Oguchi Hisao was stunned for a moment.
Although he had served as the president of Sega in his previous life, in this lifetime, under Nakayama Takuya, he acted more as an executor and a senior advisor.
Now that Nakayama Takuya was delegating power so thoroughly, he felt a heavy weight of pressure, but at the same time, a sense of accomplishment from being absolutely trusted.
"I understand. However, the Sales Department seems to have quite a few complaints about the dual-track audit system you've recently implemented," Oguchi Hisao gently reminded him. "Department Head Yoshimura has been grumbling in the izakaya quite a bit lately, saying that you're acting more like a tax-inspecting bureaucrat now, rather than a general leading the charge to conquer the world."
"Let him talk." Nakayama Takuya put his glasses back on, his gaze falling on the street scene outside the window. "Conquering the world relies on spears pointed at the enemy, but defending it requires a sturdy shield. Sega's operations are too large now—so large that if an anthill appears within, the entire dam will collapse. Yoshimura and the others only see the bonuses right in front of them; what I see is the financial security of the next five,
...ten years of financial security."
He stood up, walked over to Oguchi Hisao, and patted his capable lieutenant on the shoulder.
"I'll leave game development and market expansion to you. I'll handle the internal governance and the restructuring of the power structure. With a clear division of labor, this ship will sail steadily."
"As for this year's games, let's try to schedule all releases before December. We should still leave the Christmas and New Year period open," Takuya Nakayama added as a suggestion. "The estimated volume of the gaming market this year is even larger than last year's. As long as we can replicate last year's success, the royalties from third parties will surely give us a huge surprise."
"Understood, I know how to arrange it," Oguchi Hisao nodded and left the office.
After sending Oguchi Hisao away, Takuya Nakayama glanced at his watch.
It was 3:00 PM, the time he had set aside for a special study and discussion session with the "Board Audit Committee."
In a small conference room at Sega Headquarters, the hum of the air conditioner was particularly audible in the quiet environment.
On one side of the long table sat several partners from PricewaterhouseCoopers' New York headquarters and senior consultants from McKinsey.
Expensive laptops were placed in front of them, their screens flickering with complex financial models and risk assessment matrices.
On the other side of the long table sat several core directors of Sega, along with their respective trusted protégés.
Takuya Nakayama sat at the head of the table, holding a deep-dive analysis of the "Internal Control — Integrated Framework" (COSO Report).
This internal control standard, released by the United States only in 1992, was currently a "dragon-slaying technique"—a rare and potent skill—that was still largely unknown in the Japanese corporate world.
"Gentlemen, what we are here to discuss today is the application of 'penetrative auditing' in cross-border related-party transactions," said Richard, a partner at PricewaterhouseCoopers, in a professional, emotionless tone. "Take, for example, the payment terms between Sega of North America and local distributors. If we only look at the accounts receivable on the books, the data looks very impressive. However, if we introduce a cash flow retrospective model, we will uncover serious hidden risks of bad debt."
An elderly director frowned and adjusted his reading glasses. "Mr. Richard, we pay the ChuoAoyama Audit Corporation a huge audit fee every year. Are you suggesting that their work is ineffective?"
An elderly director frowned, pushing up his reading glasses. "Mr. Richard, we pay the Chuo Aoyama Audit Corporation exorbitant audit fees every year."
"Are you suggesting that their work is ineffective?"
Richard smiled politely, a smile that concealed a touch of the arrogance peculiar to professionals.
"Not ineffective, but due to the trust mechanisms inherent in Japanese auditing practices," he replied, "they tend to overlook flaws that have been technically concealed. Simply put, they are looking at what you want them to see, whereas we are looking for the things you don't want anyone to see."
These words hit directly at the heart of the matter, and the atmosphere in the conference room instantly froze.
Takuya Nakayama interjected at the opportune moment: "Director Suzuki, please do not misunderstand. Bringing in PwC and McKinsey is not about overturning previous audit results, but about establishing a more scientific defense system. We can let bygones be bygones regarding past mistakes, but moving forward, we must improve. As Mr. Richard said, we are undergoing the baptism of global competition. If our financial language remains stuck in the logic of a 'society of acquaintances,' the hidden risks in our finances will sooner or later be exploited—or even triggered—by those vampires on Wall Street."
He opened the proposal in his hand and pointed to the description of the "Audit Committee's" functions.
"This committee is not just a ceremonial title."
He opened the proposal in his hands, pointing to the section describing the functions of the "Audit Committee."
"This committee is not just an empty title. Moving forward, all major capital expenditures, overseas acquisitions, and performance appraisals for core executives at Sega must undergo independent review by this committee. Everyone here, or the candidates you appoint, will undergo six months of professional training. We must learn how to see through those whitewashed figures and learn how to use internationally accepted financial language to engage with global capital."
Several of the veteran board members exchanged glances.
Although these dry financial terms gave them a headache, they weren't stupid.
The proposal Takuya Nakayama presented was, in essence, expanding the power of the Board of Directors.
Previously, concrete operating data was held in the hands of department heads, and the Board usually only saw the final, aggregated results, meaning their power was effectively sidelined.
Now, through this Audit Committee, the Board's reach could extend directly to every nerve ending of the company.
For these old-school managers who craved control, this temptation was impossible to resist.
"Although the training fee is a bit pricey, it's worth it if it can bring long-term stability to the company," Director Suzuki stated first. "Managing Director Nakayama, I hope the two young people I arranged can receive special care from Mr. Richard so they can get up to speed as quickly as possible."
Takuya Nakayama nodded with a smile.
He was well aware that these trusted subordinates arranged by the directors were nominally here to learn, but in reality, they were here to act as eyes and ears.
However, he didn't mind, because this system itself was transparent and balanced.
As long as everyone followed the rules, the more eyes and ears there were, the more efficiently the system would run.
After the training sessions ended, Richard and his team began a "practical exercise" in Sega's finance building.
This so-called exercise was actually a spot check of some accounts from the past three years.
Backed by the Board of Directors and pushed forward strongly by Takuya, the Finance and Sales departments, despite their full resentment, could only obediently comply and hand over the original voucher drafts.
Furthermore, to appease the grassroots staff, the Board of Directors specially approved a special overtime subsidy for cooperating with these spot checks, which dispelled most of the staff's resentment.
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