Jiangsu Baichuan High-Tech New Materials Co.Ltd(002455)
Internal control evaluation report in 2021
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 the internal control system and evaluation methods of the company (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 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 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
The company determines the main units, businesses and matters included in the evaluation scope according to the risk oriented principle. The main units included in the evaluation scope include the parent company and all holding subsidiaries. The total assets of the units included in the evaluation scope account for 100% of the total assets in the company's consolidated financial statements, and the operating revenue accounts for 100% of the total operating revenue in the company's consolidated financial statements. The main businesses and matters included in the evaluation scope mainly include: corporate governance structure, internal control organizational structure, internal control system, internal control department, key control activities, etc. The above units, businesses and matters included in the evaluation scope cover the main aspects of the company's operation and management, and there are no major omissions.
1. Internal environment of the company
(1) Internal control organization structure
In strict accordance with the requirements of the company law, the securities law and the laws and regulations of the CSRC on listed companies, the company has continuously improved and standardized the organizational structure of the company's internal control, ensured the standardized operation of the company's general meeting of shareholders, the board of directors, the board of supervisors and other institutions, and safeguarded the interests of the company and investors.
① The general meeting of shareholders is the highest authority of the company, which can ensure that all shareholders, especially small and medium-sized shareholders, enjoy equal status and that all shareholders can fully exercise their rights.
② The board of directors is the company's decision-making body, responsible for the establishment and supervision of the company's internal control system, establishing and improving internal control policies and programs, and supervising the implementation of internal control. The board of directors shall be responsible for the general meeting of shareholders and report its work to the general meeting of shareholders.
③ The board of supervisors is the supervisory body of the company, which supervises and inspects the behavior of directors, general managers and other senior managers and the financial situation of the company, and is responsible for and reports to the general meeting of shareholders.
④ The board of directors of the company consists of four professional committees: Strategy Committee, audit committee, nomination committee and salary and assessment committee. The strategy committee is mainly responsible for studying and making suggestions on the company's long-term development strategy and major investment decisions; The audit committee is mainly responsible for the communication, supervision and verification of internal and external audit of the company; The nomination committee is mainly responsible for selecting and making suggestions on the candidates, selection criteria and procedures of directors and managers of the company; The remuneration and assessment committee is responsible for formulating and reviewing the remuneration policies and plans of the company's directors and managers, formulating and assessing the assessment standards of the company's directors and managers. The above four special committees are responsible and report to the board of directors.
⑤ The management of the company is responsible for the formulation and effective implementation of the internal control system, and ensures the normal operation of the company by commanding, coordinating, managing and supervising the operation and management rights of each holding subsidiary and functional department. Each holding subsidiary and functional department implements specific production and operation business and manages the daily affairs of the company.
(2) Establishment and improvement of internal control system
The company has established and improved a relatively perfect internal control system and management system in accordance with the requirements of laws, regulations and normative documents such as the company law, the securities law and the guidelines for the governance of listed companies. The company has formulated a series of internal management systems, including corporate governance, procurement, sales, human resources, investment and other aspects, regularly inspected and evaluated various systems, and reasonably modified them according to the implementation feedback.
(3) Establishment of internal control department
The company has set up an "internal audit department" with three staff to exercise the function of internal audit and supervision, and is responsible for independent audit and supervision of the business activities and internal control of the company and its holding subsidiaries. Under the supervision and guidance of the board of directors, the internal audit department of the company regularly and irregularly conducts audit and routine inspection on the finance, internal control and other businesses of functional departments and subsidiaries to control and prevent risks. Its audit activities are supervised by the audit committee of the board of directors.
2. Key business control activities
(1) Management control of holding subsidiaries
The company has formulated the control policies and procedures for the holding subsidiaries, and stipulated the standardized operation, personnel management, financial decision-making, investment and operation management, major event report, audit and other aspects of the subsidiaries, so as to ensure the standardized operation of the holding subsidiaries. The company holds regular general manager office meetings to understand, inspect and discuss the operation and finance of subsidiaries, so as to effectively monitor the overall operation risks of the company and ensure the smooth realization of the business objectives of holding subsidiaries. During the reporting period, the subsidiaries of the company were effectively controlled and managed.
(2) Financial management control
The company has established a standardized and complete financial management and control system and relevant operating procedures in accordance with the accounting law, general principles of enterprise finance, norms of enterprise internal control and other relevant provisions.
In accordance with the relevant provisions of the accounting standards for business enterprises and in combination with the nature and characteristics of business, the company has formulated the company's accounting methods, and the accounting system is sound. Through the financial management information system, the company has also established strict internal approval procedures for monetary funds, procurement and payment, sales and collection, fixed assets, inventory, etc., stipulated the corresponding approval authority, and implemented effective control management. During the reporting period, the company did not find any specific situation of major defects in the internal control of financial reporting.
(3) Related party transaction control
The company has formulated the decision-making rules for related party transactions, which clearly stipulates the approval authority and decision-making procedures for related parties, related party transactions and related party transactions, clearly divides the approval authority of the general meeting of shareholders and the board of directors, stipulates the deliberation procedures and avoidance of voting requirements for related party transactions, and the decision-making procedures The principles of information disclosure have made clear provisions to regulate the transaction with related parties, strive to follow the principles of honesty, impartiality, fairness and openness, and effectively protect the interests of the company and minority shareholders.
(4) External guarantee control
The company has established the external guarantee system. The company also describes the guarantee approval authority, disclosure process and other related activities in the working rules at all levels such as the general meeting of shareholders, the board of directors and the general manager, which basically covers all the guarantee activities of the company, makes detailed provisions on the authorization and approval of guarantee business, and the internal control system is well designed and reasonable. During the reporting period, the company did not provide external guarantees for subsidiaries other than those within the scope of consolidated statements, and all performed the necessary decision-making and approval procedures. There was no violation of the documents of the CSRC and the company's system. The independent directors of the company have made special explanations and expressed independent opinions on the guarantees outside the company.
(5) Major decision control
The company has established the management system for major decisions, defined the approval authority of the general meeting of shareholders and the board of directors on major matters, and established strict review and decision-making procedures. The company's major decisions adhere to the principles of legality, prudence, safety and effectiveness, control investment risks, pay attention to investment income, and protect the interests of the company and minority shareholders.
(6) Internal audit control
The company has established the internal audit system to standardize the internal audit work. The internal audit department of the company is directly responsible to the board of directors. Under the guidance of the audit committee, it exercises audit functions and powers independently without interference from other departments and individuals. The internal audit department conducts internal audit on the operation and management, financial status and internal control implementation of the company and its subsidiaries, and makes reasonable evaluation on the authenticity, rationality and legitimacy of its economic benefits.
(7) Information disclosure control
The company has established investor relations management system, information disclosure affairs management system, annual report working procedures of the audit committee of the board of directors, annual report working system of independent directors, accountability system for major errors in annual report information disclosure, insider information management system and external information user management system, Detailed provisions are made in terms of information disclosure institutions and personnel, affairs management, disclosure procedures, information reports, confidentiality measures, file management, accountability and other aspects to ensure that the person responsible for information disclosure knows all kinds of information of the company and makes timely, accurate, complete and fair disclosure to the public. It standardizes the drafting, review, notification and release process of regular reports and temporary announcements, and defines the responsibilities and code of conduct of relevant departments within the company in information disclosure. The company's internal control over information disclosure is strict, sufficient and effective, and there is no violation of relevant regulations.
(II) basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and the company's internal governance documents. 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
According to the importance of financial report misstatement that may be caused by defects, the company uses a combination of qualitative and quantitative methods to divide defects and determine major defects, important defects and general defects.
(1) The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
The quantitative standard takes the operating income and total assets as the measurement indicators.
The losses that may be caused or caused by internal control defects are related to the profit statement, which shall be measured by the operating revenue index. If the amount of misstatement in the financial report caused by the defect alone or in combination with other defects is less than or equal to 0.5% of the operating revenue, it is recognized as a general defect; If it exceeds 0.5% of the operating revenue but is less than or equal to 1%, it is recognized as an important defect; If it exceeds 1% of the operating revenue, it is recognized as a major defect.
Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset index. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than or equal to 0.5% of the total assets, it is recognized as a general defect; If it exceeds 0.5% of the total assets but is less than or equal to 1%, it is recognized as an important defect; If it exceeds 1% of the total assets, it is recognized as a major defect.
(2) The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Circumstances of major defects in financial report:
① Fraud of directors, supervisors and senior managers of the company;
② Material misstatement in the current financial report found by the certified public accountant but not identified by the company's internal control;;
③ The supervision of the audit committee and the audit internal control department on the company's external financial report and internal control of financial report is invalid.
Circumstances of major defects in financial reports:
① Failure to select and apply accounting policies in accordance with GAAP;
② The company's internal control system has not established anti fraud procedures and control measures;
③ Defects in important business processes or systems;
④ There are significant misstatements in the current financial report.
Circumstances of general defects in financial reports:
Other internal control defects that do not constitute major defects and important defect standards.
2. Identification standard of internal control defects in non-financial reporting
The identification of non-financial report defects of the company is mainly based on the severity of the business nature involved, the nature of direct or potential negative impact, the scope of impact and other factors.
(1) The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
The quantitative standard takes the operating income and total assets as the measurement indicators.
The losses that may be caused or caused by internal control defects are related to the profit statement, which shall be measured by the operating revenue index. If the amount of misstatement in the financial report caused by the defect alone or in combination with other defects is less than or equal to 0.5% of the operating revenue, it is recognized as a general defect; If it exceeds 0.5% of the operating revenue but is less than or equal to 1%, it is recognized as an important defect; If it exceeds 1% of the operating revenue, it is recognized as a major defect.
Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset index. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than or equal to 0.5% of the total assets, it is recognized as a general defect; If it exceeds 0.5% of the total assets but is less than or equal to 1%, it is recognized as an important defect; If it exceeds 1% of the total assets, it is recognized as a major defect.
(2) Non financial assets determined by the company
