Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) : self evaluation report on internal control in 2021

Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692)

Self evaluation report on internal control in 2021

Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) all shareholders:

According to the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements (hereinafter referred to as the enterprise internal control standard system), combined with Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) (hereinafter referred to as the company) internal control system and evaluation methods, on the basis of daily supervision 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 management 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 internal control of the company's financial report, there are no major defects in the internal control of financial report on the benchmark date of the internal control evaluation report. The board of Directors believes that the company has maintained effective internal control of financial report 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, main businesses and matters and high-risk areas included in the evaluation scope.

1. The main units included in the scope of evaluation include:

The total assets of the company and its wholly-owned subsidiaries and holding subsidiaries included in the evaluation scope account for 100% of the total assets in the company's consolidated financial statements, and the total operating income accounts for 100% of the operating income in the company's consolidated financial statements.

2. The main operations and matters included in the scope of evaluation include:

Corporate governance structure, organizational structure, development strategy, social responsibility and corporate culture; Sales business, procurement business, engineering projects, contract management, fund management, subsidiary management, related party transactions, external guarantee, external investment, asset management, information disclosure, etc.

3. The high-risk areas of focus mainly include:

Capital, procurement, assets, sales, engineering, contract, guarantee, investment and subsidiary management.

4. The above 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.

（2） Basis of internal control evaluation and identification standard of internal control defects

The company organizes and carries out internal control evaluation in accordance with the enterprise internal control standard system, the basic norms of enterprise internal control (CK [2008] No. 7), the notice on printing and distributing supporting guidelines for enterprise internal control (CK [2010] No. 11) and other relevant laws, regulations and rules.

According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, and in combination with the company's scale, industry characteristics, risk preference, risk tolerance and other factors, the board of directors of the company distinguished internal control over financial reports from internal control over non-financial reports, and studied and determined the specific identification standards of internal control defects applicable to the company, And consistent with previous years. The identification standards of internal control defects determined by the company are as follows:

1. Identification standard of internal control defects in financial reporting

The identification standard of internal control defects in financial reports is determined by the importance of the defects that may lead to the misstatement of financial statements. This importance mainly depends on two factors: first, whether the defects have a reasonable possibility that the internal control cannot prevent, detect and correct the misstatement of financial statements in time; Second, the amount of potential misstatement that may be caused by the defect alone or in combination with other defects.

(1) The quantitative criteria for the evaluation of internal control defects in financial reports are as follows: when the existence of one or a group of internal control defects has a reasonable possibility to prevent or find any misstatement greater than or equal to 3% of the total assets in the company's consolidated accounting statements or 5% of the total pre tax profit in the financial reports, it is recognized as a major defect; When the existence of one or a group of internal control defects has a reasonable possibility that it is impossible to timely prevent or find that the financial report is less than 3% of the total assets in the consolidated financial statements or 5% of the total profit before tax, but greater than or equal to 0.5% of the total assets in the consolidated financial statements or 1% of the total profit before tax, it is recognized as an important defect; Defects other than major defects and important defects are regarded as general defects.

(2) The qualitative criteria for the evaluation of internal control defects in financial reporting are as follows:

Recognition criteria for major defects: ① the financial statements of the enterprise have been or are likely to be given negative opinions or refused opinions by certified public accountants; ② The directors, supervisors and senior managers of the enterprise have been or are suspected of fraud, or the employees of the enterprise have colluded in fraud and caused important losses and adverse effects to the enterprise; ③ The audit committee and the audit department failed to effectively perform the supervision function of the company; ④ There are significant misstatements in the current financial statements, and the internal control fails to find such misstatements in the operation process.

Identification criteria for major defects: ① failure to select and apply accounting policies in accordance with generally accepted accounting standards; ② Failure to establish anti fraud procedures and control measures; ③ There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the true and complete goal.

Identification standard of general defects: refers to other control defects other than the above major defects and important defects.

2. Identification standard of internal control defects in non-financial reporting

The identification of internal control defects in non-financial reporting is mainly based on the impact of defects on the effectiveness of business processes and the possibility of occurrence.

The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows: when the existence of one or a group of internal control defects has a reasonable possibility to cause the direct property loss of the company to be greater than or equal to 3% of the total pre tax profit, it is recognized as a major defect; Defects that may cause the direct property loss of the company to be less than 3% but greater than or equal to 0.5% of the total pre tax profit are recognized as major defects; Defects that may cause the direct property loss of the company to be less than 0.5% of the total profit before tax are recognized as general defects.

The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows: if the possibility of defects is high, it will seriously reduce the work efficiency or effect, or seriously increase the uncertainty of the effect, or make it seriously deviate from the expected goal, it will be recognized as a major defect; If the possibility of defect occurrence is high, which will significantly reduce the work efficiency or effect, or significantly increase the uncertainty of the effect, or make it seriously deviate from the expected goal, it is recognized as a major defect; If the possibility of defects is small, it will reduce the work efficiency or effect, or increase the uncertainty of the effect, or make it deviate from the expected goal, which is a general defect.

(III) identification and rectification of internal control defects

1. Identification and rectification of internal control defects in financial reporting

According to the above identification standards of internal control defects in financial reporting, the company has no major defects and important defects in internal control of financial reporting during the reporting period.

2. Identification and rectification of internal control defects in non-financial reports

According to the above identification standards of internal control defects in non-financial reports, no major defects and important defects in the company's internal control over non-financial reports were found during the reporting period.

4、 Internal control construction of the company

(I) internal control environment

1. Corporate governance and organizational structure

In accordance with the requirements of establishing a modern enterprise system, the company has established the general meeting of shareholders, the board of directors, the board of supervisors and the management under the leadership of the board of directors in accordance with the company law, the securities law and other relevant laws and regulations, and operated effectively in accordance with their respective responsibilities. The articles of association and relevant internal regulations of the company specify the institutional arrangement of organization setting, responsibilities and authorities, staffing, working procedures and relevant requirements at all levels.

According to its own characteristics and the needs of future development, the company establishes and improves the organizational structure, defines the responsibilities and authorities in decision-making, implementation and supervision, forms a scientific and effective division of responsibilities and check and balance mechanism, and effectively prevents and resolves various risks in the process of operation. The general manager of the company consists of investment and financing department, securities affairs department, science and technology and strategic development department, market operation center, technology center, Design Institute, construction management center, water operation center, solid waste treatment division, planning and finance department, cost control department, administrative personnel department, bidding and procurement Department, audit department and other functional departments, At the same time, it has a number of sewage treatment plants and waste incineration power plants. Each department and company has clear responsibilities and mutual restraint. The company adopts the vertical management method for its subsidiaries, that is, the parent company carries out centralized and unified management on the production and operation plan, fund scheduling, personnel allocation and financial management of its holding subsidiaries.

2. Internal audit

The audit committee under the board of directors of the company is responsible for reviewing and supervising the effective implementation of internal control and self-evaluation of internal control, and coordinating internal control audit and other related matters. The audit committee has an audit department, which is responsible for the internal audit of the company's daily operation, financial status and the implementation of internal control, as well as the communication, supervision and audit with external audit in accordance with national laws and regulations and the requirements of the company's internal audit management system. The division of functions of the audit department complies with national laws and regulations and the provisions of the articles of association.

3. Development strategy

The company has a deep understanding of the overall development of the industry. Based on the comprehensive analysis and scientific prediction of the current situation and future trend, the company timely and efficiently formulates the development strategy in line with the actual situation of the company according to the current situation, development trend and market demand of the industry, so as to ensure the professionalism, efficiency and sustainability of the company's operation and management mode. The strategy committee is the deliberation and suggestion organization of the strategic planning. The general manager's office meeting is the organization and specific implementation organization of the company's strategic planning. It is responsible for organizing relevant departments to track, study and analyze the development strategic planning process, ensure the effective implementation of the company's development strategic planning, and promote the company to enhance its core competitiveness and sustainable development ability.

The company's strategic planning mainly includes strategic summary, environmental analysis, the company's overall development strategy, the company's development objectives, the company's main industrial development planning, the company's strategic measure planning, the company's organizational adjustment and the adjustment of auxiliary support system, specifically including formulating annual work plan, preparing comprehensive budget, decomposing and implementing annual objectives according to the development strategic planning Track and monitor the implementation of the development strategy of the company and its subsidiaries, put forward opinions and suggestions, and study and analyze major strategic issues.

4. Social responsibility

In accordance with national laws and regulations and in combination with the characteristics of the industry, the company actively performs social responsibilities and obligations in the process of production and operation, and fully integrates them into the company's strategy and daily business activities. Taking the social responsibility management system as the starting point, the company actively promotes the company's social responsibility work. The company regards meeting the needs of customers as meeting the standards of sewage treatment and discharge As one of the important indicators for the assessment of the quality system of waste power generation and environmental engineering, we have formulated and continuously improved the technical upgrading and quality accident early warning schemes of sewage treatment plant and waste power plant, so as to enhance the social image of the company.

The company has established and improved the human resource management and labor employment system to promote employment and protect the legitimate rights and interests of employees. The company and its subsidiaries have strictly complied with the requirements of national and local laws, regulations and normative documents on labor employment and social security, and paid full social insurance for their employees, such as pension, unemployment, medical treatment, maternity and industrial injury, Formulate and implement a series of rules and regulations such as human resources management system, employee recruitment management system and performance appraisal management measures, and establish system guarantee and system guarantee for employee recruitment, training, promotion, salary, assessment, incentive and career design.

5. Safety, health and environmental protection

The company abides by relevant safety production regulations, avoids safety accidents to the greatest extent, strictly abides by national environmental protection standards, makes effective use of resources, reduces environmental pollution, protects the legitimate rights and interests of employees, and constructs harmonious labor relations in the enterprise. As a comprehensive service provider of environmental governance, the company itself is to control pollution and protect the environment. According to the characteristics of different projects, relying on its professional technical team and project operation mode, the company can ensure project construction governance, operation safety and smooth implementation of the project, and the company and its subsidiaries strictly abide by national and local laws, regulations and normative documents on safety production management, The environmental monitoring data meet the emission requirements, there are no violations of laws and disciplines, and have not been subject to administrative punishment by the administration of work safety.

According to the national work safety law, in order to strengthen work safety and protect the safety and health of employees in the process of work, the company has formulated and implemented the work safety management system in combination with its own actual situation. The general manager of the company is fully responsible for the work safety. The company has a work safety management committee. The operation management department, as the permanent working body of the work safety management committee, is responsible for implementing the relevant provisions of the implementation system, regularly organizing professionals to inspect the headquarters and subsidiaries, putting forward rectification opinions on matters that do not meet the safety management requirements and making rectification within a time limit.

6. Corporate culture

In the production and operation practice, the company attaches importance to the construction of corporate culture, and gradually forms the core values of "people-oriented, user first and perfect details", the enterprise spirit of "integrity, benevolence, diligence and innovation", the business philosophy of honesty and trustworthiness and the code of conduct formed on this basis, which are recognized and observed by the whole team, which constitute an important part of the code of conduct of employees. Directors, supervisors, managers and other senior managers play a leading role in the construction of corporate culture, actively publicize the corporate culture through system norms, leadership speeches and company activities, and drive and affect the whole team