4. Audit Status

Audits Conducted by Members of the Audit & Supervisory Board

1. Organization, Personnel and Procedures

   The company has a total of four members of the Audit & Supervisory Board, of which three are outside members.
   The status of each Audit & Supervisory Board member is as follows.

   • Full-time Audit & Supervisory Board Member (Outside Member)
     Kazuhiro Aoyama
     He has extensive knowledge of management and sales strategies cultivated at Aeon Group companies and experience as a director at other companies.

   • Independent Outside Audit & Supervisory Board Member
     Emi Torii
     Ms. Emi Torii possesses specialized knowledge and experience as an attorney in matters of corporate legal affairs.

   • Independent Outside Audit & Supervisory Board Member
     Rumiko Tanabe
     She has experience in auditing services at an auditing firm and has expertise in finance and accounting as a certified public accountant, as well as experience as an outside director (Audit & Supervisory Committee member) and corporate auditor at other companies.

   • Audit & Supervisory Board Member
     Masato Nishimatsu
     Mr. Masato Nishimatsu possesses broad expertise and and specialized knowledge cultivated at several AEON Group companies, and has knowledge in general business management.

   *The Audit & Supervisory Board is chaired by the full-time Audit & Supervisory Board member and, in principle, is held every month. In addition, we have assigned one person as dedicated staff for assisting the performance of duties by Audit & Supervisory Board members.

   * Full-time Audit & Supervisory Board Member Maki Watanabe and Audit & Supervisory Board Member Takao Muramatsu retired at the conclusion of the regular meeting of general shareholders, held May 17, 2023.

   * Full-time Audit & Supervisory Board Member Kazuhiro Aoyama and Audit & Supervisory Board Member Rumiko Tanabe were elected at the regular meeting of general shareholders, held May 17, 2023.

2. Activity Status

   1. The attendance status of each Audit & Supervisory Board member at the Audit & Supervisory Board and board of directors meetings held during the fiscal year is as follows.
      Maki Watanabe:
      15/15 Audit & Supervisory Board meetings (100%), 14/14 board of directors meetings (100%)
      Takao Muramatsu:
      14/15 Audit & Supervisory Board meetings (93%),  13/14 board of directors meetings (93%)
      Emi Torii:
      15/15 Audit & Supervisory Board meetings (100%), 14/14 board of directors meetings (100%)
      Masato Nishimatsu:
      14/15 Audit & Supervisory Board meetings (100%),  14/14 board of directors meetings (100%)

   2. Major Matters for Consideration at the Audit & Supervisory Board
      (Matters for resolution)

      • Audit policy for Audit & Supervisory Board members, audit plans including priority audit items, and division of duties
      • Appointment or reappointment / non-reappointment of financial statement auditors
      • Agreement to audit remuneration for the financial statement auditors
        (Matters for information sharing and reporting)
      • Information exchange with the President and CEO
      • Information exchange with the financial statement auditors regarding audit policies, audit plans, and audit status
      • Information exchange with the Management Auditing Department regarding audit policies, audit plans, and audit status
      • Information exchange with outside directors
      • Reports from executive directors and others on priority audit items and topics arising during the period
      • Monthly audit activity report from the full-time Audit & Supervisory Board member
      • Review of the Audit and Supervisory Board activities for the year and preliminary discussion of the audit plan for the following year

   3. Audit Activities

      Members of the Audit & Supervisory Committee attend board of director and Management Council meetings, including by way of methods using the Internet and other channels, according to Audit & Supervisory Board standards, audit policies, and audit plans, etc. determined by the Audit & Supervisory Committee. Members audit the execution of duties by directors through the inspection of important documents and observations of operating departments, etc.

      The full-time Audit & Supervisory Board member, in addition to attending Management Council meetings held within the fiscal year, also attends major meetings such as those of the Risk Management Committee, Compliance Committee, ESG Promotion Committee, and the Disclosure Committee, checking the status of execution of director duties and providing opinions as necessary. In addition, independent outside auditors and corporate auditors also attend the Management Strategy Advisory Committee meetings, which focus on important policies and management issues in consultation with the president and CEO. The member also inspects and confirms the content of approval documents, minutes, major contracts, and other materials for executive directors.

      Independent outside directors and Audit & Supervisory Board members collaborate to hold monthly information exchange meetings with executive directors, executive employees, and directors of subsidiaries, where one to two of these officers will attend. At these meetings, information is exchanged regarding progress, issues, and other matters for the fiscal year’s policy at each business unit or subsidiary. Furthermore, the full-time Audit & Supervisory Board Member requests reports on the status of execution of duties from executive directors, employees, and others as necessary.

      The Audit & Supervisory Board receives reports from financial statement auditors about financial statement audit systems, audit plans including priority audit areas, audit execution status and audit results and exchanges opinions regarding these. Furthermore, the full-time Audit & Supervisory Board member conducts information exchanges at the appropriate timings with financial statement auditors, interacting actively with these auditors. The Audit & Supervisory Board also receives reports from the Management Auditing Department about internal audit systems, plans, execution status, and results and exchanges opinions regarding these. Furthermore, the full-time Audit & Supervisory Board member holds regular meetings with the Management Auditing Department, building a system of cooperation. In addition to these efforts to strengthen cooperation in three-party audits, we are working toward more efficient and effective Audit & Supervisory Board audits with the cooperation of internal controls departments.

Internal Audits

The Management Auditing Department is independent of other executive departments reporting directly to the president. 13 employees have been assigned to conduct internal audits. The Management Auditing Department conducts internal audits to confirm whether the execution of operations is conducted in accordance with various laws and regulations, company regulations, business plans, etc. The department also confirms whether operations are conducted effectively and efficiently, providing guidance and advice for improvement.

The Management Auditing Department coordinates and exchanges opinions with members of the Audit & Supervisory Board and financial statement auditors on a regular and ad hoc basis to exchange opinions on internal audit implementation plans and results.

Financial Statement Auditor

1. Name

   Deloitte Touche Tohmatsu LLC

2. Continuous Audit Period

   32 Years
   (Note) This period is within the possible scope of investigation by the company; the actual continuous audit period may exceed the above.

3. Certified public accountants assisting in financial statement audits

   Tomoyasu Maruyama
   Jun Miyashita

4. Individuals assisting in financial statement audits

   Ten certified public accountants and 22 others assist in financial statement audit procedures.

5. Policies and reasons for financial statement auditor selection

   In selecting a financial statement auditor, we take into account the overall organization, quality management systems, independence, audit implementation structure, and ability to centrally manage overseas subsidiary firms. We also consider audit fees and other factors.
   We received a presentation from Deloitte Touche Tohmatsu LLC explaining the firm’s corporate structure and policies regarding audits of our company. Subsequently, members of the Audit & Supervisory Board conducted a careful review and determined that Deloitte Touche Tohmatsu LLC was an appropriate selection as our financial statement auditor.
   Policies Regarding the Dismissal or Non-Reappointment of Financial Statement Auditors
   If the Audit & Supervisory Board determines that the financial statement auditor is subject to the provisions of Article 340, Paragraph 1 of the Companies Act, the Audit & Supervisory Board shall dismiss the accounting auditor, subject to the consent of all members of the Audit & Supervisory Board.
   In addition, if the Audit & Supervisory Board determines issues have arisen related to the audit quality, quality management, independence, etc., of the financial statement auditor, and that such issues represent a significant hindrance to the execution of audit procedures, the Audit & Supervisory Board shall submit a resolution at the general shareholders’ meeting for the dismissal non-reappointment of the proposed financial statement auditor.

6. Evaluation of Financial Statement Auditor by the Members of the Audit & Supervisory Board and the Audit & Supervisory Board

   Based on financial statement auditor selection standards and evaluation standards established by the Audit & Supervisory Board, the Audit & Supervisory Board shall evaluate the quality management structure of the financial statement auditor, as well as the financial statement auditor’s independence, expertise, understanding of AEON MALL business operations, audit fees, communication with company management and members of the Audit & Supervisory Board, coordination with global network member firms, audit plans reflecting considerations of the risk of fraud, etc. Further, the Audit & Supervisory Board shall seek the opinions of the Finance and Accounting Division and Management Auditing Department (executive divisions participating in financial statement audits) in said evaluation.