Transparency Report 2018 2018 9 ______年 月 www.kpmg.com/jp/azsa © 2017 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public Accountants Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transparency Report 2018 1 1. Message from the Local Senior Partner As a member of the KPMG network, KPMG AZSA LLC shares a common Purpose - to Inspire Confidence, Empower Change – with member firms around the globe. Based on this Purpose, we aim to establish the reliability of information through auditing and accounting services and support the change of companies and society towards sustainable growth. AZSA Quality 2018 introduces efforts at KPMG AZSA LLC to improve audit quality, the foundation of which is KPMG’s globally consistent audit quality. In this transparency report, we will additionally introduce KPMG’s system for ensuring audit quality. 2. Who we are 2.1 Our business 2.2 Our strategy KPMG AZSA LLC, a member firm of KPMG International, comprises Our firm’s mission is to ensure the reliability of information by approximately 6,000 people in major cities in Japan, providing audit, providing quality audit and accounting services as well as to attestation, and advisory services such as accounting advisory contribute to the realization of a fair society and healthy services, financial advisory services, IT advisory service and other development of our economy by empowering change. In order to advisory services for initial public offerings and the public sector. execute our firm’s mission, we have following vision: We also offer highly specialized professional services that address To be The Clear Choice for our clients, people and society. the unique needs of sectors such as financial services, manufacturing, retail, IT, media, government, energy and healthcare. As a member firm of KPMG International, KPMG AZSA LLC provides clients with a consistent set of professional services globally through a network in more than 150 countries. 3. Our structure and governance 3.1 Legal structure of member firms to use the KPMG name and trademarks are Legal structure and ownership contained within agreements with KPMG International. KPMG AZSA is affiliated with KPMG International Cooperative Member firms are generally locally owned and managed. Each (“KPMG International”). KPMG International is a Swiss cooperative member firm is responsible for its own obligations and liabilities. which is a legal entity formed under Swiss law. It is the entity with KPMG International and other member firms are not responsible for which all the member firms of the KPMG network are affiliated. a member firm’s obligations or liabilities. Further details about KPMG International and its business activities, Member firms may consist of more than one separate legal entity. If including our relationship with it, are available in Appendix 1 to the this is the case, each separate legal entity will be responsible only KPMG International Transparency Report. (link to be provided) for its own obligations and liabilities, unless it has expressly agreed KPMG AZSA is part of a global network of professional services otherwise. firms providing Audit, and Advisory services to a wide variety of public and private sector organizations. KPMG International’s 3.3 Responsibilities and obligations of member structure is designed to support consistency of service quality and firms adherence to agreed values wherever its member firms operate. Under agreements with KPMG International, member firms are KPMG AZSA LLC is a limited liability company incorporated under the required to comply with KPMG International’s policies and Certified Public Accountant Law. regulations including quality standards governing how they operate As at 30 June 2018, there were 603 partners in KPMG AZSA (30 June and how they provide services to clients to compete effectively. 2017: 614partners). This includes having a firm structure that ensures continuity and A list of key entities, including details of legal structure, regulatory stability and being able to adopt global strategies, share resources status, nature of their business and area of operation is set out in (incoming and outgoing), service multi-national clients, manage risk, the Appendix. and deploy global methodologies and tools. Member firms commit to a common set of KPMG Values (see 3.2 Name,ownership and legal relationships section 4.1). KPMG is the registered trademark of KPMG International and is the KPMG International’s activities are funded by amounts paid by name by which the member firms are commonly known. The rights member firms. The basis for calculating such amounts is approved by the Global Board and consistently applied to the member firms. © 2018 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public Accountants Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transparency Report 2018 2 A firm’s status as a KPMG member firm and its participation in the Executive Board KPMG network may be terminated if, among other things, it has not Discuss execution of duties by Executive Board members. complied with the policies and regulations set by KPMG Comprises the Managing Partner, Deputy Managing Partner, and International or any of its other obligations owed to KPMG Executive Board members. Meetings are held monthly. International. Senior Review Board ■Governance structure The Senior Review Board comprises a chairman recommended by Our governance structure is composed of the Partners’ Meeting, the Senior Executive Board and appointed by the Partners Meeting, which is the highest decision-making body, the Senior Executive as well as vice-chairmen who are nominated by the Chairman of the Board, which make decisions concerning firm management, and the Senior Review Board and approved by the Senior Executive Board. Executive Board as an executive body. Furthermore, in order to The Senior Review Board develops the basic policy for reviews of monitor the firm management, we have established the audit and attestation engagements and renders the firm’s final Management Oversight Committee and the Public Interest judgment on audit opinions where there is an issue flagged by Oversight Committee, which is an independent supervisory body. Divisional Review Boards as requiring careful consideration or where In addition, the Senior Review Board conducts reviews of audit there are significant audit matters that meet designated review opinions as necessary. requirements. The Managing Partner, Senior Executive Board members, and Besides being held every time a senior review matter occurs, Executive Board members, all of whom are responsible variously for meetings are held at least once a month for decision-making related firm management and execution, as well as the members of the to the firm’s review system (shinsa) and for sharing information Management Oversight Committee, who are responsible for related to the matters subject to senior review (jokyu shinsa). supervision and evaluation, are selected through direct election by all partners. Management Oversight Committee Details of key governance bodies are given below. (As of June 30, The Management Oversight Committee is composed of members 2018) who are not engaged in management or execution, and is tasked with evaluating the effectiveness of initiatives to enhance audit Partners’ Meeting quality. Meetings are held monthly. Make decisions on significant matters related to management. Comprises all partners with capital contributions. Regular meetings Public Interest Oversight Committee are held 4 times a year. Independent outside and internal members who oversee firm management with a view to the public interest. To accomplish this, Senior Executive Board the members receive reports from the Management Oversight Make decisions on matters related to management. Comprises the Committee on important firm activities and projects and discuss Managing Partner and Senior Executive Board members. Held at them with the Managing Partner and Senior Executive Board least once a month. members. The Committee members also oversee the supervision and evaluation by the Management Oversight Committee of the appropriate conduct of the Nomination Committee, Audit Committee, and Compensation Committee. Meetings are held monthly. 4. System of quality control ■Overview Management Manual (Global Q&RM Manual) available to all KPMG AZSA implements KPMG International policies and personnel. procedures and adopts additional policies and procedures that are These policies and associated procedures are designed to assist designed to address rules and standards issued by the Business member firms in complying with relevant professional standards, Accounting Council of the Financial Service Agency, Japanese regulatory and legal requirements, and in issuing reports that are Government and the Japanese Institute of Certified Public appropriate in the circumstances, as well as help member firm Accountants (JICPA), and other regulators as well as local laws, such personnel act with integrity and objectivity and perform their work as the Certified Public Accountants Law, Companies Act, Financial with diligence. These policies and procedures are based on the Instruments and Exchange Law, other