Last updated : December 27, 2017
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 have been able to confirm the effectiveness of these systems without any particular issues.
The Internal Control Office, with its staff of 22 people, verifies the internal control systems in place throughout the Group and the status of their implementation. 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 continuously enhancing and verifying their effectiveness. At the same time, NTT is continuously accelerating its efforts to develop and implement IT and other Groupwide internal control systems and to improve their operational procedures and efficiency.
NTT has established the Basic Policies Concerning the Maintenance of Internal Control Systems for NTT Group, which was approved via resolution by the Board of Directors. The basic concepts of these policies are as follows.
Basic Policies Concerning the Maintenance of Internal Control Systems (Excerpt)
- I. Basic Concepts for the Development of Internal Control Systems
- 1.NTT shall develop a system of internal controls by taking measures for the prevention and minimization of losses, with the objectives of ensuring compliance with legal requirements, managing risks, and achieving appropriate and efficient business operations.
- 2.NTT shall establish the Internal Control Office, which oversees the establishment of internal control rules and frameworks. The Internal Control Office shall evaluate the effectiveness of the internal control systems based on internal audits regarding high risk matters affecting the entire NTT Group, and shall make sure that necessary corrective measures and improvements are implemented.
- 3.NTT shall also take appropriate measures to ensure the reliability of its internal control systems for financial reporting based on the U.S. Public Company Accounting Reform and Investor Protection Act of 2002 ("Sarbanes-Oxley Act") and the Financial Instruments and Exchange Act.
- 4.As a chief executive officer, the president shall be responsible for ensuring the development and operation of the internal control 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 NTT Group Corporate Ethics 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 and the text of the NTT Group Corporate Ethics Charter is made available. In these ways, NTT is working to enhance the understanding of employees. Furthermore, NTT conducts annual surveys of employees to measure their awareness and implements other corporate ethics 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.
In April 2017, NTT requested an impartial and fair third-party evaluation of its help line as recommended by the revised version of Guideline on Internal Whistleblowing System released by the Consumer Affairs Agency in December 2016. This evaluation found that the Company's help line was generally appropriately implemented and operated.
Reports Filed through the Groupwide Corporate Ethics Help Line
|Fiscal year ended
March 31, 2014
|Fiscal year ended
March 31, 2015
|Fiscal year ended
March 31, 2016
|Fiscal year ended
March 31, 2017
|Number of reports||312||322||304||365|
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. 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 Act on Nippon Telegraph and Telephone Corporation, etc., and that breaches are punishable by law.
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.
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