Internal control evaluation report in 2001
Zte Corporation(000063) 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).
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
During the reporting period, the company carried out internal control evaluation according to the requirements of normative documents such as the basic norms of enterprise internal control and its supporting guidelines, continued to optimize the company’s internal control system, and further improved the company’s risk prevention ability to adapt to the changing internal and external environment.
(I) evaluation scope of internal control
According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas. The main units included in the evaluation scope include: Zte Corporation(000063) and the strategy and investment, operation management, finance, human resources, marketing, engineering services, system products, terminal business division, supply chain, public affairs, administrative property, legal compliance, internal control audit, etc. of some important holding companies. The total assets of the units included in the evaluation scope account for more than 90.22% of the total assets in the company’s consolidated financial statements, and the total operating revenue accounts for more than 98.66% of the total operating revenue in the company’s consolidated financial statements; The main businesses and matters included in the evaluation scope include: structure process, human resources, social responsibility, corporate culture, capital activities, procurement management, asset management, sales business, research and development, engineering outsourcing, guarantee business, business outsourcing, financial reporting, comprehensive budget, contract management, internal information transmission, information system, etc. The key units of the company include strategy and investment, operation management, finance, marketing, engineering services, system products, terminal business division, supply chain, etc; Focus on high-risk areas, including procurement business, business management, logistics business, etc; The key concern is the whole process control of assets, which is evaluated from the aspects of application, acquisition, inventory and disposal of assets. We believe that the company’s resources, staff qualifications and experience in accounting and financial reporting functions meet the requirements, and the training courses and relevant budgets received by the staff are sufficient.
The above units, businesses, matters and key areas of concern included in the evaluation scope cover the main aspects of the company’s operation and management, and there are no major omissions.
（2） Internal control evaluation basis, procedure and internal control defect identification standard
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and China’s accounting standards for business enterprises. Internal control evaluation procedures include: formulating evaluation work plan, forming evaluation working group, implementing on-site test, identifying control defects, summarizing evaluation conclusions and compiling evaluation report.
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 criteria for defects in internal control over financial reporting
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows (after considering compensatory control measures and actual deviation rate):
Table 1
Potential misstatement of defective classified assets potential misstatement of operating revenue potential misstatement of profit potential misstatement
Potential misstatement amount ≥ potential misstatement amount ≥ combined potential misstatement amount ≥ major defect consolidated accounting statement assets consolidated accounting statement business income consolidated accounting statement total profit and loss 1% 5% of total profit
Consolidated accounting statements assets consolidated accounting statements business consolidated accounting statements 0.5% of total assets ≤ 0.5% of income ≤ 2.5% of total potential profits important defects potential misstatement amount misstatement amount consolidation meeting ≤ potential misstatement amount consolidated accounting statements operating income 1% of total assets of consolidated accounting statements 5% of total profit
Potential misstatement amount ＜ potential misstatement amount ＜ combined potential misstatement amount ＜ general defect consolidated accounting statement capital consolidated accounting statement business income 0.5% of the total profit and loss in the consolidated accounting statement 2.5% of the total profit
The qualitative criteria for the evaluation of internal control defects in financial reports determined by the company are as follows: major defects: major violations in the company’s financial reports and information disclosure; The supervision of the company’s audit committee and internal audit institutions on internal control is invalid; The company’s financial reports announced in previous years have major misstatements, which cannot be found in the operation of internal control.
Important defects: violations in the company’s financial report and information disclosure, resulting in important misstatement; The supervision function of the audit committee and internal audit institutions of the company on internal control has not been effectively brought into play; Significant misstatement occurred in the financial report announced by the company in previous years, but the internal control failed to find the misstatement in the operation process.
General defects: 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 quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows: Table 2
Severity of defect classification impact
Direct property loss caused by major defects ≥ 1% of the total assets of the company
0.5% of the total assets in the consolidated accounting statements ≤ 0.5%, resulting in direct and important defects
Property loss ＜ 1% of the total assets of the company
Direct property loss caused by general defects ＜ 0.5% of the total assets of the company
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows: major defects: the company violates national laws and regulations, which seriously affects the sustainable operation of the company; Lack of institutional control or systematic failure of the company’s important business; Major defects in the company’s internal control have not been rectified.
Important defects: the company violates national laws and regulations, which has a great impact on sustainable operation; There are defects in the company’s important business system or system; Important defects in the company’s internal control have not been rectified.
General defects: other internal control defects that do not constitute major defects and important defect standards.
(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、 Description of other major matters related to internal control
During the reporting period, the company has no other important matters related to the company’s internal control that need to be explained.
Chairman: Li Zixue Zte Corporation(000063) March 8, 2022
