[Translation]

Audit and Supervisory Committee Audit Report Templates
Japan Audit & Supervisory Board
Members Association (the “Association”)
Enacted on November 10, 2015

1. These “Audit and Supervisory Committee Audit Report Templates” (these “Templates”)
set out the formats, terms, and the like of the audit reports provided for in the Companies Act
for the purpose of serving as a reference when audit and supervisory committees prepare those
audit reports.
Audit reports are to be prepared based on the actual conditions of the audits of the relevant
company. Audit and supervisory committees are strongly expected to prepare audit reportsthat accurately reflect the actual conditions of audits in accordance with the Companies Act,
the Ordinance for Enforcement of the Companies Act, the Ordinance on Accounting ofCompanies, and the like. In regard to statements to be included in audit reports in cases suchas when performing audits that actively incorporate the views set out in the “Code of Audit andSupervisory Committee Auditing and Supervising Standards” established by the Association
and reflecting those views in the audit reports, there are many example statements provided in
the notes, so please actively use those examples as a reference.
2. In regard to audit reports prepared by audit and supervisory committees, there are separate
provisions under laws and regulations regarding the preparation of audit reports concerningbusiness reports and supplementary schedules thereto (“Business Reports, Etc.”) and audit
reports concerning accounting documents and supplementary schedules thereto (“Accounting
Documents, Etc.”). However, audits performed by audit and supervisory committees
concerning Business Reports, Etc. and those concerning Accounting Documents, Etc. areclosely related and have many similarities. Therefore, the preparation method used in these
Templates is to prepare the audit report concerning the Business Report, Etc. and the audit
report concerning the Accounting Documents, Etc. for each business year together as a single
document. Under laws and regulations, the period for audits by audit and supervisorycommittees concerning Business Reports, Etc. is four weeks, while the period for audits byaccounting auditors concerning accounting documents is four weeks followed by an additional
week for audits by audit and supervisory committees. Therefore, if preparing the audit reportconcerning the Business Report, Etc. and the audit report concerning the Accounting
Documents, Etc. together as a single document in the same way as these Templates, please notethat it may be necessary to extend the period for the audit of the Business Report, Etc. byagreement with the specified directors.
These Templates assume that the audit report concerning the consolidated accounting
documents will be prepared together with the audit report concerning the Business Report, Etc.
and the audit report concerning the non-consolidated Accounting Documents, Etc. as a single
document. In order to address companies such as those that choose to separately prepare audit
reports concerning consolidated accounting documents or those that are not required to prepare
consolidated accounting documents, explanations regarding how to handle such cases areprovided in the notes.
3. In regard to the “Method and Contents of Audits” section in audit reports, it is necessary
to clearly and concisely state the methods of the audits actually performed by the audit and1supervisory committee while giving consideration so that it is possible to accurately judge thereliability of the audit. However, it is expected that the methods and contents of audits in eachcompany will have their own characteristics due to factors such as differences in the company’s
scale, business format, organization, and establishment and operation status of internal control
systems, etc., and in order for the users of the audit reports to understand those characteristics,
it is also possible to state the “Method and Contents of Audits” section in audit reports more
specifically. In these Templates, notes and explanations as appropriate have been added toplaces where a variety of possible statements are anticipated, so please refer to those notes, etc.
when preparing the audit reports.
Naturally, audit reports are to be prepared on the basis of the audit and supervisorycommittee members performing their duty of care. In order to demonstrate that audit andsupervisory committee members have fulfilled that duty, it is necessary for the audit andsupervisory committee to clearly set out auditing standards and maintain audit records, minutesof audit and supervisory committee meetings, and the like.
4. These Templates are intended for companies that are both public companies and large
companies as provided for in the Companies Act, and these Templates have been preparedmainly in consideration of listed companies. For audit and supervisory committees of othertypes of companies, please prepare audit reports using these Templates as a reference asappropriate while taking matters such as the audit environment of the company into
consideration.
5. If a company prepares temporary accounting documents, the audit and supervisorycommittee must prepare an audit report concerning those documents. In this case, please
prepare the audit reports concerning the temporary accounting documents using the statements,
etc. regarding audits of accounting-related documents in these Templates as a reference.

2

I.

Audit Report Concerning Business Report, Etc. and Audit Report Concerning
Accounting Documents, Etc. (Combined Audit Report Including Audit Report
Concerning Consolidated Accounting Documents) (Note 1)[Date][TBD] Co., Ltd.
Representative Director and President, [TBD] (Note 2)
Audit and Supervisory Committee (Note 3)
Submission of Audit Report

The audit and supervisory committee has prepared an audit report pursuant to Article 399-2, paragraph(3), item (i) of the Companies Act and hereby submits it as enclosed (Note 4).
End

Audit Report
The audit and supervisory committee has audited the directors’ performance of their duties for the [TBD]
business year from [TBD] to [TBD] and reports as follows in regard to the method and results of those
audits.
1.

Method and Contents of Audits (Note 5)
In regard to the content of resolutions of the board of directors regarding the matters stated in Article399-13, paragraph (1), items (i)(b) and (i)(c) of the Companies Act, as well as the systems developed
pursuant to those resolutions (i.e., internal control systems) (Note 6), the audit and supervisorycommittee periodically received reports from directors and employees, etc. regarding the status of
the establishment and operation of those systems and as necessary requested explanations andexpressed opinions in regard thereto, in addition to which the audit and supervisory committee
conducted audits using the following methods.
(i)
In accordance with the audit policies (Note 7) and division of duties, etc. (Note 8) determinedby the audit and supervisory committee (Note 9), and in cooperation with the internal control
department of the company (Note 10), the audit and supervisory committee attended
important meetings, received reports from directors and employees, etc. regarding mattersrelated to the performance of their duties, requested explanations as necessary, viewed
important decision-making documents, etc., and inspected the status of operations and assets
at the head office and main business locations (Note 11). Additionally, in regard to
subsidiaries, the audit and supervisory committee communicated and exchanged information
with the directors and audit and supervisory board members, etc. of subsidiaries and received
reports on business from subsidiaries as necessary. (Note 12)(ii)
In regard to the basic policies provided for in Article 118, item (iii)(a) of the Ordinance for
Enforcement of the Companies Act, the efforts provided for in item (iii)(b) of that article(Note 13), the matters given due consideration provided for in item (v)(a) of that article, andthe judgment and reasons provided for in item (v)(b) of that article (Note 14), each as statedin the business report, the audit and supervisory committee considered the contents thereof
taking into account matters such as the status of deliberations at meetings of the board of
directors and other deliberations.
(iii) The audit and supervisory committee oversaw and verified whether the accounting auditor
maintained an independent position and conducted an appropriate audit, received reports
from the accounting auditor on the status of the performance of its duties, and requested

3explanations as necessary. Additionally, the audit and supervisory committee received
notification from the accounting auditor that, in accordance with the “Quality Control
Standards for Audits” (Business Accounting Council, October 28, 2005), etc., it had
developed systems in order to ensure that its duties are appropriately performed (i.e.,
notification of the matters stated in the items of Article 131 of the Ordinance on Accountingof Companies) and requested explanations as necessary. (Note 15)
Using the methods above, the audit and supervisory committee examined the business report, thesupplementary schedules thereto, the accounting documents (i.e., the balance sheet, statement ofincome, statement of changes in net assets, and explanatory notes to accounting documents (Note16)), the supplementary schedules to the accounting documents, and the consolidated accounting
documents (i.e., the consolidated balance sheet, consolidated statement of income,consolidated statement of changes in net assets, and explanatory notes to consolidated
accounting documents) for the business year.
2.

Audit Results (Note 17)
(1)

(2)

(3)

Results of audit of business report, etc.
(i)
We find that the business report and the supplementary schedules thereto accurately
present the status of the company in accordance with laws, regulations, and the articles
of incorporation.
(ii)
We do not find any misconduct nor any material fact constituting a violation of any
law, regulation, or the articles of incorporation in relation to the directors’
performance of their duties (Note 18). (Note 19)(iii) We find the content of the resolutions of the board of directors regarding internal
control systems to be reasonable. (Note 20) Additionally, we do not find any mattersthat should be commented upon in regard to the statements in the business report or
the directors’ performance of their duties relating to the internal control systems.
(Note 21)(iv) We find the basic policy regarding persons who control the determination of financial
and business policies of the company stated in the business report to be reasonable.
We find that the efforts provided for in Article 118, item (iii)(b) of the Ordinance for
Enforcement of the Companies Act stated in the business report are in compliancewith that basic policy and do not harm the common interests of the shareholders of
the company, and that their purpose is not to maintain the positions of the directors of
the company. (Note 22)(v)
In regard to transactions with parent companies, etc. stated in the business report, we
do not find any matters that should be commented upon in regard to the matters given
due consideration so that the interests of the company are not harmed when engaging
in such transactions (Note 23), the judgment of the board of directors regardingwhether or not such transactions harm the interests of the company, and the reasonsfor that judgment (Note 24).
Results of audit of accounting documents and supplementary schedules thereto
We find the methods and results of the audit by the accounting auditor, [TBD] (Note 25), tobe reasonable. (Note 26)
Results of audit of consolidated accounting documents
We find the methods and results of the audit by the accounting auditor, [TBD] (Note27), to be reasonable. (Note 28)

3.

Opinion of Audit and Supervisory Committee Member [Name] (If there are differing audit
opinions) (Note 29)4.

Subsequent Events (If material subsequent events have occurred) (Note 30)

4[Date] (Note 31)[TBD] Co., Ltd.; Audit and Supervisory Committee
Audit and Supervisory Committee Member[Name] [Seal]
Audit and Supervisory Committee Member[Name] [Seal]
Audit and Supervisory Committee Member[Name] [Seal]
Audit and Supervisory Committee Member[Name] [Seal](Signatures) (Note 32)(Note)(Note 1)

(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

Audit and Supervisory Committee Members [TBD] and [TBD] are outside directors
provided for in Article 2, item (xv) and Article 331, paragraph (6) of the Companies Act.
(Note 33)

These Templates are to be used when preparing the audit report concerning the Business Report,
Etc., the audit report concerning the Accounting Documents, Etc., and the audit reportconcerning the consolidated accounting documents together as a single document. If
separately preparing the audit report concerning the consolidated accounting documents, pleasedelete the underlined portions of the main text of these Templates.
Audit reports are to be submitted to the “specified directors” pursuant to Article 132, paragraph(1) of the Ordinance for Enforcement of the Companies Act and Article 132, paragraph (1) of
the Ordinance on Accounting of Companies. For companies with an audit and supervisorycommittee, it is likely that in many cases, the “specified directors” will be the representative
directors or the directors who performed duties relating to the preparation of the business reportand Accounting Documents, Etc. (please refer to Article 132, paragraph (4) of the Ordinancefor Enforcement of the Companies Act and Article 130, paragraph (4) of the Ordinance on
Accounting of Companies), so state the titles and names of those persons.
The handling of the seal of the audit and supervisory committee on the cover sheet follows theinternal regulations of the company.
The cover sheet provided assumes that the audit report is submitted in writing. The audit
report can be prepared by electronic or magnetic methods, and in that case, certain revisions
will be necessary, such as changing “as enclosed” to “as attached.”
In regard to “1. Method and Contents of Audits,” please note that a more specific descriptionof the methods and contents of the audits actually conducted is required. It is expected thatstating the specific methods and contents will lead to greater understanding by the users of theaudit report. In particular, in cases where there are audit items specific to the company for theperiod under review, such as if there is an audit item set as an important audit matter and given
particular focus when conducting the audit (a priority audit item), it is preferable to makespecific statements, such as “... determined by the audit and supervisory committee, setting[TBD] as a priority audit item, and in cooperation with the internal control department of thecompany, the audit and supervisory committee attended important meetings ...”
These Templates refer to the systems actually developed pursuant to resolutions by the boardof directors regarding the matters stated in Article 399-13, paragraph (1), items (i)(b) and (i)(c)of the Companies Act as “internal control systems.” For the phrase “internal control systems,”
please consider the appropriate term to use based on the actual conditions of the company, suchas “overall systems relating to the internal controls of the company.” It is also possible torefer to the specific headings and page numbers, etc. in the business report.
“Audit policies” can be changed to “audit policies for the period under review” if you wish toclearly state that the audits were performed in accordance with the audit policies for the period
being audited. Additionally, it is also possible to specifically state the audit policies for theperiod under review.

5

(Note 8)(Note 9)(Note 10)(Note 11)

(Note 12)(Note 13)

(Note 14)

(Note 15)

“Audit policies and division of duties, etc. determined by the audit and supervisory committee”
includes the appointment of “audit and supervisory committee members appointed by the audit
and supervisory committee” stated in provisions such as Article 399-3, paragraphs (1) and (2)of the Companies Act.
If the audit and supervisory committee has established audit and supervisory committee
auditing and supervising standards, it is preferable to include a statement such as, “Incompliance with the audit and supervisory committee auditing and supervising standards
established by the audit and supervisory committee, in accordance with the audit policies anddivision of duties, etc., ...”For “internal control department of the company,” please state the appropriate department name,etc. in accordance with the actual conditions of the company, such as “the internal audit
department and other departments responsible for internal controls of the company.”
For “attended important meetings ... and inspected the status of operations and assets at thehead office and main business locations,” use an appropriate expression based on the actual
conditions of audits in the company. For example, depending on the composition of audit andsupervisory committee members, the status of the establishment and operation of internal
control systems, and the status of cooperation with the internal control department, it is also
possible to include a statement such as “... inspected the process and contents of decisionmaking at important meetings, etc., the contents of principal decision-making documents andother important documents, etc. relating to business execution, the status of the performance of
duties by the directors (and other principal employees, etc.), and the status of the operations andassets of the company.”“Received reports on business from subsidiaries as necessary” does not mean that audit andsupervisory committee members appointed by the audit and supervisory committee exercised
their rights to investigate the status of operations or financial status of a subsidiary provided forin Article 399-3, paragraph (2) of the Companies Act but instead refers to day-to-day or general
audit activities relating to subsidiaries. If audit and supervisory committee members
appointed by the audit and supervisory committee exercised their rights to investigate the statusof operations or financial status of a subsidiary, it is possible to include a statement such as“requested reports on business from subsidiaries as necessary, and investigated the status of theoperations and finances of subsidiaries.”
The statement regarding “the basic policies provided for in Article 118, item (iii)(a) of theOrdinance for Enforcement of the Companies Act, the efforts provided for in item (iii)(b) ofthat article ... stated in the business report” applies to cases in which the company has
established takeover defense measures. It is not necessary to include this statement if thematters listed in Article 118, item (iii) of the Ordinance for Enforcement of the Companies Act
are not stated in the business report. Please also refer to Note 22.
If the matters provided for in Article 118, item (v) of the Ordinance for Enforcement of theCompanies Act are not stated in the business report, the statement regarding “the matters given
due consideration provided for in item (v)(a) of that article, and the judgment and reasonsprovided for in item (v)(b) of that article ... stated in the business report” does not need to bestated in the audit report (Article 130-2, paragraph (1), item (ii) and Article 129, paragraph (1),item (vi) of the Ordinance for Enforcement of the Companies Act).
The audit and supervisory committee must state “matters related to systems for ensuring thatthe performance of the duties of Accounting Auditor(s) is being carried out appropriately”(Article 128-2, paragraph (1), item (ii) and Article 127, item (iv) of the Ordinance on
Accounting of Companies; “Systems to Ensure Appropriate Performance of Accounting
Auditor Duties”) in the audit report. After receiving notification from the accounting auditorof matters relating to those systems (Article 131 of the Ordinance on Accounting of Companies;
the wording of the relevant provision is “matters related to systems for ensuring that theperformance of the duties of Accounting Auditor(s) is being carried out appropriately”) (thenotification is to be received by the audit and supervisory committee members that are“specified audit and supervisory board members” as provided for in Article 130, paragraph (5),item (iii) of the Ordinance on Accounting of Companies), the audit and supervisory committee
confirms whether those systems are developed in accordance with certain appropriate standards.
In these Templates, the notification matters regarding the Systems to Ensure Appropriate

6

(Note 16)(Note 17)

(Note 18)

(Note 19)

(Note 20)

Performance of Accounting Auditor Duties and the confirmation method thereof are referred toin the sentence, “Additionally, the audit and supervisory committee received notification fromthe accounting auditor ... and requested explanations as necessary.” In these Templates, the“Quality Control Standards for Audits” (Business Accounting Council, October 28, 2005) areused as “certain appropriate standards,” but other standards are also important, such as thepractical guidelines of the Japanese Institute of Certified Public Accountants (Quality Control
Standards Committee Statement No. 1, “Quality Control for Audit Firms,” and AuditingStandards Committee Statement No. 220, “Quality Control for an Audit of Financial
Statements”).
In these Templates, the results of the confirmation by the audit and supervisory committee
regarding the Systems to Ensure Appropriate Performance of Accounting Auditor Duties are
not stated as a separate matter but are included in the statements to the effect that the methods
and results of the audit by the accounting auditor are found to be reasonable in “(2) Results ofaudit of accounting documents and supplementary schedules thereto” in “2. Audit Results.” If
there are any matters that should be particularly emphasized or any matters that are consideredappropriate to be clearly stated in regard to the Systems to Ensure Appropriate Performance of
Accounting Auditor Duties, please specifically state those matters in “1. Method and Contentsof Audits” or in “(2) Results of audit of accounting documents and supplementary schedules
thereto” in “2. Audit Results.”
If the explanatory notes to accounting documents are not prepared as separate materials, pleasestate “... the business report, the supplementary schedules thereto, the accounting documents(i.e., the balance sheet, statement of income, and statement of changes in net assets), thesupplementary schedules to the accounting documents ...” (please refer to Article 57, paragraph(3) of the Ordinance on Accounting of Companies).
If there are any matters to be commented upon in regard to the “Audit Results” section, statethat and the relevant facts clearly and concisely. If investigations necessary for audits could
not be performed, state that and the reasons therefor in the relevant section. Additionally, if
priority audit items are mentioned in “1. Method and Contents of Audits,” it is also possible tostate matters such as the audit results for those priority audit items in “Audit Results.” Thesame applies in cases where statements were made in “1. Method and Contents of Audits” about
matters regarding which explanations were requested or opinions were expressed in relation tointernal control systems or about matters learned through communication or informationexchanges with directors and audit and supervisory board members, etc. of subsidiaries that
affected the audit.
When preparing the “Audit Results” section, if there are material facts relating to the status of
the company, such as events or circumstances pertaining to the assumption of the company
being a going concern, material accidents or damage, or material litigation, confirm thestatements in the business report or other documents, consider whether statements should bemade in the audit report, and include such statements if you find it necessary to do so.
“Performance of their duties” can also be written as “execution of their duties” in accordancewith the wording used in laws and regulations (please refer to Article 130-2, paragraph (1), item(ii) and Article 129, paragraph (1), item (iii) of the Ordinance for Enforcement of theCompanies Act). In these Templates, “performance of their duties” is used throughout.
If any misconduct or any material fact constituting a violation of laws, regulations, or thearticles of incorporation in relation to the directors’ performance of their duties is found,
specifically state that fact.
If the audit and supervisory committee members have publicly announced an opinion in thecourse of their duties, such as in cases where a third-party allotment is performed during theperiod under review and the opinion of the audit and supervisory committee members regardingwhether it constitutes an issuance under favorable conditions is announced, it is possible to statea summary of that opinion if necessary.
If resolutions by the board of directors relating to internal control systems are “foundinappropriate” (Article 130-2, paragraph (1), item (ii) and Article 129, paragraph (1), item (v)of the Ordinance for Enforcement of the Companies Act), it is required to specifically state thatfact and the reasons therefor.

7

(Note 21)(Note 22)

(Note 23)

(Note 24)

In particular, the contents of resolutions by the board of directors regarding systems to ensure
the effectiveness of audit and supervisory committee audits (i.e., the matters listed in the itemsof Article 110-4, paragraph (1) of the Ordinance for Enforcement of the Companies Act) suchas matters related to employees appointed to support the duties of the audit and supervisorycommittee, systems for directors and employees, etc. of the company and its subsidiaries toreport to the audit and supervisory committee and other systems relating to reports to the audit
and supervisory committee, systems to ensure that any person who makes a report to the audit
and supervisory committee does not receive disadvantageous treatment due to having done so,and procedures for the advance payment or reimbursement of expenses arising in connection to
the performance of audit and supervisory committee duties and other matters relating to policies
on the handling of expenses or debts arising in connection to the performance of audit andsupervisory committee duties are particularly important in order to achieve effective audits by
the audit and supervisory committee, and if there is any problem, etc. in regard thereto, pleaseproactively state that fact.
If the summary of the operation status of internal control systems stated in the business reportis “found inappropriate” (Article 130-2, paragraph (1), item (ii) and Article 129, paragraph (1),item (v) of the Ordinance for Enforcement of the Companies Act), it is required to specificallystate that fact and the reasons therefor.
If significant corporate wrongdoing occurred in the period under review or the previous period,in most cases, it is likely that that fact and the status of measures to identify causes and prevent
reoccurrence are material matters that should also be stated in the business report. The
responsibility of the audit and supervisory committee is to express opinions regarding matterssuch as (i) whether the contents of statements in the business report are appropriate and (ii)whether any problem, etc. can be found in regard to the status of business execution in order toprevent reoccurrence taking into consideration the directors’ duty of care.
This is a statement of an opinion regarding takeover defense measures, etc. and the judgmentof the board of directors in regard thereto (Article 130-2, paragraph (1), item (ii) and Article
129, paragraph (1), item (vi) of the Ordinance for Enforcement of the Companies Act; if thosematters are not stated in the business report, it is not necessary to state this item). Consideringthat the judgment and role of audit and supervisory committees in regard to the appropriatenessof takeover defense measures is receiving greater attention, if there are any matters that should
be commented upon, it is preferable to specifically state those matters. “The basic policy
regarding persons who control the determination of financial and business policies of thecompany stated in the business report” and “the efforts provided for in Article 118, item (iii)(b)of the Ordinance for Enforcement of the Companies Act stated in the business report” can also
be changed to refer to the specific headings and page numbers, etc. in the business report.
For transactions with parent companies, etc. that require a note regarding transactions withrelated parties in the explanatory notes to the accounting documents, it is necessary to state themeasures given due consideration so that the interests of the company are not harmed whenengaging in such transactions, the judgment of the board of directors, and the reasons for that
judgment in the business report (Article 118, item (v) of the Ordinance for Enforcement of theCompanies Act). Additionally, if those matters are stated in the business report, the opinionof the audit and supervisory committee in regard to those matters must be stated in the audit
report (Article 130-2, paragraph (1), item (ii) and Article 129, paragraph (1), item (vi) of theOrdinance for Enforcement of the Companies Act). Even if it is stated in the business reportthat there were no matters given due consideration so that the interests of the company are notharmed, the audit and supervisory committee must express an opinion regarding whether or notthat judgment is appropriate.
If the judgment of the board of directors differs from the opinion of the outside directors, that
opinion must also be stated in the business report (Article 118, item (v)(c) of the Ordinance for
Enforcement of the Companies Act). If the judgment of the board of directors and the opinionof the outside directors is different, then taking into account the judgment of the board of
directors and the reasons therefor and the opinion of the outside directors, it is necessary for theaudit and supervisory committee to sufficiently consider whether or not there are any mattersto be commented upon by means such as exchanging opinions with the representative director
or outside directors as necessary.

8

(Note 25)(Note 26)
(Note 27)
(Note 28)

(Note 29)

(Note 30)

(Note 31)

(Note 32)

(Note 33)

State the name of the auditing firm or the name and office name of the certified public
accountant.
If it is found that the methods or results of the audit by the accounting auditor are not appropriate,
specifically state that fact and the reasons therefor.
Same as Note 25.
Same as Note 26. Taking into account the status of the progress of consolidated management
as well as matters such as the way that consolidated information is stated in the business report,
it is also possible to state the “Results of audit of consolidated accounting documents” before
the “Results of audit of accounting documents and supplementary schedules thereto.”
If there is an opinion that differs from that of the audit and supervisory committee, state thename of the relevant audit and supervisory committee member, and clearly and concisely statethat differing opinion and the reasons therefor.
Under laws and regulations, the subsequent events that should be stated in the audit reports of
the audit and supervisory committee are limited to those related to the accounting-related
documents (however, any subsequent events that are included in the audit report of theaccounting auditor need not be stated in the audit reports of the audit and supervisorycommittee; Article 128-2, paragraph (1), item (ii) and Article 127, item (iii) of the Ordinanceon Accounting of Companies, and others). If there are any matters to be stated, state themspecifically.
If any material events occur after the last day of the business year that do not affect property or
profits or losses, please note that the event must be stated in the business report as a material
matter relating to the current status of the stock company (please refer to Article 120, paragraph(1), item (ix) of the Ordinance for Enforcement of the Companies Act).
Please note that the date of preparation of the audit report is a matter required to be stated underlaws and regulations (please refer to Article 130-2, paragraph (1), item (iii) of the Ordinancefor Enforcement of the Companies Act and Article 128-2, paragraph (1), item (iii) of theOrdinance on Accounting of Companies).
In order to ensure the authenticity of the audit report and reliability of the audits, it is preferable
for each audit and supervisory committee member to sign his or her name and then affix his or
her seal. If the audit report is prepared as an electronic or magnetic record, each audit andsupervisory committee member must electronically sign it.
For audit and supervisory committee members who are outside directors, it is preferable toindicate that fact. If there are full-time audit and supervisory committee members, it is also
possible to state their titles as “Full-time Audit and Supervisory Committee Member.”

Other Matters
1. In cases such as if there was a vacancy in an audit and supervisory committee member position during
the period under review, specifically note that fact in the audit report.
2. For the first business year in which a company transitions to a company with an audit and supervisorycommittee, it is possible to include special statements regarding the audit methods, etc. concerning mattersfrom the start of the business year until the close of the annual shareholders’ meeting.

9