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Internal Controls Systems: Fundamental Approach and Current Status |
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| To earn the trust of customers and society, Honda’s divisions have implemented frameworks to ensure a systematic approach to compliance and risk management in accordance with policies determined by the Board of Directors regarding internal controls systems, and under the guidance of their respective directors-in-charge. These include the formulation of performance guidelines and procedures for self-assessment. Honda also has a system to support the initiatives of each division. effective audits are carried out to monitor the execution status of each division. |
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| • Conduct Guidelines |
| Honda Conduct Guidelines have been created to guide the actions of all associates. In addition, each division produces more detailed performance guidelines according to its specific attributes. |
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| • Self-Assessment Checklist |
| Each division approaches compliance and risk management in a systematic way. For example, each division has a checklist that clarifies specific laws and risks to consider related to its particular business, and conducts regular self assessments. The results of such assessments are reported to the director in charge of each division, and the overall status of compliance and risk management is evaluated regularly by the Executive Council. |
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| • Compliance System |
| Honda has appointed a compliance Officer to act as a director in charge of compliance-related initiatives. Other key elements of our compliance system include the Business Ethics Committee and the Business Ethics Improvement Proposal Line. |
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| • Business Ethics Committee |
| Honda’s Business Ethics Committee is chaired by the compliance Officer and consists of directors and corporate Officers. The committee deliberates on matters related to corporate ethics and compliance. The Business Ethics Committee met twice in FY2007. |
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| • Business Ethics Improvement Proposal Line |
| Honda places high priority on open communications. It set up the Business Ethics Improvement Proposal Line to receive suggestions related to corporate ethics. By providing appropriate responses to suggestions, Honda is constantly working to enhance corporate ethics. The system is designed to ensure the protection of those providing information, allowing them to remain anonymous. The Business Ethics Committee supervises the operation of the Business Ethics Improvement Proposal Line and submits status reports to the Board of Corporate Auditors. |
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| •Risk Management System |
| Each division works to address and mitigate its particular set of risks. In addition, Honda has Crisis Response Rules, which are designed to address company-wide crises such as natural disasters. Honda has appointed a risk management Officer, who is a director in charge of risk management-related initiatives. It has also established the Company-Wide Response Headquarters to address crisis situations. |
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| The Big Boardroom: Honda’s corporate culture and decision-making |
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There is no president’s Office at Honda, and no separate Offices for directors. There is simply a Directors’ Room.a big room with desks for each of the representative directors, plus large tables around which directors gather to discuss management issues, sometimes inviting associates to join them. The Big Boardroom concept was introduced in 1964 by one of the men who created Honda: Vice President Takeo Fujisawa. Mr. Fujisawa believed that to create new value the company needed more than what individuals working in isolation could provide. Honda needed to create an environment in which its leaders could freely exchange ideas, synergistically forming a powerful leadership team. By working face to face every day, the directors formed stronger bonds of trust, sharing information and affirming opinions.
The Big Boardroom system also provides a form of internal management auditing, encouraging open, expeditious decisionmaking in everyday matters and emergencies alike. Introduced as a creative way to run a company, the Big Boardroom is also highly appropriate, given contemporary imperatives of corporate governance and risk management.
The open-mindedness and vitality of Honda’s corporate culture have their origins in traditions like the Big Boardroom, and are reaffirmed every time associates bounce ideas off each other in Y-gaya (brainstorming) sessions. This spirit of egalitarianism keeps Honda strong, fueling innovation for the future. |
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| The Directors’ Room in the era of Honda’s second President, Kiyoshi Kawashima |
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| The Directors’ Room today |
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