Inadequate internal management systems accompanying business expansion
First written in FY2024. 1 of 3 entries say "Advanced", first in FY2025. Latest entry: FY2026.
Muscat Group moved to the "Worse" side of this theme in 2026, 5 years after the typical company in this theme (2021).
The whole theme swung hardest in 2023: 2 of 9 companies on the "Worse" side.
1 other company's latest entry also says "Materialised".
- FY2026MaterialisedAnnual report
「The Company recognizes that, during the fiscal year, a material weakness requiring disclosure arose in internal control over financial reporting because, as non-routine estimates continued to increase and become more complex following active M&A and organizational restructuring, systems for management evaluation and approval, including ensuring comprehensive consideration of issues in the financial closing and reporting process, regularly calculating and verifying estimates involving forecasts, and escalating matters to management, had not been sufficiently established or operated. This resulted in an error concerning the recognition of an impairment loss on shares of affiliated companies.」
Insufficient internal management systems to address the increasing complexity of estimates following M&A and organizational restructuring actually occurred, leading to an error in the impairment loss on shares of affiliated companies and a material weakness requiring disclosure in internal control over financial reporting. - FY2025AdvancedAnnual report
「The Company shall appropriately manage the operations of Group subsidiaries and other entities according to their operational scale and business characteristics, and take appropriate measures from the perspectives of compliance with laws and regulations, customer protection and management of various risks.」
As the number of subsidiaries has increased, the management framework has been made more specific, including dispatching officers and employees to subsidiaries, group audits, whistleblowing and reporting to the Board of Directors. - FY2024First statedAnnual report
「If the Group cannot establish internal management systems in a timely manner to respond to business expansion and change, and its internal control systems do not function effectively, it may be unable to conduct operations appropriately.」
The policy is to strengthen the corporate functions and internal audit system in line with the scale of the business.