OUTSOURCING : Notice of Receipt of the Full English Translation of the Investigation Report from the Investigation Committee

To Whom It May Concern	January 24, 2022
Company Name:	OUTSOURCING Inc.
Representative:	Haruhiko Doi
	Chairman and CEO
(First Section of TSE: Securities Code 2427)
Contact:	Masashi Umehara
	Managing Executive Officer
	and Head of Business
	Management Division
Phone:	[phone] (main)

Notice of Receipt of the Full English Translation of the Investigation Report from the Investigation Committee

The Company has disclosed the full Japanese investigation report and the summary version of the investigation report prepared in English, as described in the "Notice Regarding Receipt of the Investigation Report from the Investigation Committee" announced on December 28, 2021. The Company is pleased to inform you that it has received the full English translation of the investigation report.

Same as the Japanese investigation report, from the viewpoint of privacy and protection of confidential information, partial non-disclosure measures are taken for personal names and company names.

We sincerely apologize for the great concern and inconvenience caused to our shareholders, investors, and other stakeholders. The Company will do its utmost to restore everyone's trust, and ask for your continued support.

(Translation)

FOR REFERENCE PURPOSES ONLY

To OUTSOURCING Inc.

Investigation Report

December 28, 2021

The Outside Investigation Committee for OUTSOURCING Inc.

Chairman: Norihiro Sekiguchi

Member: Ayumi Uzawa

Member: Kayo Henmi

THIS IS AN ENGLISH TRANSLATION OF THE JAPANESE

ORIGINAL VERSION, PREPARED ONLY FOR THE

CONVENIENCE OF SHAREHOLDERS RESIDING OUTSIDE

JAPAN. THE ORIGINAL JAPANESE VERSION WILL PREVAIL,

SHOULD THERE BE ANY DIFFERENCE IN THE MEANING

BETWEEN THE ENGLISH VERSION AND THE JAPANESE

VERSION.

1

(Translation)

FOR REFERENCE PURPOSES ONLY

Table of Contents

I. Outline of the Investigation .................................................................................................	10
1.	Background on the Establishment of the Outside Investigation Committee...........................	10
2.	Purposes for Establishing the Committee ..........................................................................	10
3.	Structure of the Investigation...........................................................................................	10
4.	Background of the Expansion of the Scope of the Investigation (Detection of Suspicion of
Inappropriate Accounting at OS and OST)............................................................................	11
II. Outline of Investigation Procedures.....................................................................................	12
1.	Investigation Period........................................................................................................	12
2.	Summary of Investigation Procedures ..............................................................................	12
(1) Verification and Scrutiny of the Relevant Materials ..........................................................	12
(2)	Interview with Relevant Personnel .................................................................................	12
(3)	Investigation through Digital Forensics ...........................................................................	12
(4)	Questionnaire Investigations ..........................................................................................	12
(5)	Information Gathering through Establishment of an Information Supplement Desk .............	13
3. Assumptions ..................................................................................................................	13
III. Summary of the Company ................................................................................................	14
1.	Summary of the OS Group ..............................................................................................	14
(1) Summary of OS............................................................................................................	14
(2)	Composition of the OS Group ........................................................................................	14
(3)	Corporate History of the OS Group ................................................................................	16
(4)	Summary of the Corporate Governance System at the OS Group .......................................	18
(5)	System of Budget Planning and Control for Subsidiaries...................................................	20
2. Summary of the OST Group............................................................................................	21
(1) Summary of OST..........................................................................................................	21

(2) Management Organization of OST (such as shareholders and directors) (as of August 1, 2021)

	21
(3)	Composition of the OST Group......................................................................................	22
(4)	Corporate history of the OST Group ...............................................................................	23
(5)	Summary of the Corporate Governance System at the OST Group.....................................	24
(6)	Circumstances in Preparation for the Listing of the OST Stock..........................................	25
3. Summary of EN .............................................................................................................	28
(1) Summary of EN............................................................................................................	28
(2)	Organizational Structure at EN.......................................................................................	28
(3)	Corporate History of EN................................................................................................	28
4. Summary of RPM ..........................................................................................................	29
IV. Transition of Financial Results of the OS Group ..................................................................	30
1. Profit and Loss of the OS Group ......................................................................................	30
	2

(Translation)

	FOR REFERENCE PURPOSES ONLY
2. Profit and Loss by Segment.............................................................................................	30
(1)	Fiscal year ended December 2015 ..................................................................................	30
(2)	Fiscal year ended December 2016 ..................................................................................	31
(3)	Fiscal year ended December 2017 ..................................................................................	31
(4)	Fiscal year ended December 2018 ..................................................................................	31
(5)	Fiscal year ended December 2019 ..................................................................................	31
(6)	Fiscal year ended December 2020 ..................................................................................	32
3. Profit and Loss of EN .....................................................................................................	32
V. Investigation Results concerning Suspicious Misconducts at OS ............................................	33
1. Overview of the Inappropriate Accounting at OS. ..............................................................	33
(1)	Overview of Inappropriate Accounting ...........................................................................	33
(2)	Beginning of the Legacy................................................................................................	33
(3)	Motives for the Legacy..................................................................................................	34
(4)	Planning and Conduct of the Legacy...............................................................................	34
(5)	Management of the Legacy............................................................................................	35
2. Outline of Each Practice as Part of Legacy........................................................................	36
(1)	Inflated Recognition of Sales .........................................................................................	36
(2)	Deferral of Expenses.....................................................................................................	37
3. "Barter Transactions" with Company b.............................................................................	39
(1)	Basic Concept ..............................................................................................................	39
(2)	History of Transactions .................................................................................................	40
(3)	Mr. AD's Understanding................................................................................................	53
(4)	Other Matters ...............................................................................................................	54
(5)	Economic Substance of OS's "Barter Transactions" with Company b.................................	55
(6)	Examination of Accounting Matters................................................................................	56
(7) Summary .....................................................................................................................	58
4. "Barter Transactions" with Recruiting Companies .............................................................	58
(1)	Basic Approach ............................................................................................................	58
(2)	Characteristics of the "Barter Transactions" with Recruiting Companies.............................	59
(3)	Economic Substance of the "Barter Transactions" with Recruiting Companies....................	60
(4)	Examination of Accounting Matters................................................................................	64
(5)	Other Matters (OST's Paybacks for "Barter Transactions" (Margin Adjustments between OS
and OST)).........................................................................................................................	65
5. Examination of Other Suspicious Cases at OS...................................................................	66
6. The Result of Inappropriate Accounting of Each Fiscal Year...............................................	67
VI. Investigation Results concerning Suspicious Misconducts at OST.........................................	68
1. Overview of the Inappropriate Accounting at OST.............................................................	68
(1)	Overview of the Inappropriate Accounting ......................................................................	68
	3

(Translation)

	FOR REFERENCE PURPOSES ONLY
(2)	Beginning of the Inappropriate Accounting .....................................................................	69
(3)	Motives for the Inappropriate Accounting .......................................................................	69
(4)	Planning, Conduct and Management of the Inappropriate Accounting ................................	69
2. Overview of Methods of the Inappropriate Accounting ......................................................	70

(1) Recognition of Fictitious Sales (in the fiscal years ended December 2019 and December 2020)

	70
(2)	Deferral of Recruitment Expenses ..................................................................................	71
(3)	Inappropriate Adjustment to Work-in-progress Inventory Balance......................................	72
(4)	Deferral of outsourcing expenses....................................................................................	72
3. Examination of Other Suspicious Cases at OST.................................................................	73
4. The Result of Inappropriate Accounting of Each Fiscal Year...............................................	73
VII. Investigation Results concerning Suspicious Misconducts at EN .........................................	75
1. Overview of the Inappropriate Accounting at EN...............................................................	75
(1)	Overview of the Inappropriate Accounting ......................................................................	75
(2)	Beginning of the Inappropriate Accounting .....................................................................	75
(3)	Motives for the Inappropriate Accounting .......................................................................	75
(4)	Planning and Conduct of the Inappropriate Accounting.....................................................	75
2. Overview of Methods of the Inappropriate Accounting ......................................................	76
(1)	Recognition of Fictitious Sales.......................................................................................	76
(2)	Early Recognition of Sales.............................................................................................	78
(3)	Inappropriate Adjustment to Work-in-progress Inventory Balance......................................	79
(4)	Inappropriate Accounting Relating to Advance Payments..................................................	80
(5) Avoidance of Recognizing Provision for Loss on Orders Received.....................................	80
(6) Avoidance of Recognizing Impairment Loss ....................................................................	81
(7)	Deferral of Expenses.....................................................................................................	81
(8)	Inappropriate Recognition of Fixed Assets ......................................................................	82
(9)	Inappropriate Accounting Relating to Advance Payments Received ...................................	83
3. Examination of Other Suspicious Cases at EN...................................................................	83
4. The Result of Inappropriate Accounting of Each Fiscal Year...............................................	84
VIII. Investigation Results concerning Suspicious Misconducts at RPM .....................................	85
1. Overview of the Inappropriate Accounting at RPM............................................................	85
(1)	Overview of the Inappropriate Accounting ......................................................................	85
(2)	Beginning of the Inappropriate Accounting .....................................................................	85
(3)	Motives for the Inappropriate Accounting .......................................................................	85
(4)	Planning and Conduct of the Inappropriate Accounting.....................................................	85
2. Overview of Methods of the Inappropriate Accounting ......................................................	86
(1)	Inappropriate Adjustment to Work-in-progress Inventory Balance......................................	86
(2) Avoidance of Recognizing Provision for Loss on Orders Received.....................................	87
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