[Cover]
[Document Submitted] Internal Control Report
[Article of the Applicable Law Requiring Submission of This Document]
Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act of Japan
[Submitted to] Director, Kanto Local Finance Bureau
[Date of Submission] June 19, 2025
[Company Name] ACOM Kabushiki-Kaisha [Company Name in English] ACOM CO., LTD. (the "Company")
[Position and Name of Representative] Masataka Kinoshita, President & CEO
[Position and Name of ―
Chief Financial Officer]
[Location of Head Office] 9-1, Higashi Shinbashi 1-chome, Minato-ku, Tokyo
[Place Where Available for Public Inspection]
Tokyo Stock Exchange, Inc.
(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
This document is a translation of the Internal Control Report (original text: Japanese) submitted to the Prime Minister pursuant to Article 24-4-4 of the Financial Instruments and Exchange Act. It does not bear any responsibility pertaining to the aforementioned Financial Instruments and Exchange Act regarding the content of the English text. We recommend that the determination of the authenticity of the content be based on the Japanese text of the Internal Control Report.
Matters concerning the basic framework for internal control over financial reporting
Masataka Kinoshita, President & CEO, is responsible for establishing and maintaining internal control over the Company's financial reporting, and he establishes and maintains internal control over financial reporting in line with the basic framework for internal control set forth in "On the Setting of the Standards and Practice Standards for Management Assessment and Audit Concerning Internal Control Over Financial Reporting (Council Opinions)" released by the Business Accounting Council.
Internal control seeks to achieve its goals within a reasonable range through the organic linking and integrated functioning of the basic elements of internal control. Accordingly, it is possible that internal control over financial reporting cannot fully prevent or discover the inclusion of misstatements in financial reports.
Matters concerning assessment scope, reference date, and assessment procedures
Internal control over financial reporting is assessed using March 31, 2025, the last day of the current fiscal year examined, as the reference date, and generally accepted standards for assessment of internal control over financial reporting were applied in making this assessment.
Overview of the evaluation procedures for internal control over financial reporting
The overview of our company's evaluation procedures for internal control over financial reporting is as follows:
The company, including the consolidated subsidiaries and equity-method affiliates (hereinafter referred to as "our group"), conducts evaluations of internal controls at the company-wide level, except for business locations where the impact on the reliability of financial reporting is deemed minimal. Based on the results of these evaluations, we select the business processes to be evaluated.
To assess these operational processes, the selected operational processes were analyzed and the efficacy of internal control then evaluated by determining the essential aspects of control having a significant impact on the reliability of financial reporting and assessing the establishment and maintenance of these essential aspects.
Additionally, if there are deficiencies in key control points, we assess the impact of these deficiencies on the reliability of financial reporting and determine the effectiveness of internal controls related to financial reporting.
The required Scope for assessing internal controls over financial reporting
The required scope for assessing internal control over financial reporting at the Company, its consolidated subsidiaries, and equity-method affiliate is determined on the basis of the significance of the impact on the reliability of financial reporting.
The significance of impact on the reliability of financial reporting is determined by considering the quantitative and qualitative impact on financial reporting as well as the likelihood of occurrence. This allows us to reasonably determine the scope of evaluation for internal controls related to business locations and business processes subject to companywide internal control evaluation.
The companywide internal control evaluation is conducted for our company and three consolidated subsidiaries. Consolidated subsidiaries and equity-method affiliates, which are judged to have minimal impact on the reliability of financial reporting from the perspective of quantitative and qualitative significance and likelihood of occurrence, are not included in the scope of companywide internal control evaluation.
In evaluating business processes, key business locations are selected. Our group primarily engages in Loan and Credit Card Business, Guarantee Business, Overseas Financial Business, and Loan Servicing Business. In deciding key business locations, we use operating revenue (before the elimination of transactions between consolidated companies) as the appropriate indicator to measure the business scale of our main businesses. Additionally, we aggregate operating revenue (before the elimination of transactions between consolidated companies) from locations with high amounts, setting a quantitative standard of approximately two-thirds of the total. As a result, our company is selected as an important business location.
At the selected key business locations, operational processes are assessed for accounts highly relevant to the company's business objectives, including operating revenue, accounts receivable - operating loans, loans payable, and bonds payable relating to fund procurement.
Furthermore, operational processes pertaining to major accounts containing estimates and forecasts for which there exists a high possibility of critical misstatements as well as operational processes connected
with operations involving high-risk transactions are additionally assessed as key operational processes due to their impact on financial reporting. The main business processes are as follows:
Calculation of Provision for Loss on Interest Repayment:
The future number of claims and the average loss per claim from entities eligible for interest repayment are calculated using forecast values. Due to the inherent uncertainty in the estimates and key assumptions, there is an element of unpredictability.
Matters concerning assessment results
The aforementioned assessments determined that the Company's internal control over financial reporting was effective as of the last day of the current fiscal year examined.
Additional matters Not applicable
Matters on special note Not applicable