Internal Control System

In view of the changing public expectations regarding corporate risk management, to adapt to these changes the Kubota Group Risk Management Committee maintains existing risk management activities relating to internal control risk, ascertains new risks with potential major impact on business operations, and takes countermeasures.
The committee undertakes regular risk assessments of the Kubota Group, and after conducting a risk assessment, it determines new risks to be addressed as a priority. In addition, subcommittees under the supervision of the Kubota Group Risk Management Committee implement risk response measures and regularly report back to the committee on their progress. The committee monitors these and issues instructions where necessary.

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  System Diagram

Kubota considers its risk management activities as part of its business activities. Based on its understanding that risk management is the foundation of business activities, Kubota is willing to exert its efforts to manage risks appropriately through continuous steady improvement via “immediate corrective actions upon any perception of inadequacies,” by identifying risks common to the entire Kubota Group, such as those relating to the reliability of financial reporting. At the same time, while accelerating the global development of its businesses, Kubota strongly recognizes that risk management activities are the foundation for the continuity of its businesses, and strives to improve such activities both in Japan and overseas.

To ensure the reliability of financial reporting for the Kubota Group overall, including overseas subsidiaries, we have established and operate an internal control system. Moreover, to confirm its effectiveness, the Corporate Auditing Department and the auditing divisions of subsidiaries conduct regular internal audits. Based on the results of these audits, we have built a system for evaluating the effectiveness of internal controls on a consolidated basis in conformance with the internal control and reporting system (J-SOX), etc., pertaining to financial reporting as stipulated by the Financial Instruments and Exchange Act.

We realize that full implementation of compliance is key to establishing Kubota as a Global Major Brand. The Kubota Group therefore engages in the risk management activities set out below to ensure prevention of any infringement of Japan’s Anti-Monopoly Act and the competition laws of overseas countries as well as the Subcontract Act.

The Kubota Group is engaged in efforts to prevent any corrupt practices. It has placed particular focus on preventing bribery among risk management activities on the preventing of illegal payment, and will work to achieve SDGs Target 16.5: Substantially reduce corruption and bribery in all their forms.
Amid increasing international moves to anti-bribery, we marked December 9 – designated by the United Nations as International Anti-Corruption Day – by broadcasting a President’s Message to all Kubota Group officers and employees every year. In the message, our top management made a clear commitment by declaring that ‘KUBOTA Group never allows business based on unfair practices such as bribery.’
As part of its activities to prevent corruption, the Kubota Group conducts wide-ranging education and awareness-raising activities for officers and employees. Specifically, in bribery prevention education for officers and employees, we conduct training sessions and e-learning in Japan and overseas. These include explanations of laws and regulations in each country, as well as the status of execution, and a number of case studies to improve understanding. The training is held regularly on an ongoing basis to ensure circulation of the latest information and cultivate an awareness of bribery prevention.
Furthermore, we have prepared a handbook*, and we issue newsletters throughout the year, among various measures to introduce various information such as laws, regulations, and case studies related to bribery prevention, embezzlement, and facilitation payments, etc., to the entire Group in and effort to prevent bribery and ensure widespread awareness.
In addition, as an initiative directed outside the company, a ‘Request to Suppliers’ was posted on the Kubota website in the name of the General Manager of the Corporate Compliance and Risk Management Headquarters. The text outlined to suppliers the Kubota Group’s approach to bribery prevention and asked for their understanding and cooperation in bribery prevention activities.
As a new initiative, from the end of 2023, we have rolled out operation of a global hotline for overseas bases. In this way, we are working to enhance our internal reporting system with the aim of facilitating early detection and prevention of bribery and other improper activity.
To verify these risk management activities, the Kubota Group has established the Committee on Prevention of Illegal Payments *2 and it carried document surveys which were conducted to investigate whether preventive frameworks were in place and sufficiently functioning, as well as whether there were any illegal payments.
The policies for these risk management activities and the results are periodically reported to the Board of Directors through the Kubota Group Risk Management Committee. Based on the feedback provided, the content of risk management activities is reviewed to improve the overall level.

1. *1.We have put together a Kubota Group Handbook for Anti-Bribery which is being issued across the entire Group. The Handbook is issued in a global version with universal content available in Japanese, English, French, Chinese, and Thai, and in individual country versions that supplement the universal content with more detailed information on the points to be noted and actions to be taken in the particular country or region. These are available for China, Thailand, Korea, Indonesia, Myanmar, the Philippines, Vietnam, and Mexico.
2. *2.12 companies in Japan and 33 overseas bases were surveyed in FY2023