Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) : self evaluation report on internal control in 2021

Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390)

Self evaluation report on internal control in 2021

Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) all shareholders:

In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control regulatory requirements (hereinafter referred to as the "enterprise internal control normative system"), combined with the internal control system and evaluation methods of Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) (hereinafter referred to as the "company"), on the basis of daily and special supervision of internal control, We evaluated the effectiveness of the company's internal control on December 31, 2021 (the benchmark date of the internal control evaluation report).

1、 Important statement

It is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control, evaluate its effectiveness and truthfully disclose the internal control evaluation report in accordance with the provisions of the enterprise's internal control standard system. The board of supervisors shall supervise the establishment and implementation of internal control by the board of directors. The president of the company is responsible for organizing and leading the daily operation of the enterprise's internal control. The board of directors, the board of supervisors and the directors, supervisors and senior managers of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this report, and bear individual and joint legal liabilities for the authenticity, accuracy and completeness of the contents of the report.

The objective of the company's internal control is to reasonably ensure the legal compliance of operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the realization of development strategy. Due to the inherent limitations of internal control, it can only provide reasonable assurance for the realization of the above objectives. In addition, as changes in circumstances may lead to inappropriate internal control or reduced compliance with control policies and procedures, there is a certain risk to speculate the effectiveness of internal control in the future according to the internal control evaluation results.

2、 Internal control evaluation conclusion

According to the identification of major defects in the company's internal control over financial reporting, there are no major defects in the internal control over financial reporting on the benchmark date of the internal control evaluation report. The board of Directors believes that the company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise's internal control standard system and relevant regulations. According to the identification of major defects in the company's internal control over non-financial reports, the company found no major defects in the company's internal control over non-financial reports on the benchmark date of the internal control evaluation report.

There are no factors affecting the evaluation conclusion of the effectiveness of internal control from the base date of the internal control evaluation report to the date of issuance of the internal control evaluation report.

3、 Internal control evaluation

(I) evaluation scope of internal control

According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas. The main units included in the evaluation scope include: Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) , wholly-owned subsidiaries and holding subsidiaries.

The main businesses and matters included in the evaluation scope include: internal environment, risk assessment, control activities, information and communication, and internal supervision; The high-risk areas of focus mainly include downstream industry fluctuation risk, market competition risk, bad debt risk of accounts receivable, price fluctuation risk of main raw materials, exchange rate fluctuation risk, internal management risk and foreign investment project risk.

The above units, businesses and matters included in the evaluation scope and high-risk areas cover the main aspects of the company's operation and management, and there are no major omissions.

1. Internal environment

(1) The company has established a relatively perfect corporate governance structure

In accordance with the company law, securities law, Shenzhen Stock Exchange GEM Listing Rules, Shenzhen Stock Exchange GEM listed companies standardized operation guidelines and other laws, regulations, normative documents and the relevant provisions of the articles of association, the company has formulated the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors and the rules of procedure of the board of supervisors The president's working rules defines the responsibilities and authorities in decision-making, implementation and supervision, improves the corporate governance structure, and forms a scientific and effective division of responsibilities and check and balance mechanism. The company has established the corporate governance structure of the general meeting of shareholders, the board of directors, the board of supervisors, the president and various functional departments to perform their respective duties and standardize the operation.

(2) Internal audit supervision system

The board of supervisors of the company exercises its functions and powers in accordance with the rules of procedure of the board of supervisors, is responsible for the general meeting of shareholders, and performs its supervisory duties to the directors, President and other senior managers in accordance with the law.

In accordance with the audit law, the provisions of the National Audit Office on internal audit, the auditing standards of the Ministry of China and other relevant laws and regulations and the requirements of the standardization of joint-stock companies, the company has established an audit committee under the board of directors and formulated the working rules of the audit committee of the board of directors, which specifies that the audit committee is mainly responsible for communication with the internal and external audit institutions of the company The supervision and verification work has strengthened the decision-making function of the board of directors, achieved prior audit and professional audit, ensured the effective supervision of the board of directors over the management, and improved the internal control of the company.

The audit committee of the company has set up the audit department and formulated the internal audit system, which clearly stipulates the audit scope, audit procedures, audit authority and professional ethics of the audit department. It is particularly emphasized that the person in charge of the audit department should be a person with corresponding independence, good professional ethics and professional competence; The audit department shall conduct regular and irregular verification, and the work of the audit department shall not be interfered by other departments or individuals; The audit department shall report the internal control defects found in the supervision and inspection in accordance with the internal audit procedures of the enterprise; Have the right to report directly to the board of directors on the major defects of internal control found in the supervision and inspection. The formulation and implementation of the above system has laid a foundation for preventing internal control risks and improving management efficiency from the system level. Through independent and objective supervision and evaluation activities of internal audit, review and evaluate the soundness, operation effectiveness and compliance of the company's internal control system, effectively reduce internal control risks, effectively improve management efficiency and operation efficiency, and provide a strong guarantee for preventing asset loss, resource waste and optimizing organizational structure and process. (3) Organizational structure of the company

The company has established a management structure according to the modern enterprise management system. According to the business operation characteristics and management needs, the company has set up a marketing center, R & D center, supply chain management department, quality assurance department, logistics and storage department, human resources department, finance department, audit department, securities Affairs Department, equipment management department, environmental safety department, investment development department, human protective articles business department Internal functional organizations such as dust-free wiping products division, dust purification products manufacturing center, electromechanical products manufacturing center and die-cutting products division. It defines the responsibilities and authorities of each department, post responsibilities, business management procedures and management systems, so as to divide and guide the work of each functional department. (4) Human resource management

According to the labor law and relevant laws and regulations, the company has established scientific labor and personnel systems such as employment, assessment, training, promotion, salary, leave, resignation, dismissal, retirement and social insurance payment, strictly implemented national laws and regulations on labor employment, protected the legitimate interests of employees, and established and improved incentive and restraint mechanisms, Continuously enhance employees' sense of belonging and mission; According to the enterprise development plan and annual production and operation plan, formulate reasonable employment plan and employee training plan, continuously improve the professional competence of employees and strengthen their professional ethics, and maintain the survival, development and innovation ability of the enterprise by establishing and improving a flexible employment mechanism. The company takes measures such as organizing new employees to study, posting bulletin boards and internal e-mail to fully publicize and effectively implement these systems through multiple channels and in an all-round way.

(5) Enterprise culture construction

The company's core values: customer first, integrity and compliance, dedication, win-win cooperation and positive progress. Customer first: customer demand-oriented, provide customers with competitive products and services, try our best to make customers satisfied and continue to create maximum value for customers.

Integrity and compliance: only when you are honest and sincere can you do what you say, keep your commitments, win customers with integrity, operate in accordance with laws and regulations, and abide by the company's systems and processes.

Conscientiousness: conscientiousness is to have a good working attitude and start from yourself. When there are problems in work, you should find reasons, not reasons. Conscientiousness is to have the courage and courage to take responsibility, have rigid execution, and try your best to complete the goals and tasks.

Win win cooperation: we advocate the spirit of teamwork. If we win, we will toast each other, and if we lose, we will fight to save each other. We will adhere to cooperation with all stakeholders to jointly create value, share interests and achieve common development.

Positive and enterprising: not satisfied with the current situation, study hard and make progress, be self-motivated, constantly improve work requirements and standards, and continuously improve and improve management level.

The company strengthens the publicity and implementation of corporate culture in its daily work, publicizes the concept of corporate culture to the majority of employees through various publicity channels, integrates the construction of corporate culture into daily business activities, enhances the sense of responsibility of employees and the cohesion of the company, and ensures the healthy and stable operation of the company.

2. Risk assessment

The company implements a sound risk management concept and takes a cautious approach to high-risk investment projects. Relevant management systems have been formulated. On the basis of considering strategic objectives, internal control objectives, development ideas and industry characteristics, the company has formulated and improved risk management policies and measures, implemented the inspection and supervision of the implementation of internal control system, ensured the knowability, preventability and controllability of business transaction risks, and ensured the operation safety of the company.

(1) Operational risk

① Identify and assess market risks

The anti-static ultra clean technology industry mainly serves the electronic information manufacturing industry. The electronic information industry is obviously affected by the macroeconomic cycle. At the same time, the anti-static ultra clean technology industry has low concentration and fierce market competition. Although the company has obvious core competitive advantages, if the economic situation changes unpredictably and the company can not effectively deal with the increasingly fierce market competition, it will have an adverse impact on the company's performance.

In this regard, the company pays close attention to the changing market situation of the industry, strengthens close communication with customers, improves the technical added value of products, strengthens cost control, and maintains the overall competitive advantage of the company in the market. The company continues to expand new areas of the market, tap new customers and new profit growth points, so as to eliminate the adverse effects of market competition.

② Identify and evaluate operation and management risks

After years of development, the company has formed and accumulated some excellent management experience. With the expansion of the company's business scale, the increase of personnel, especially the rapid development in recent years, the increase of subsidiaries, new changes in the company's business direction and business model, and the further expansion of the span of management, the company's operation management, talent development, technology development Business development and other capabilities bring greater challenges. If the company's organizational structure and management mode can not adapt and timely adjust and improve, it will lead to certain operation and management risks. In this regard, while timely improving the internal management system, the company strengthened and improved the internal control management of each subsidiary, strengthened the training and capacity-building of the management team, and improved the quality of the management team. At the same time, continuously improve the internal control system and strengthen management reform to improve the management level and operation efficiency of the company.

③ Identify and evaluate the price fluctuation risk of main raw materials

The price rise of the company's main raw materials will directly affect the production cost and the gross profit margin and profitability of the company. In the future, if the price rise of the company's main raw materials and the price of the company's products cannot rise year-on-year, the profit level of the company may be squeezed and there is a risk of decline in the gross profit margin. In this regard, the company will continue to optimize raw material inventory management, strengthen risk prevention and control of raw material procurement, and actively communicate and negotiate with suppliers and customers to reduce the impact of raw material price fluctuations. At the same time, the company will reduce the rising pressure of raw material price fluctuations on the company's costs by optimizing product structure, improving production technology, improving standardized operation level, improving production efficiency and controlling costs.

④ Identify and evaluate the risks of new business development

The company has three business areas: anti-static ultra clean technology products, medical device products and new energy lithium battery materials. The business development of the company extends to the field of new energy lithium battery materials, realizes the extension of the enterprise industrial chain, enhances the market competitiveness and profitability, and is in line with the strategic interests of the company's long-term development.

In 2021, the company's overseas investment and construction of lithium battery material project may have potential risks such as technical risk, economic benefit risk, industry competition risk and management risk. The company will make use of the resource advantages, professional management experience and rich technical accumulation and operation experience of each shareholder to strengthen the management of new business projects, timely and effectively respond to the changes of the external environment, timely adjust the development strategy according to the market situation, and minimize the risk of adverse operation of the company.

(2) Financial risk

① Identify and evaluate the risk of accounts receivable

With the continuous expansion of the company's business scale, the ending balance of accounts receivable increases, and the aging of some customers is long, resulting in accounts receivable occupying a large amount of funds of the company. Although the company's main customers have good reputation and are less likely to have bad debts, if the production and operation status of customers changes adversely, the company's accounts receivable may have bad debt risk.

In this regard, the company strengthened the risk assessment and tracking management of customer credit, strengthened the pre audit, in-process control and post supervision of accounts receivable, further clarified the responsibilities of sales personnel and financial personnel in managing accounts receivable, and improved and refined the accounts receivable management system and the assessment management system of sales personnel.

② Identify and assess exchange rate fluctuation risk

The company's exports are mainly settled in US dollars. If the exchange rate of RMB against US dollars fluctuates sharply, the company's financial situation will be affected, and the company needs to bear the foreign exchange settlement risk caused by exchange rate fluctuation.

In this regard, the company will strengthen foreign exchange risk prevention, pay close attention to the trend of exchange rate, flexibly select a reasonable combination of foreign exchange hedging tools according to the needs of business development, and reduce the adverse impact of exchange rate fluctuations. At the same time, we will continue to adopt sound business strategies for overseas businesses, continuously track and fully grasp the credit status of customers, strengthen order management and real-time monitoring, effectively and dynamically manage accounts receivable, and further strengthen the implementation and implementation of the financial internal control system.

3. Control activities

(1) Establish and improve the internal control system

① Corporate governance

In accordance with the provisions of the company law, the securities law and other relevant laws and regulations, the company has formulated a corporate governance system with the articles of association and the rules of procedure of the "three meetings" as the core, including the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors, the rules of procedure of the board of supervisors, the working rules of the president, the working system of independent directors Information disclosure management system to ensure the standardized operation of the company and promote the healthy development of the company. ② Daily operation and management

Based on the basic system, in accordance with the principles of comprehensiveness, importance, checks and balances, adaptability, cost-effectiveness and the requirements of establishing a modern enterprise system, the company has formulated a series of systems and regulations covering all business links such as procurement, production, sales, fixed assets management and financial management. The company has formulated job descriptions for all posts, The contents and responsibilities, work authority, job requirements and examination of each post