Notice Regarding the Results of an Internal Investigation into an Overseas Consolidated Subsidiary and Measures to Prevent Recurrence
Sun Asterisk Vietnam Co., Ltd（SVN）
Education support services with local educational institutions, Japanese-language instructors, and local education stakeholders
(1) Management and certain SVN officers and employees had insufficient awareness of internal controls; (2) external negotiations handled by a specific SVN employee had become dependent on that individual over an extended period, making it difficult for others to provide checks and balances; and (3) monitoring and internal controls by the parent company over the overseas subsidiary were inadequate, including the SVN accounting department's unilateral off-book processing at its own discretion.
As of the end of the interim consolidated accounting period for the fiscal year ending December 2026, ¥24 million in off-book cash was recognized. During the interim consolidated accounting period for the fiscal year ending December 2026, ¥6 million in selling, general and administrative expenses and ¥30 million in non-operating income, including ¥22 million attributable to the impact of prior fiscal years, were recognized.
The end of, and the interim consolidated accounting period for, the fiscal year ending December 2026
Company response
From 7 August 2026, a structure was established under which the company's Internal Audit Office and outside counsel served as the investigation leaders and investigators, while the internal audit and accounting departments of the company and SVN served as the secretariat responsible for collecting and organizing documents. The structure included a detailed review of relevant documents, interviews with relevant parties, and forensic investigations of electronic data from the perspectives of both Japanese and Vietnamese law.
(1) Prohibit off-book assets, liabilities, and off-book fund management, and enforce regular checks; (2) establish rules for reporting and escalation to headquarters when unusual transactions or accounting treatments occur; (3) strengthen transaction controls for providing funds to external parties, including preparing contracts and approval processes; (4) strengthen headquarters' management oversight and monitoring of SVN; (5) prevent work from becoming dependent on specific SVN employees and enforce appropriate segregation of duties; and (6) conduct regular training on internal controls.
The company will continue to confirm the facts and consider the necessary accounting treatment, while steadily implementing measures to prevent recurrence and working to strengthen the governance structure of the group.
| Item | Details |
|---|---|
| Event name | Notice Regarding the Results of an Internal Investigation into an Overseas Consolidated Subsidiary and Measures to Prevent Recurrence |
| Date of occurrence | Over an extended period since around 2013 |
| Subject Entity | Sun Asterisk Vietnam Co., Ltd（SVN） |
| Target Locations / Products | Education support services with local educational institutions, Japanese-language instructors, and local education stakeholders |
| Cause | (1) Management and certain SVN officers and employees had insufficient awareness of internal controls; (2) external negotiations handled by a specific SVN employee had become dependent on that individual over an extended period, making it difficult for others to provide checks and balances; and (3) monitoring and internal controls by the parent company over the overseas subsidiary were inadequate, including the SVN accounting department's unilateral off-book processing at its own discretion. |
| Amount of Impact on Business Performance | As of the end of the interim consolidated accounting period for the fiscal year ending December 2026, ¥24 million in off-book cash was recognized. During the interim consolidated accounting period for the fiscal year ending December 2026, ¥6 million in selling, general and administrative expenses and ¥30 million in non-operating income, including ¥22 million attributable to the impact of prior fiscal years, were recognized. |
| Accounting period in which recognized | The end of, and the interim consolidated accounting period for, the fiscal year ending December 2026 |
| Investigation structure | From 7 August 2026, a structure was established under which the company's Internal Audit Office and outside counsel served as the investigation leaders and investigators, while the internal audit and accounting departments of the company and SVN served as the secretariat responsible for collecting and organizing documents. The structure included a detailed review of relevant documents, interviews with relevant parties, and forensic investigations of electronic data from the perspectives of both Japanese and Vietnamese law. |
| Measures to prevent recurrence | (1) Prohibit off-book assets, liabilities, and off-book fund management, and enforce regular checks; (2) establish rules for reporting and escalation to headquarters when unusual transactions or accounting treatments occur; (3) strengthen transaction controls for providing funds to external parties, including preparing contracts and approval processes; (4) strengthen headquarters' management oversight and monitoring of SVN; (5) prevent work from becoming dependent on specific SVN employees and enforce appropriate segregation of duties; and (6) conduct regular training on internal controls. |
| Outlook | The company will continue to confirm the facts and consider the necessary accounting treatment, while steadily implementing measures to prevent recurrence and working to strengthen the governance structure of the group. |
Items this document does not state (15)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.Insufficient awareness of internal controls among management and certain SVN officers and employees, the prolonged dependence on a specific employee for external negotiations, the SVN accounting department's off-book processing, and inadequate monitoring and internal controls by the parent company.