Sound controls are fundamental to our business operating model. We have established effective control mechanisms for our operations. Authority to approve business arrangements on behalf of our company is clearly assigned and formally delegated to appropriate management. Through internal and external audits, we continuously monitor compliance.

System of Management Control (SMC)

Our System of Management Control (SMC) Basic Standards define the basic principles, concepts and standards that form our control system. “Control" comprises all the means devised by an organization to direct, restrain, govern and check upon various activities. TonenGeneral has evolved a system of management control to ensure effective, efficient and proper utilization of its resources in pursuit of the Company's objectives, with due regard for the respective interests of its stakeholders and the public. The basic purpose of such control is to see that business is conducted properly in accordance with management's general and specific directives.

Controls Integrity Management System (CIMS)

Our Controls Integrity Management System (CIMS), based on the SMC, provides a systematic framework for the effective execution of controls and takes a structured, standardized, prevention-based approach to managing risks and concerns. CIMS is a management system providing a process for ensuring that the Corporate Policies, SMC standards and In-Line Controls (control steps / procedures implemented at the process and/or job level) are implemented and effectively sustained over time. The system is comprised of seven elements: “Management Leadership Commitment & Accountability," “Risk Assessment," “Business Procedure Management & Improvement," “Personnel & Training," “Management of Change," “Reporting & Resolution of Control Weakness" and “Controls Integrity Assessment."

Auditing and Compliance

The Internal Audit Group conducts TonenGeneral's internal audit process. The Internal Audit staff independently assesses compliance with policies and procedures, and evaluates the effectiveness of all financial and related controls. Management and managers are obligated to consider all Internal Audit findings and recommendations and take appropriate actions. Generally, each segment of the business receives an internal audit about every three years. In addition, business segments conduct internal assessments based on CIMS and audit standards around the middle of each audit cycle. Approximately once each year, management reviews internal audit results, with particular attention to any problem areas.

Independent external auditors review the Company's financial statements to ensure accuracy and conformity with generally accepted accounting principles. The Company takes many steps to assure the independence of external auditors.

Please refer to “Framework: Conduct of Business and Affairs, Monitoring and Internal Auditing" for details.

SHE Committee

TonenGeneral employs ExxonMobil's global network and the OIMS in conducting various programs to protect the environment. These activities include the establishment of the Safety, Health and Environment (SHE) Committee for the refining, supply and petrochemical divisions of the ExxonMobil Japan Group in Japan, to which TonenGeneral belongs, to establish fundamental SHE policies and conduct periodic performance reviews. Under the direction of each committee, each production facility and operating division sets specific goals and conducts detailed follow-up.