catalogue
1、 About internal control Page 1-3 II. Whether it constitutes an equity transaction Page 4-5 II. Compliance of accounting treatment Page 6-6
Special description of letter of concern
TJH [2022] No. 160
Shenzhen Stock Exchange:
We have received the letter of concern about Jinzi Ham Co.Ltd(002515) (company department concern letter [2022] No. 71, hereinafter referred to as concern letter) transferred from Jinzi Ham Co.Ltd(002515) (hereinafter referred to as Jinzi Ham Co.Ltd(002515) company or company). We have carefully checked the financial matters that need to be explained in the letter of concern, and now the report is explained as follows.
1、 Explain whether the internal control system and risk management measures established by your company for commodity futures hedging business are perfect and can effectively control risks. Combined with the implementation of relevant systems of your company's commodity futures hedging business, including but not limited to transaction content, specific transaction amount, this closing operation, etc., explain whether there are major defects in your company's internal control. (Article 1 of the letter of concern)
（1） Explain whether the internal control system and risk management measures established by your company for commodity futures hedging business are perfect and whether they can effectively control risks
In accordance with the guidelines for the standardized operation of listed companies of Shenzhen Stock Exchange (revised in 2020), the company has formulated the internal control system for commodity futures hedging business, which clearly stipulates the approval authority, internal audit process and risk treatment procedures of hedging business, as follows:
1. The company establishes a "futures decision-making group" to manage the futures hedging business of the company. The members of the "futures decision-making group" include the chairman, President, vice president, person in charge of procurement, person in charge of finance, person in charge of internal audit, etc; The board of directors authorizes the chairman to take charge of futures hedging business and act as the head of the "futures decision-making group".
2. The company sets up a "futures working group" to be responsible for the specific implementation and operation of hedging business according to the decisions of the "futures decision-making group", with the vice president in charge as the group leader. The "futures working group" shall set up corresponding posts of futures hedging trading business in the securities department, finance department and internal audit department to be responsible for the specific implementation of hedging business. The main posts include futures traders, risk managers, fund allocators, accountants and archivists, among which futures traders are responsible for specific futures trading operations.
3. In terms of risk management measures, the company made it clear that: (1) the company's futures hedging business is limited to pig futures traded in domestic futures exchanges. The futures position shall not exceed the spot demand of hedging, and the time period of futures position shall match the time period of risk in the spot market in principle; (2) The company shall establish a hedging transaction account in its own name and use its own funds. It shall not use the raised funds to hedge directly or indirectly. Strictly control the capital scale of hedging business, reasonably plan and use the margin, supervise and control the investment proportion of margin, and close the position in time in case of severe market fluctuations to avoid risks; (3) The company focuses on futures trading and reasonably selects contract months to avoid market liquidity risk; (4) The internal audit department of the company will regularly and irregularly inspect the hedging transaction business, supervise the hedging transaction business personnel to implement risk management policies and risk management procedures, and timely prevent operational risks in the business; (5) The company will arrange and use professionals in strict accordance with the relevant internal control system, establish a strict authorization and post restraint mechanism, strengthen the professional ethics education and business training of relevant personnel, and improve the comprehensive quality of relevant personnel; (6) In order to improve the sense of responsibility of futures traders and standardize the company's futures trading management, the company formulated the assessment measures for the operation of futures hedging business before opening the futures account, and defined the relevant reward and punishment measures for futures traders.
（2） In combination with the implementation of the relevant systems of your company's commodity futures hedging business, including but not limited to the trading content, specific trading quota, this closing operation, explain whether there are major defects in your company's internal control
1. Trading contents of the company's commodity futures hedging business
The company carries out commodity futures hedging business and selects pig futures contracts traded on the floor market. Pig futures are Shenzhen Agricultural Products Group Co.Ltd(000061) futures directly related to the production and operation of the company, which meet the requirements of the resolution of the board of directors and the internal control system of the company. In the month selection of pig futures contract, based on the judgment of pork price and the actual operation needs of the company, the company mainly buys lh2203 and lh2111 contracts.
2. Trading quota of the company's commodity futures hedging business
According to the resolution of the 10th meeting of the 5th board of directors on January 11, 2021, the company will carry out pig futures hedging business with its own and self raised funds within the limit of 50 million yuan (excluding physical delivery of futures subject matter) within one year from the date of deliberation and approval by the board of directors; For commodity futures hedging business, in principle, the position established in the futures market matches the company's spot operation demand in a certain period of time; At any time point, the net long position or net short position established in the futures market shall not exceed 2 / 3 of the consumption in the next year in principle. The trading of the company's commodity futures hedging business in 2021 is as follows:
Project may 2021 June 2021 July 2021 August 2021 September 2021
Total net investment of 2000000.00 -1670000.00 4670000.00 45000000.00 20000000.00 in the current month (yuan)
Position at the end of the month 32 tons (2 hands) 32 tons (2 hands) 16272 tons
(1017 hands)
Note: since the implementation of position closing in September 2021, the company has transferred the surplus funds in the futures account to the account of Agricultural Bank Of China Limited(601288) Jinhua Branch and suspended the commodity futures hedging business.
It can be seen from the above table that as of August 31, 2021, the margin of the company's futures account did not exceed 50 million yuan and did not exceed the authority authorized by the board of directors; On September 1, 2021, the company decided to deliver the contract in kind. Due to the continuous decline of the price of futures varieties, in order to prevent passive closing, the company added 20 million yuan of margin to the futures account in batches in early September 2021, which met the requirements of the company's internal control system.
As for the position of warehouse under construction, as of August 31, 2021, the company's position was 16272.00 tons (1017.00 hands), which was lower than 2 / 3 of the company's procurement volume in 2020 and the planned procurement volume in 2021, but it did not fully match the actual operating procurement volume in the spot market.
3. Trading closing operation of the company's commodity futures hedging business
Since the middle of September 2021, the prices of pigs in the futures and spot markets have fallen sharply. Due to excessive pessimism about the future market, the futures traders closed their positions on the pig futures contracts without the company's closing order, trying to re open their positions at a lower price, and did not report the relevant situation to the company until September 27, 2021, Promise to bear all losses according to relevant assessment methods. After knowing the relevant situation, the company required it to bear all the losses according to the relevant provisions of the assessment methods, and recovered all the compensation on September 30, 2021, thus causing no actual economic losses to the company. Since October 2021, the company has suspended the hedging business of pig futures. The company made a decision to dissuade the futures traders, and investigated the corresponding responsibilities of the members of the futures decision-making group and the futures working group in this incident according to their work responsibilities. However, the company failed to disclose the information of the relevant matters in time due to the understanding deviation of the relevant matters.
（3） Verification description
For the internal control related to the company's commodity futures hedging business, our audit procedures mainly include:
1. Understand the key internal controls related to the company's commodity futures hedging business, evaluate the design of these controls, determine whether they have been implemented, and test the operation effectiveness of relevant internal controls;
2. Understand the risk management measures related to the company's commodity futures hedging business, evaluate the setting of these measures, and test whether these measures effectively control risks;
3. Obtain the resolutions of the board of directors, internal control system, proposal on carrying out pig hedging business, difference error correction announcement and hedging business progress announcement related to the company's commodity futures hedging business, and understand whether the company's information disclosure meets the requirements;
4. Obtain the company's 2021 pig futures account opening information and pig futures trading details, and understand whether the futures trading content and trading quota comply with the resolutions of the board of directors and relevant provisions of internal control;
5. Obtain the minutes of relevant meetings and relevant daily reports of the company's pig futures, and understand the decision-making process of the company's plan to implement the pig futures contract for physical delivery;
6. Obtain the company's relevant instructions, meeting minutes and the company's punishment notice on the closing operation, and understand the process of the closing operation and the remedial measures taken by the company;
7. Interview relevant members of the futures decision-making group and futures traders to understand the company's internal control and assessment methods related to futures trading, and understand the causes of closing positions and the measures taken by the company.
After verification, we believe that the company has established internal control system and risk management measures for commodity futures hedging business. Although the company has suffered losses due to the illegal closing operation of futures traders, and in view of the fact that the compensation paid by futures traders has been received in time in accordance with the relevant assessment measures, so as to avoid the actual losses of the company, the following internal control defects still exist:
1. When the company conducts commodity futures hedging business, it fails to make timely adjustment according to the market situation when building positions in the futures market, resulting in deviation from the actual operating demand of the company in a certain period of time;
2. The daily supervision and control of futures traders need to be strengthened. The operation authority of futures traders needs to be further controlled and refined. At the same time, the supervision and inspection of futures accounts should be strengthened, and the futures accounts should be reconciled and inspected regularly to find abnormal and illegal transactions in time;
3. If the accounting treatment of important matters of the company's commodity futures hedging business is wrong or not timely and not disclosed in time, relevant personnel need to strengthen business learning to ensure timely and accurate disclosure of relevant information.
2、 Explain the specific time when your company's futures traders pay the compensation, the specific source of funds of relevant compensation, whether the compensation actually comes from your company's controlling shareholders, actual controllers and other related parties (including the original actual controllers, controlling shareholders and their related parties), and whether it constitutes an equity transaction. (Article 3 of the inquiry letter)
(I) specify the specific time when the futures trader of your company will pay the compensation
The details of compensation paid by futures traders of the company are as follows:
Serial number payment time amount (yuan) futures trader bank and account number
1 2021.9.29 27,000,000.00 Agricultural Bank Of China Limited(601288)
2 2021.9.29 20,000,000.00 622848038186183****
3 2021.9.30 8,105,349.00
Total 55105349.00
(II) the specific capital source of relevant compensation, whether the compensation actually comes from your company's controlling shareholders, actual controllers and other related parties (including the original actual controllers, controlling shareholders and their related parties), and whether it constitutes an equity transaction
The compensation paid by the company's futures traders to the company's account comes from the self owned and self raised funds of his individual and his father-in-law Shi xiongbiao (due to the shortage of fund-raising time, Shi xiongbiao temporarily borrowed 41.05 million yuan from his friend Wang Qihui (vice president of the company and former Secretary of the board of directors) on September 29, 2021, On September 29, 2021, he occupied the 5.95 million yuan of alimony entrusted by his brother Shi Yanjun (President and former chairman of the company) to his nephew, and then repaid most of the arrears to Wang Qihui through the transfer of other company shares held by him. At the same time, he paid 5.7 million yuan of alimony to his nephew and returned the difference in accordance with Shi Yanjun's entrustment, As of the issuing date of this note, Shi xiongbiao's occupation of Shi Yanjun's funds has been eliminated, and the outstanding balance of Wang Qihui's arrears is 6.9278 million yuan). In addition, there is no actual source from the company's controlling shareholders and actual controllers (including the original actual controllers and controlling shareholders).
Shi xiongbiao, the father-in-law of the company's futures trader, is a natural person shareholder holding 3.45% of the company's shares, and Shi xiongbiao is the brother of Shi Yanjun, the former actual controller of the company, According to the company's futures related assessment measures (the operators must operate in strict accordance with the company's internal control system for commodity futures hedging business. If they fail to operate in accordance with the company's system requirements, the business profit is positive and the company will not reward; when the business profit is negative, the specific operators must compensate in full), The losses caused to the company by the illegal operation of futures traders should be compensated by them. Shi xiongbiao used his own and self raised funds to help his son-in-law pay compensation based on his father-in-law rather than his shareholder status. This transaction does not constitute an equity transaction.
（3） Verification description
For the compensation paid by the company's futures traders, our audit procedures mainly include:
1. Interview relevant members of the futures decision-making group and futures traders to understand the process of closing positions and the basis for the company to collect fines;
2. Obtain the company's futures hedging business operation assessment methods and verify their formulation process and time;
