{"url_path":"/sec/payp/10-k/2026/item-15","section_key":"item-15","section_title":"Item 15 Controls and Procedures","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-30","source_url":"https://www.sec.gov/Archives/edgar/data/2080845/0001193125-26-289382-index.html","accession_number":"0001193125-26-289382","cik":"0002080845","ticker":"PAYP","issuer_name":"PayPay Corp","edgar_url":"https://www.sec.gov/Archives/edgar/data/2080845/0001193125-26-289382-index.html","primary_entity_key":"0002080845","primary_entity_name":"PayPay Corp"},"word_count":909,"has_tables":true,"body_markdown":"Item 15. Controls and Procedures\n\nDisclosure Controls and Procedures\n\nOur management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2026.\n\nBased on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2026, to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. This conclusion was based on the identification of a new material weakness during the fiscal year ended March 31, 2026. The material weakness is that we did not adequately design and maintain the effectiveness of the controls to ensure that sufficient instructions are provided by the parent company, PayPay Corporation, and that necessary information is accurately reported by subsidiaries for the preparation of the financial statement disclosures.\n\nTo address this newly identified material weakness, we plan to reassess and enhance the policies and procedures in order to prepare the consolidated financial statements, including:\n\n(1)\nOrganizing regular Group-wide training, especially training related to subsidiary-specific disclosures.\n\n(2)\nEnhancing the guidelines that secure the accuracy and completeness of certain information used in the financial statement disclosures.\n\n(3)\nImproving period end financial reporting reviews over the disclosures included in the consolidated financial statements.\n\n129\n\n[Table of Contents](#toc_page)\n\n \n\nOur management, including our Chief Executive Officer and Chief Financial Officer, recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.\n\nManagement's Annual Report on Internal Control Over Financial Reporting\n\nThis Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies.\n\nAttestation Report of the Registered Public Accounting Firm\n\nThis Annual Report does not include an attestation report of our company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.\n\nChanges in Internal Control Over Financial Reporting\n\nAs previously disclosed in our registration statement on Form F-1, while preparing our consolidated financial statements for the year ended March 31, 2025, we identified material weaknesses in our internal control over financial reporting as disclosed in our registration statement on Form F-1, which related to (1) the control that secures the accuracy and completeness of certain information used for financial reporting processes at PayPay Bank Corporation and PayPay Securities Corporation; (2) the control over assessment in capitalization of intangible assets arising from software development at PayPay Bank Corporation; (3) the controls that evaluate the effectiveness of controls maintained by certain service organizations we relied on in our internal controls over the financial reporting processes at PayPay Bank Corporation; and (4) the control over privileged-level access, which manages configuration and security administrations within the IT system at PayPay Securities Corporation.\n\nTo address the material weaknesses identified above, we took the following actions:\n\n(1)\nFor the material weakness relating to the data accuracy in financial reporting, we enhanced the related guidelines and controls designed to ensure the accuracy and completeness of information used in financial reporting.\n\n(2)\nFor the material weakness relating to the software capitalization, while we had already designed and implemented the enhanced controls over the review and assessment of software development costs for capitalization purposes as of March 31, 2025, we operated such controls throughout the fiscal year as designed..\n\n(3)\nFor the material weakness relating to the oversight of third-party service organizations, we changed a third-party service organization which can provide a SOC 1 report, and also newly implemented compensating controls where a SOC 1 report is unavailable.\n\n(4)\nFor the material weakness relating to privileged-level access within our IT systems, we enhanced controls over privileged-level access, including controls relating to configuration management and security administration.\n\nManagement believes that the previously identified material weaknesses have been remediated as of March 31, 2026, based on the remediation efforts undertaken and the operation of the enhanced controls during the fiscal year.\n\nOther than as described above, there were no changes in our internal control over financial reporting that occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.\n\nFor risks relating to our internal control over financial reporting, see “Item 3. Key Information—D. Risk Factors— We identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain proper and effective internal control over financial reporting. If we fail to establish and maintain proper internal control over financial reporting, our ability to produce accurate financial statements or comply with applicable regulations could be impaired. As a result, shareholders could lose confidence in our financial reporting, which could result in litigation or regulatory enforcement actions and would harm our business and the trading price of the ADSs\"."}