member attends meetings of the Board of Directors, audits compliance with laws, regulations, and the Articles of Incorporation, as well as the status of management decision-making processes and internal controls, and expresses their opinions on the above. They also attend important meetings such as the Management Meeting and Risk Management Committee meetings as necessary, and conduct hearings with business teams. Based on the findings and impressions obtained through these auditing activities, the Audit & Supervisory Committee holds discussions with the Co-CEOs to exchange opinions on the situation and makes recommendations as necessary. Audit Team In FY2021, Uzabase aimed to 1) halt the decline in net sales growth rate and 2) make investments towards achieving 30% growth from 2022 onwards. We also believed it to be of great importance to define priority investment areas for SPEEDA, NewsPicks, new businesses, and the engineering team, and for these investments to be properly executed. At the same time, establishing a governance structure that is appropriate for future growth was also determined to be an area of priority for the future development of the company. The latter in particular was considered an urgent task, and we worked to improve the operation of the risk management system by making it a part of the OKRs for the Corporate Division. Furthermore, the Nomination and Compensation Committee discussed stock-based compensation, which is scheduled to be implemented in FY2022, and the development of the next generation of business leaders, among other issues. In addition, with the ongoing COVID-19 pandemic and remote work becoming the norm in the company, new labor management issues were also considered to be likely to arise. As such, we monitored and supervised the management’s executive decisions, focusing on the following high-priority audit matters: (1) Strengthening governance by establishing and improving the operation of the Board of Directors and the Nomination and Compensation Committee; (2) Enhancement of the operation of the risk management system; (3) Execution of investments into priority areas; (4) Labor management. Audit Policy and Key Audit Matters in FY2021 The Internal Audit team is an organization under the direct jurisdiction of the Co-CEOs and the Audit & Supervisory Committee (a “double reporting line” structure). It conducts internal audits of all management activities of Uzabase from an independent and objective standpoint, assessing legal compliance, appropriateness of financial reporting, and effectiveness and efficiency of operations, while also strengthening internal controls through proposals for the improvement of the effectiveness of such controls. The results of the internal audit activities are reported to the Uzabase management and Audit & Supervisory Committee members, who then exchange opinions on the status of internal audit activities, if required. In addition, the Internal Audit team shares information with the audit firm wherever necessary regarding the status and evaluation of internal control over financial reporting, and the progress of internal audit activities, in order to facilitate mutual cooperation. Internal audits are conducted using the framework for internal control over financial reporting (J-SOX standards). When auditing company-wide internal controls, in addition to confirming the control environment, the team conducted sample tests on the actual operations related to the joining and leaving the company by employees, as well as other aspects. In addition, when auditing controls over business processes, the team’s key audit matters included confirmations on the status of payment processing related to sales recognition and receivables/purchase management for key business units, as well as each company's approval systems. In addition to the apparent risks revealed as part of the regular audit activities, the team also identified potential risks and “added value” matters requiring continuous improvement, compiling then into a risk management chart. This chart was then used by members of each division of the company, including business units, to continuously implement countermeasures throughout the year, and the results of this activity were then checked by the Internal Audit team. Status of Internal Audit
uzabase
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