About Guangzhou jusailong Engineering Plastics Co., Ltd
Assurance report of internal control
Zhonghui Huijian [2021] No. 6981 all shareholders of Guangzhou jusailong Engineering Plastics Co., Ltd.:
We have accepted the entrustment to review the attached self-evaluation report on internal control of Guangzhou jusailong Engineering Plastics Co., Ltd. (hereinafter referred to as jusailong company) prepared by the management of Guangzhou jusailong Engineering Plastics Co., Ltd. as of June 30, 2021, and have verified the effectiveness of internal control related to the financial statements.
1、 Description of significant inherent limitations
Internal control has inherent limitations, and there is the possibility of misstatement and undetected due to error or fraud. In addition, due to the change of circumstances, the internal control may become inappropriate, or the degree of compliance with control policies and procedures may be reduced. According to the internal control evaluation results, it is speculated that the effectiveness of internal control in the future has a certain risk.
2、 Restrictions on the users and purposes of the report
This assurance report is only used for the initial public offering of shares by jusailong company and shall not be used for any other purpose. We agree that this assurance report, as a necessary document for the initial public offering of jusailong company, should be submitted together with other application materials.
3、 Responsibilities of management
The responsibility of the management of jusailong company is to establish and improve the internal control and maintain its effectiveness. At the same time, in accordance with the basic norms of enterprise internal control (CK [2008] No. 7) and relevant regulations, the management of jusailong company shall recognize the effectiveness of the internal control related to the financial statements on June 30, 2021, and be responsible for the above recognition.
4、 Responsibilities of Certified Public Accountants
Our responsibility is to express assurance opinions on the effectiveness of internal control based on the implementation of assurance work.
5、 Job overview
We have carried out the assurance business in accordance with the provisions of other assurance business standards for Chinese certified public accountants No. 3101 - assurance business other than audit or review of historical financial information. The above provisions require us to plan and implement the assurance work to obtain reasonable assurance on whether the information of the assurance object is free from material misstatement. In the assurance process, we have implemented other procedures including understanding, testing and evaluating the rationality of the design and effectiveness of the implementation of the internal control system, as well as other procedures that we consider necessary. We believe that our assurance work provides a reasonable basis for expressing opinions.
6、 Assurance conclusion
We believe that jucylon has maintained effective internal control related to the financial statements in all major aspects on June 30, 2021 in accordance with the basic norms of enterprise internal control and relevant regulations.
This conclusion is formed under the inherent limitations pointed out in the assurance report.
Zhonghui Certified Public Accountants (special general partnership) Chinese certified public accountant:
Hangzhou, China Certified Public Accountant:
Report date: September 17, 2021
Guangzhou jusailong Engineering Plastics Co., Ltd
Internal control self evaluation report
All shareholders of Guangzhou jusailong Engineering Plastics Co., Ltd.:
In accordance with the basic norms of enterprise internal control jointly issued by the Ministry of finance, China Securities Regulatory Commission and other departments and other relevant regulations, we have conducted a comprehensive inspection on the establishment, improvement and implementation of internal control of Guangzhou jusailong Engineering Plastics Co., Ltd. (hereinafter referred to as the company or the company), It also identified the defects existing in the design and operation of internal control, and comprehensively evaluated the rationality, integrity and implementation effectiveness of the company's internal control. The self-evaluation of the company's internal control related to financial reporting as of June 30, 2021 is reported as follows:
1、 Overall implementation of internal control evaluation organization
The board of directors of the company has always attached great importance to the establishment and improvement of the internal control system. In combination with the audit of the declared financial statements, the board of directors organized internal personnel to conduct a comprehensive inspection on the establishment and implementation of the company's internal control as of June 30, 2021, fully communicated with the external audit institutions and widely consulted the external auditors, On this basis, a self-evaluation report on internal control is issued. This report was approved by the board of directors of the company on September 17, 2021.
2、 Statement of the responsible party of internal control
Under the supervision of the corporate governance, the management of the company is responsible for designing, implementing and maintaining effective internal control and evaluating its effectiveness in accordance with the basic norms of enterprise internal control jointly issued by the Ministry of finance, China Securities Regulatory Commission and other relevant regulations; The main person in charge of the company is responsible for the authenticity of the internal control evaluation conclusion.
3、 Basic requirements for internal control evaluation
（1） Principles of internal control evaluation
Follow the principles of comprehensiveness, importance and independence to ensure the independence, objectivity and impartiality of this evaluation.
（2） Contents of internal control evaluation
1. Based on the internal environment, focus on: governance structure, development strategy, institutional setting, distribution of rights and responsibilities, separation of incompatible posts, human resources policies and incentive and restraint mechanisms, corporate culture, social responsibility, etc.
2. Focus on production and operation activities, focusing on: fund raising and use, procurement and payment, sales and collection, production process and cost control, asset operation and management, foreign investment, related party transactions, external guarantee, R & D and other links.
3. Give consideration to control means and focus on: whether the budget is binding, whether there are disputes in contract performance, whether the information system is organically combined with internal control, whether the internal report is timely transmitted and effectively communicated, etc.
（3） Basis of internal control evaluation
According to the company law, securities law, basic norms of enterprise internal control and other laws, regulations and other relevant provisions. （4） Procedures and methods of internal control evaluation
1. Evaluation procedure: establish an evaluation team and formulate an evaluation plan; On site inspection; The evaluation team studies and identifies the defects of internal control; Report to the board of directors for deliberation and approval in accordance with the specified authorities and procedures.
2. Evaluation method: form an evaluation team, comprehensively use various methods such as individual interview, questionnaire, special discussion, walk through test, statistical sampling and comparative analysis, widely collect the evidence of the company's internal control design and effective operation, and study and identify the internal control design defects and operation defects.
4、 Establishment and implementation of internal control
（1） Establish and implement the objectives followed by internal control
Internal control is a process implemented by the company's board of directors, board of supervisors, management and all employees to achieve control objectives. The objective of establishing and implementing internal control is to reasonably ensure the legal compliance of the company's operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the company to realize its development strategy.
（2） Principles for establishing and implementing internal control
1. Principle of comprehensiveness. Internal control shall run through the whole process of decision-making, implementation and supervision, covering all businesses and matters of the company.
2. Principle of importance. Internal control should pay attention to important business matters and high-risk areas on the basis of comprehensive control. 3. Principle of checks and balances. Internal control shall form mutual restriction and supervision in the aspects of governance structure, institutional setting, distribution of rights and responsibilities, business process, etc., and take into account the operation efficiency.
4. Principle of adaptability. The internal control shall adapt to the company's business scale, business scope, competition and risk level, and shall be adjusted in time with the changes of the situation.
5. Cost benefit principle. Internal control should weigh the implementation cost and expected benefits to achieve effective control at an appropriate cost.
（3） Evaluation of the basic framework of the company's internal control
According to the basic norms of enterprise internal control and other regulations, the establishment and implementation of effective internal control by the company should include the following elements: (1) internal environment; (2) Risk assessment; (3) Control activities; (4) Information and communication; (5) Internal oversight. Based on the comprehensive evaluation of these five elements, the establishment and implementation of the company's internal control system are as follows:
1. Internal environment
(1) Governance structure
In accordance with relevant national laws and regulations and the articles of association, the company has established a standardized corporate governance structure and rules of procedure, defined the responsibilities and authorities in decision-making, implementation and supervision, and formed a scientific and effective division of responsibilities and check and balance mechanism.
1) The rules of procedure of the general meeting of shareholders have been formulated, which clearly stipulates the nature, functions and powers of the general meeting of shareholders and the working procedures such as convening and notification, proposal, voting and resolution of the general meeting of shareholders. The formulation and effective implementation of the rules ensure that the general meeting of shareholders exercises the decision-making power on major matters according to law, which is conducive to protecting the legitimate rights and interests of shareholders.
2) The board of directors of the company consists of 9 directors, including 1 Chairman and 1 vice chairman, including 3 independent directors. There are four special committees: Strategy Committee, audit committee, salary and assessment committee and Nomination Committee; The special committees are held by the directors and independent directors of the company. The company has formulated the rules of procedure of the board of directors, the working system of independent directors and the rules of procedure of professional committees of the board of directors, which stipulate the selection and appointment procedures of directors, the obligations of directors, the composition and responsibilities of the board of directors, the rules of procedure of the board of directors, the working procedures of independent directors, the composition and responsibilities of various special committees, etc. The formulation and effective implementation of these systems can ensure that the special committee can effectively perform its duties and provide help for the scientific decision-making of the board of directors.
3) The board of supervisors of the company is composed of three supervisors, one of whom is the employee representative. The company has formulated the rules of procedure of the board of supervisors, which clearly stipulates the responsibilities of supervisors, the functions and powers of the board of supervisors, the convening and notification of the board of supervisors, resolutions, etc. The formulation and effective implementation of the rules will help give full play to the supervisory role of the board of supervisors and protect the interests of shareholders, the company and the legitimate interests of employees from infringement. 4) The company has formulated the general manager's working rules, which stipulates the responsibilities of the general manager, the general manager's office meeting, the general manager's reporting system, the supervision system and so on. The formulation and effective implementation of these systems ensure the effective implementation of various decisions of the board of directors, and improve the operation and management level and risk prevention ability of the company.
(2) Internal organizational structure
The internal institutions set up by the company include: general manager's office, financial center, management center, Quality Assurance Center, manufacturing center, R & D center, sales center and internal audit department. By reasonably dividing the responsibilities of each department and post, and implementing the principle of separation of incompatible positions, a mechanism of clear division of labor, mutual cooperation and mutual checks and balances is formed between each department, which ensures the orderly and healthy operation of the company's production and operation activities and the realization of control objectives.
(3) Establishment of internal audit institutions
The audit committee under the board of directors of the company is responsible for the internal and external audit of the company in accordance with the rules of procedure of professional committees of the board of directors and other provisions
Communication, supervision and verification of external audit. The audit committee consists of three directors and two independent directors, one of whom is an accounting professional and serves as the convener of the Committee. The audit committee has an internal audit department and a manager of the internal audit department, who has the professional ability to carry out audit work independently. The internal audit department shall supervise and inspect the effectiveness of internal control in combination with internal audit supervision. The internal 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, its audit committee and the board of supervisors on the major defects of internal control found in the supervision and inspection.
(4) Human resources policy
The company has formulated human resources policies conducive to the sustainable development of the enterprise, including: employment, training, dismissal and resignation of employees; Salary, assessment, promotion, reward and punishment of employees; Compulsory leave system and regular job rotation system for employees in key positions; Restrictive regulations on the departure of employees who master important trade secrets, etc.
At the same time, the company attaches great importance to the quality of employees and takes professional ethics and professional competence as important standards for selecting and employing employees. At present, the company has 438 employees, including 7 with senior titles, 11 with intermediate titles and 17 with primary titles; Among them, there are 4 doctors, 8 masters, 71 undergraduates and 77 junior college students. The company also carries out various forms of follow-up training and education for different posts according to the needs of actual work, so that employees can be competent for their jobs.
(5) Corporate culture
Adhering to the enterprise philosophy of "gathering talents from all over the world and creating a Evergreen Foundation together", the enterprise values of "customer first, loyalty and gratitude, passion and dedication, honesty and love", and the business policy of "quality, safety, environmental protection and respect for heaven and love", the company is committed to "the engineering of general plastics, the high-performance of engineering plastics and the low-cost research of special engineering plastics" It is a leading enterprise providing customers with cost-effective comprehensive system solutions in all aspects of quality, service and supply. The company attaches great importance to strengthening cultural construction, cultivating positive values and sense of social responsibility, advocating honesty and trustworthiness, love and dedication, innovation and teamwork, establishing modern management concept and strengthening risk awareness. Directors, supervisors, managers and other senior managers shall play a leading role in the construction of corporate culture. The company's employees shall abide by the employee code of conduct and earnestly perform their post responsibilities.
2. Risk assessment
The company has formulated reasonable control objectives and established an effective risk assessment mechanism to identify and respond to internal and external risks related to the realization of control objectives and determine the corresponding risk tolerance.
In identifying internal risks, the company mainly focuses on the following factors: (1) human resources factors such as the professional ethics of directors, supervisors, managers and other senior managers and the professional competence of employees; (2) Organizational structure, business mode, asset management, business process and other management factors; (3) Independent innovation factors such as research and development, technology investment and information technology application; (4) Financial status, operating results, cash flow and other financial factors; (5) Safety and environmental protection factors such as operation safety, employee health and environmental protection; (6) Other relevant internal risk factors.
When identifying external risks, the company mainly focuses on the following factors: (1) economic situation, industrial policy, financing environment, market competition, resource supply and other economic factors; (2) Laws and regulations, regulatory requirements and other legal factors; (3) Safety and stability, cultural tradition, social credit, education level, consumer behavior and other social factors; (4) Scientific and technological factors such as technological progress and process improvement; (5) Natural disaster, ring
