Internal Control

Last updated : October 31, 2016

Overview of Internal Control Systems

NTT maintains internal control systems related to financial reporting based on the U.S. Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley Act), Section 404, and the Financial Instruments and Exchange Act of Japan. Based on tests and evaluations of the design and operational effectiveness of these systems, we were able to confirm, as of March 31, 2016, the effectiveness of these systems without any particular issues.
In regard to general internal control systems, internal audits are conducted by the internal auditing divisions of each Group company, and the results of these auditing activities are reviewed by NTT. In addition, standardized audits are performed with regard to major risk factors that are common issues throughout the Group, and we are continually enhancing and verifying their effectiveness. As for internal audits, the Internal Control Office and its staff of 22 people verify the internal control systems in place throughout the Group and the status of their implementation. NTT is continually accelerating its efforts to develop and implement IT and other Groupwide internal control systems and to improve their operational procedures and efficiency.
For information on Basic Policy for the Development of Internal Control Systems, please refer to the following NTT website.

Compliance Systems

Establishment of the NTT Group Corporate Ethics Charter

Recognizing that it is imperative to conduct business in compliance with laws and regulations and to maintain high ethical standards in order to promote sound corporate activities, NTT established the NTT Group Corporate Ethics Charter in November 2002.
The charter, which applies to all officers and employees of NTT Group, lays out the basic principles for corporate ethics and provides specific guidelines for ethical behavior. These guidelines are intended to remind everyone of their duty as members of a group that bears significant responsibility to society. This responsibility includes preventing dishonesty, misconduct, and the disclosure of corporate secrets as well as refraining from exchanging excessive favors with customers and suppliers. The guidelines are also meant to ensure that employees conduct themselves according to the highest ethical standards in both private and public activities.

NTT Group Corporate Ethics Charter

  • 1.Recognizing the establishment of corporate ethics as one of its most important missions, top management shall exert its leadership to ensure that the spirit of this Charter is adopted throughout the Company, and shall assume full responsibility for solving any problems when any event inconsistent with that spirit occurs.
  • 2.Every person with subordinate employees shall not only act in a self-disciplined manner, but shall also always provide guidance and assistance to his / her subordinate staff to ensure that their conduct is in conformity with our corporate ethics.
  • 3.Every officer and employee of NTT Group shall not only comply with all laws and regulations, social standards, and internal company rules whether in Japan or overseas, but officers and employees shall also hold the highest ethical philosophy within himself / herself both in public and in any private situations. Among other things, each officer and employee, as an officer or employee of a member of a Global Information Sharing Corporate Group, shall keep himself / herself fully aware that any disclosure of customer or other internal privileged information constitutes a materially wrongful act. Also, as a member of a group of companies which holds great social responsibilities, he / she shall strictly refrain from giving or receiving from customers, business partners, and other interested parties excessive gratuities.
  • 4.Each NTT Group company, at the first opportunity, shall take initiatives to provide training programs in order to help its officers and employees enhance their awareness of our corporate ethics.
  • 5.Every officer and employee of NTT Group shall direct his / her efforts to prevent wrongful or scandalous acts which may potentially occur as specialization and advancement of our business proceeds. Each NTT Group company shall improve its system to prevent such acts, including, for instance, the re-assignment of contract representatives who have remained with the same customers for a long period of time, and the improvement of monitoring tools to protect customer and other information.
  • 6.Any officer or employee who may come to know of the occurrence of any wrongful act or any scandal shall promptly report the wrongful act or scandal to his / her superior or other appropriate persons. If he / she is not able to make such a report, he / she may contact the Corporate Ethics Help Line (Contact Point). It should be noted that every officer and employee who reports the occurrence of any wrongful act or scandal shall be protected so that the reporting party shall not suffer any negative consequences due to such reporting.
  • 7.In the event of an occurrence of any wrongful act or scandal, each NTT Group company shall be committed to the settlement of the problem by taking appropriate steps through a speedy and accurate fact finding process, and responding in a timely, suitable, and transparent manner in order to fulfill its social accountability.

Initiatives to Promote Awareness of the NTT Group Corporate Ethics Charter

To ensure the effectiveness of the NTT Group Corporate Ethics Charter, NTT Group companies offer training sessions on corporate ethics to employees. In addition, on a website for employees, examples of corporate ethics issues are explained in detail. In these ways, NTT is working to enhance the understanding of employees. Furthermore, NTT conducts annual surveys of employees to measure their awareness, and the results are then used for awareness-enhancement initiatives.

Groupwide Corporate Ethics Help Line (External Help Line)

To prevent dishonesty or misconduct, each Group company has set up an internal consulting center. In addition, NTT has established the Groupwide Corporate Ethics Help Line as an external contact point and outsources its operation to a law firm.
The content of the consultations and reports are investigated and handled by the staff member in charge, and a report is submitted to the Corporate Ethics Committee of each Group company. All reports are collected at least once a year by NTT, where the response status is ascertained and reported to the Board of Directors.
The NTT Group Corporate Ethics Charter clearly states that people who file reports with the Groupwide Corporate Ethics Help Line are protected from any disadvantage arising from the fact that they filed a report.

Reports Filed through the Groupwide Corporate Ethics Help Line

Fiscal year ended
March 31, 2013
Fiscal year ended
March 31, 2014
Fiscal year ended
March 31, 2015
Fiscal year ended
March 31, 2016
Number of reports 266 312 322 304

Prevention of Bribery

In recognition that it is essential to conduct business in compliance with laws and regulations and in accordance with high ethical standards, NTT Group forbids dishonesty, including all forms of bribery, provision of preferential treatment to suppliers, and facilitation payments*.
In particular, in regard to the prevention of bribery, we have prepared a bribery prevention handbook, which has also been made available on the in-house website. We are working to ensure that all Group employees, including those at overseas subsidiaries, are aware of bribery prevention. In these ways, we are taking steps to foster a thorough understanding of bribery prevention.
In addition, NTT, NTT East, and NTT West stipulate that bribery is forbidden under the Law Concerning Nippon Telegraph and Telephone Corporation, and that breaches are punishable by law.

  • *Facilitation payments: Small payments made with the sole objective of smoothing procedures related to ordinary administrative services.

Coordination with Suppliers

NTT has established and disclosed the NTT Guidelines for CSR in Supply Chain with the aim of fulfilling its social responsibilities by working together with suppliers to ensure conformity with social norms and legal compliance. We thereby aim to prevent bribery and other forms of misconduct along the supply chain.
The NTT Guidelines for CSR in Supply Chain states that suppliers are requested "to maintain a sound and normal relationship with political bodies and government administrations, without resorting to bribery and / or making illegal political donations" and "not to offer and / or request inappropriate benefits to / from stakeholders." We expect suppliers to comply with these requests, and are striving to prevent misconduct at suppliers and throughout the entire supply chain.

Participation in PRI in Person 2015

(Photograph provided by QUICK ESG
Research Center)

In September 2015, NTT was invited to PRI in Person 2015, a global conference about responsible investment and reported on activities through a dialogue with Sparinvest, an institutional investor.
Institutional investors evaluate corporate activities in accordance with major benchmarks and request improvements to companies. Companies leverage dialogue with institutional investors to make improvements.
NTT has continued to conduct dialogues with Sparinvest for two years, and we have been able to make a significant improvement in the achievement rate* for the prevention of misconduct, from 18% to 80%.
Moving forward, with consideration for the concerns of institutional investors, we will conduct information disclosure with attention to major benchmarks and we will actively conduct dialogue with institutional investors.

  • *Degree of achievement based on the benchmark from Transparency International that is used by PRI