubber 3 - 1 4


Steel 9 2 5 16

Metal 5 8 15 28

Machine 25 6 31 62





Trading 25 6 21 52





Finance 14 18 46 78







- - - -


Ratio (%) 36.2 13.8 50.1


246

<Quality Assessments of Internal Audit>

1. Internal Assessments (Tables 127 to 133)

<Table 127> Development of internal audit quality assessments rules / manuals based on IIA the Standards (by

industry)


QA rules / manuals

Industry

Developed Not

Developed

Total




Chemical 15 73 88

Medicine 8 25 33


Rubber 2 3 5


Steel 4 13 17

Metal 4 26 30

Machine 20 46 66





Trading 20 53 73





Finance 54 110 164





Services 53 135 188




4 38 42


Ratio (%) 26.0 74.0


247

<Table 128> Implementation of periodic “internal assessment” based on the Standards (by industry)


Periodic Review

Industry

Implementing Not

Implementing

Total




Chemical 12 78 90

Medicine 6 25 31


Rubber - 4 4


Steel 1 16 17

Metal 2 28 30

Machine 7 58 65





Trading 9 65 74





Finance 34 120 154

Real estate 9 38 47




Services 26 154 180




2 37 39


Ratio (%) 15.5 84.5


248

<Table 129> Cycle of periodic internal assessment (by industry)


Cycle

Industry

Less than

1 year

Every

year

Every

2�4

years

Every 5

years

6 years or

more Total

Construction 2 4 - 1 - 7

Fishing / Food 1 7 1 1 - 10

Textile / Paper / Pulp - 1 1 - - 2

Chemical 4 6 1 - - 11

Medicine 1 4 - - - 5


Rubber - - - - - -


Steel - 1 - - - 1

Metal - 1 - - - 1

Machine 4 3 - - - 7



Precision equipment - 1 1 - - 2

Misc. manufacturing 3 3 1 - - 7

Trading 2 6 - 1 - 9

Department store / Super market 1 6 - - - 7

Various commercial 2 8 - - - 10

Life insurance 1 3 1 - - 5


Finance 7 24 - - - 31

Real estate 1 6 1 1 - 9


Telecom / Advertising 3 6 2 - - 11

Electric / Gas 1 4 2 - - 7

Services 10 16 - - - 26 Independent administrative institution / Special public


- 2 - - - 2


Ratio (%) 25.6 62.5 8.4 2.5 1.0


249

<Table 130> Timing of previous periodic “internal assessments” (by industry)


Previous assessment

(year)

Industry

2007 2006 �2005 Total


Fishing / Food 3 7 - 10

Textile / Paper / Pulp - 2 - 2

Chemical 5 6 - 11

Medicine 1 4 - 5


Rubber - - - -

Glass / Soil & Stone - - - -

Steel - 1 - 1

Metal 1 1 - 2

Machine 5 2 - 7


Transportation equipment - 2 1 3



Trading 4 4 1 9


Various commercial 7 3 - 10


Non-life insurance 3 - - 3

Finance 19 11 2 32

Real estate 4 2 1 7




Services 13 13 - 26




- 2 - 2


Ratio (%) 48.7 45.3 6.0


250

<Table 131> Measurement of effectiveness of “ongoing monitoring”, which is an integral part of the day-to-day

supervision of the IAA. (by industry)


Implementing Ongoing monitoring and

measurement of effectiveness

Industry

Measuring Not measuring

Not

Implementing

Total




Chemical 5 5 78 88

Medicine 5 1 22 28


Rubber 1 1 2 4


Steel 1 1 15 17

Metal 2 - 26 28

Machine 2 4 56 62



Precision equipment - 1 24 25


Trading 6 - 64 70





Finance 15 11 114 140





Services 20 15 142 177




- 2 35 37

Total (# of Organizations) 108 96 1,134 1,338

Ratio (%) 8.0 7.2 84.8


Ratio (%) 15.2 84.8


251

<Table 132> Purpose to measure the effectiveness of “ongoing monitoring” (by industry)


Purpose

Industry

To manage IA

A efficiently

To enhance awareness and

evaluation of importance of

IAA

within organization

To facilitate / confirm

improvem

ent of IAA

To confirm level of internal

audit performed

Others

Total

Construction 2 2 2 1 - 7

Fishing / Food 4 3 7 5 1 20

Textile / Paper / Pulp - 1 1 1 - 3

Chemical 3 2 4 - 1 10

Medicine 2 2 3 1 - 8

Oil / Coal / Mining - 1 1 1 - 3

Rubber - - 1 - - 1


Steel - - 1 - - 1

Metal 1 - 1 1 - 3

Machine 2 - - - - 2


Transportation equipment - - 1 - 1 2

Precision equipment - - - - - -

Misc. manufacturing 1 - - 1 - 2

Trading 3 1 4 2 - 10

Department store / Super market 1 - 2 - - 3


Life insurance 2 - 2 1 - 5

Non-life insurance - 1 3 1 - 5

Finance 11 7 13 - - 38

Real estate 2 1 1 1 - 5

Transportation / Warehouse - 1 2 1 - 4


Electric / Gas - - 1 1 - 2

Services 10 4 12 7 - 33 Independent administrative institution / Special public


- - - - - -


Ratio (%) 53.3 36.5 74.3 40.0 2.9




� Others include “to confirm future direction”, “to respond to requests from parent company”, and “to

evaluate individual performance”.

252

<Table 133> Timing to measure the effectiveness of “ongoing internal assessments” (by industry)


Timing

Industry

After each

engagement

Periodically At the next audit Total


Fishing / Food 5 2 - 7

Textile / Paper / Pulp - - 1 1

Chemical 2 2 1 5

Medicine 4 1 - 5

Oil / Coal / Mining 1 - - 1

Rubber 1 - - 1

Glass / Soil & Stone 1 1 - 2

Steel - - - -

Metal 1 1 - 2

Machine 1 1 - 2

Electric equipment 4 2 - 6

Transportation equipment 1 1 - 2

Precision equipment - - - -

Misc. manufacturing - 1 - 1

Trading 3 3 - 6


Various commercial 6 4 - 10

Life insurance 1 1 - 2


Finance 7 7 1 15

Real estate - 1 - 1


Telecom / Advertising 2 1 - 3

Electric / Gas 1 - - 1

Services 10 6 3 19




- - - -


Ratio (%) 54.3 38.1 7.6


253

2. External Assessment (Tables 134 to 143)

<Table 134> Understanding that “external assessments” must be conducted at least once every five years, which

is required by the Standards (by industry)


Understanding

Industry

Understanding Not

Understanding

Total




Chemical 58 31 89

Medicine 30 2 32


Rubber 3 2 5


Steel 10 7 17

Metal 16 14 30

Machine 37 29 66





Trading 35 39 74





Finance 89 66 155





Services 118 66 184




21 16 37


Ratio (%) 61.1 38.9


254

<Table 135> Implementation of periodic “external assessments”, which is required by the Standards (by industry)


Periodic External Assessments

Industry

Implementing Not

Implementing

Total



Textile / Paper / Pulp - 21 21

Chemical 5 85 90

Medicine 1 32 33


Rubber - 5 5


Steel - 17 17

Metal 2 28 30

Machine - 65 65





Trading 6 68 74

Department store / Super market - 36 36




Finance 37 121 158

Real estate 2 45 47




Services 11 168 179


public institution / School corporation / Association

etc.

2 36 38


Ratio (%) 7.0 93.0


255

<Table 136> Cycle of periodic “external assessments” (by industry)


Cycle

Industry

Less than

1 year

Every

year

Every

2�4

years

Every 5

years

6 years or

more Total

Construction - 2 - - - 2

Fishing / Food 1 - - 1 1 3

Textile / Paper / Pulp - - - - - -

Chemical - 2 1 1 - 4



Rubber - - - - - -


Steel - - - - - -

Metal 2 - - - - 2

Machine - - - - - -

Electric equipment - 1 - - - 1

Transportation equipment - 1 - - - 1

Precision equipment 2 - - - - 2

Misc. manufacturing 1 - 1 - - 2

Trading 2 2 - 1 - 5

Department store / Super market - - - - - -

Various commercial - 1 1 1 1 4

Life insurance - - 2 2 1 5

Non-life insurance - - 1 1 - 2

Finance 4 9 11 8 2 34

Real estate - - 1 1 - 2

Transportation / Warehouse - - - - - -

Telecom / Advertising - 4 1 - - 5

Electric / Gas - - - 2 - 2

Services 1 4 5 - - 10 Independent administrative institution / Special public


- 1 - - 1 2


Ratio (%) 14.8 30.6 27.3 20.5 6.8


256

<Table 137> Timing of previous periodic “external assessments” (by industry)


Previous assessment

(year)

Industry

2007 2006 �2005 Total



Textile / Paper / Pulp - - - -

Chemical 1 1 2 4

Medicine - - - -


Rubber - - - -

Glass / Soil & Stone - - - -

Steel - - - -

Metal 1 1 - 2

Machine - - - -

Electric equipment - 1 - 1

Transportation equipment - 1 - 1

Precision equipment 2 - - 2

Misc. manufacturing 2 - - 2

Trading 3 2 - 5

Department store / Super market - - - -



Non-life insurance - - 2 2

Finance 14 9 8 31

Real estate - 1 - 1

Transportation / Warehouse - - - -

Telecom / Advertising 4 - - 4

Electric / Gas - - 2 2

Services 4 3 3 10




1 1 - 2


Ratio (%) 45.8 28.9 25.3


257

<Table 138> Method of “external assessments” (by industry)


Method

Industry

By external reviewer Self-assessment with

independent validation

Total

Construction - 2 2

Fishing / Food 3 - 3

Textile / Paper / Pulp - - -

Chemical 4 - 4

Medicine - - -


Rubber - - -

Glass / Soil & Stone - - -

Steel - - -

Metal 1 1 2

Machine - - -

Electric equipment 1 - 1

Transportation equipment 1 - 1

Precision equipment 2 - 2

Misc. manufacturing 2 - 2

Trading 4 1 5

Department store / Super market - - -

Various commercial 4 - 4



Finance 27 7 34

Real estate 2 - 2

Transportation / Warehouse - - -

Telecom / Advertising 5 - 5


Services 9 1 10




1 1 2


Ratio (%) 84.1 15.9


258

<Table 139> Reviewer of “external assessments” (by industry)


Reviewer

Industry

Audit

firm

Service

provider of

internal

audit

Peer reviewer (3 organizations or

more)

Others Total

Construction 1 1 - - 2

Fishing / Food 2 1 - - 3

Textile / Paper / Pulp - - - - -

Chemical 2 - - 2 4

Medicine - - - - -


Rubber - - - - -


Steel - - - - -

Metal 1 - - 1 2

Machine - - - - -

Electric equipment - - - 1 1

Transportation equipment 1 - - - 1

Precision equipment 2 - - - 2

Misc. manufacturing - 1 - - 1

Trading 3 1 - 1 5

Department store / Super market - - - - -

Various commercial 1 - - 3 4

Life insurance 2 1 - 2 5

Non-life insurance - 1 - 1 2

Finance 25 1 1 7 34

Real estate - 2 - - 2

Transportation / Warehouse - - - -

Telecom / Advertising 2 - - 3 5

Electric / Gas 2 - - - 2

Services 4 - 1 5 10




- - - 2 2


Ratio (%) 55.2 10.3 2.3 32.2


� Others include “parent company”, “industrial association”, “consultant”, and “corporate lawyer”.

259

<Table 140> Involvement of the board (audit committee), kansayaku, and management regarding selection of

“external assessments” (by industry)


Selection items

Industry

Selection of

method of

External

Assessments

Selection of

reviewer

Both method

of External

Assessments

and reviewer

Not involved Total

Construction 1 1 - - 2

Fishing / Food - 1 - 2 3

Textile / Paper / Pulp - - - - -

Chemical - - 2 2 4

Medicine - - - - -


Rubber - - - - -


Steel - - - - -

Metal - - 1 1 2

Machine - - - - -

Electric equipment - - - 1 1

Transportation equipment - - - 1 1

Precision equipment 1 - - - 1

Misc. manufacturing - - 1 - 1

Trading 1 - 2 3 6

Department store / Super market - - - - -

Various commercial 1 - 1 1 3

Life insurance - - 3 2 5

Non-life insurance - - - - -

Finance 1 11 13 8 33

Real estate - - 1 1 2

Transportation / Warehouse - - - - -

Telecom / Advertising 1 - - 4 5

Electric / Gas - - - 2 2

Services - 3 2 4 9



/ Association etc.

- - - 2 2


Ratio (%) 7.3 19.5 31.7 41.5


Ratio (%) 58.5 41.5


260

<Table 141> Timing of implementation of “external assessments” if not yet implemented (by industry)


Implementation year

Industry

2007 2008 2009 2010� Not yet

determined

Will not

implement Total

Construction - - 2 - 63 - 65

Fishing / Food - 2 2 - 44 - 48

Textile / Paper / Pulp 2 - - - 16 1 19

Chemical - 3 3 2 73 3 84

Medicine 1 2 1 1 25 - 30

Oil / Coal / Mining - - - - 10 - 10

Rubber 1 - - - 4 - 5

Glass / Soil & Stone - - - - 11 1 12

Steel - 1 1 - 15 - 17

Metal - 2 - - 24 1 27

Machine - 1 6 4 51 2 64

Electric equipment - 8 6 5 78 3 100

Transportation equipment - 1 - 1 35 3 40

Precision equipment - 1 1 1 19 1 23

Misc. manufacturing - 2 3 2 44 2 53

Trading - 5 2 1 59 - 67

Department store / Super market - 2 3 - 31 - 36

Various commercial - 5 4 2 62 1 74

Life insurance - - 1 - 10 - 11

Non-life insurance - 3 - 1 7 - 11

Finance - 6 6 2 103 3 120

Real estate - 2 3 3 35 1 44

Transportation / Warehouse - 3 2 1 58 3 67

Telecom / Advertising - 1 2 - 29 - 32

Electric / Gas - - - 1 13 1 15



- - 1 1 31 3 36

Total (# of Organizations) 6 60 57 33 1,084 33 1,273

Ratio (%) 0.5 4.7 4.5 2.6 85.2 2.6


� “2010�” includes “2010” (20 organizations), “2011” (6 organizations), “2012” (6 organizations), and

“2013” (1 organization).

261

<Table 142> Method of “external assessments” if not yet implemented (by industry)


Method

Industry

By external reviewer Self-assessment with

independent validation

Total




Chemical 34 37 71

Medicine 17 11 28


Rubber - 5 5


Steel 3 10 13

Metal 13 9 22

Machine 25 29 54





Trading 25 36 61





Finance 66 38 104





Services 68 78 146




16 12 28


Ratio (%) 46.8 53.2


262

<Table 143> Reason why “external assessments” were not yet implemented (by industry)


Reason

Industry

No budget

No tim

e

Managem

ent

does not find the

value

Not up to 5 years

cycle

Others

Total


Fishing / Food 10 6 17 15 10 58


Chemical 20 22 25 26 13 106

Medicine 5 4 5 11 7 32

Oil / Coal / Mining 1 1 1 3 4 10

Rubber - 2 1 2 - 5

Glass / Soil & Stone - 6 3 4 1 14

Steel 2 2 7 6 4 21

Metal 8 9 9 7 4 37

Machine 17 10 21 20 15 83



Precision equipment 5 3 6 11 3 28


Trading 11 12 21 21 14 79





Finance 27 33 35 26 18 139

Real estate 3 5 7 26 5 46


Telecom / Advertising 6 9 6 13 5 39

Electric / Gas 3 4 3 5 2 17



5 6 13 12 3 39


Ratio (%) 20.8 22.0 30.7 35.0 20.9




� Others include “not necessary / insufficient understanding”, “insufficient preparation”, “under

consideration”, “reviewed by parent company / regulatory body”, “insufficient information on external

assessments”, “considering cost / benefit”, etc.

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