Company code: Hunan Sokan New Materials Co.Ltd(688157) company abbreviation: Hunan Sokan New Materials Co.Ltd(688157)
Hunan Sokan New Materials Co.Ltd(688157)
Internal control evaluation report in 2021
Hunan Sokan New Materials Co.Ltd(688157) 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 company’s (hereinafter referred to as the company’s) internal control system and evaluation methods, 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). I 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. II Internal control evaluation conclusion 1 On the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting
□ yes √ no
2. Evaluation conclusion of internal control over financial reporting
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. 3. Whether major defects in internal control over non-financial reporting are found
□ yes √ no
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. 4. Factors affecting the evaluation conclusion of internal control effectiveness from the benchmark date of internal control evaluation report to the date of issuance of internal control evaluation report □ applicable √ not applicable
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. 5. Whether the internal control audit opinion is consistent with the company’s evaluation conclusion on the effectiveness of internal control over financial reporting
√ yes □ No 6 Whether the disclosure of major defects in internal control of non-financial reports in the internal control audit report is consistent with the disclosure of the company’s internal control evaluation report √ yes □ no III Internal control evaluation (I) Scope of internal control evaluation
According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas. 1. The main units included in the evaluation scope include Hunan Sokan New Materials Co.Ltd(688157) , Changsha songrun new materials Co., Ltd., Dongguan OHI chemical coating Co., Ltd., Matsui new materials (Hong Kong) Co., Ltd., Beijing Matsui Engineering Technology Research Institute Co., Ltd., Hunan Matsui advanced surface treatment and functional coating Research Institute Co., Ltd., Guangxi beichi Automobile Technology Co., Ltd Hunan xinyichen Technology Co., Ltd., Matsui New Material Research Institute (Guangdong) Co., Ltd. 2. Proportion of units included in the scope of evaluation:
Proportion of indicators (%)
The ratio of the total assets of the units included in the evaluation scope to the total assets of the company’s consolidated financial statements 100
The total operating income of the units included in the evaluation scope accounts for 100% of the total operating income in the company’s consolidated financial statements
3. The main operations and matters included in the scope of evaluation include:
Procurement business, sales business, contract management, capital activities, guarantee business, social responsibility, corporate culture, production management, human resources, research and development, organizational structure, development strategy, engineering projects, asset management, subsidiary control, internal information transmission, comprehensive budget, financial report and information system. 4. High risk areas of focus mainly include:
Purchase business, sales business, capital activities, guarantee business, human resources, asset management, subsidiary control, financial reporting and other business processes. 5. 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. Is there any major omission □ yes √ no
6. Is there a statutory exemption
□ yes √ No 7 Other explanatory matters
None (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 control system and internal control standards. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ No 2 Identification standard of internal control defects in financial reporting
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
More than 3% of the total profit, but small, resulting in financial reporting errors. The total profit exceeds 5% of the total profit
Less than 5% and less than 3% of total profit
More than 0.5% of the total assets, but the total assets that lead to financial reporting errors exceed 1% of the total assets
Less than 1% less than 0.5% of total assets
Description: None
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Qualitative standard of defect nature
1. The defect involves fraud by senior management;
2. Make misstatement correction for major errors in the published financial report;
Major defects
3. There is a major misstatement in the current financial report, but the internal control fails to find the misstatement in the process of operation;
4. The supervision of the audit committee and the audit department on the company’s external financial report and internal control of financial report is invalid.
1. Failure to select and apply accounting policies in accordance with GAAP;
2. Failure to establish anti fraud procedures and control measures;
3. Important defects after communication are not corrected within a reasonable period;
4. Ineffective control over the financial reporting process at the end of the period;
Important defects
5. There is a material misstatement in the current financial report, but the internal control fails to identify the misstatement in the operation process, and the amount of misstatement reaches a significant degree, but does not reach a significant degree;
6. It is found that the amount affected by defects does not reach or exceed the importance level, but from the nature, it should still attract the attention of the board of directors and management.
General defects are other control defects except major defects and important defects.
Note: none 3 Identification standard of internal control defects in non-financial reporting
The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
More than 3% of the total profit, but small, resulting in financial reporting errors. The total profit exceeds 5% of the total profit
Less than 5% and less than 3% of total profit
More than 0.5% of the total assets, but the total assets that lead to financial reporting errors exceed 1% of the total assets
Less than 1% less than 0.5% of total assets
Description: None
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Qualitative standard of defect nature
1. The company’s violation of national laws and regulations or normative documents leads to the investigation of relevant departments and is ordered to withdraw from the industry or revoke its business license or receive major punishment;
2. The company’s major decision-making procedures are not democratic and unscientific, resulting in major mistakes;
3. The company’s important business lacks system control or the system fails;
Major defects
4. The key management personnel or technical personnel of the company have lost one after another;
5. Frequent negative news in the media;
6. Major or important defects in the company’s internal control cannot be rectified;
7. Other situations that have a significant negative impact on the company.
1. General mistakes in the company’s decision-making procedures did not cause significant losses to the company;
2. The company violates the internal control management system of the enterprise, resulting in losses;
3. Serious loss of key business personnel of the company;
Important defects
4. There are defects in the company’s important business system or system;
5. Major or general defects in the company’s internal control have not been rectified;
6. Personnel mobility in key positions is frequent.
Other non-financial reporting internal control defects that do not constitute major defects or important defects.
Description: None
（3） Identification and rectification of internal control defects 1 Identification and rectification of internal control defects in financial reporting 1.1 Major defects
Whether the company has major defects in internal control over financial reporting during the reporting period □ yes √ no 1.2 Important defects
Whether the company has significant defects in internal control over financial reporting during the reporting period □ yes √ no 1.3 General defect
None 1.4 After the above rectification, on the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting that have not been rectified □ yes √ no 1.5 After the above rectification, on the benchmark date of the internal control evaluation report, whether the company has any important defects in the internal control of financial reporting that have not been rectified □ yes √ No 2 Identification and rectification of internal control defects in non-financial reporting 2.1 Major defects
Whether the company found any major defects in internal control over non-financial reporting during the reporting period □ yes √ no 2.2 Important defects
Whether the company found any significant defects in internal control over non-financial reporting during the reporting period □ yes √ no 2.3 General defect
None 2.4 After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in the non-financial reporting internal control that have not been rectified □ yes √ no 2.5 After the above rectification, on the benchmark date of the internal control evaluation report, whether the company finds any important defects in non-financial reporting internal control that have not been rectified □ yes √ no IV Description of other major matters related to internal control 1 Rectification of internal control defects in the previous year □ applicable √ not applicable
2. Operation of internal control in this year and improvement direction in the next year
√ applicable □ not applicable
In 2021, the main business processes of the company and its subsidiaries have formulated systems, procedures and work guidelines in line with the basic norms of enterprise internal control and supporting guidelines, which can be followed and implemented. Effective internal control has been maintained in all major aspects of financial reports and non-financial reports, and the overall internal control has been operated continuously and effectively.
In 2022, with the change of the company’s external environment and the development of production and operation activities, the company will further improve the internal control system and strengthen the implementation of the internal control system
