Luoyang Jalon Micro-Nano New Materials Co.Ltd(688357)
Internal control evaluation system
Chapter I General Provisions
Article 1 in order to promote the internal control evaluation of Luoyang Jalon Micro-Nano New Materials Co.Ltd(688357) (hereinafter referred to as "the company"), comprehensively evaluate the design and operation of internal control, standardize the internal control evaluation procedures and evaluation reports of the company, reveal and prevent risks, according to the company law of the people's Republic of China (hereinafter referred to as "the company law") and the basic norms of enterprise internal control This system is formulated in combination with the actual situation of the company, such as the guidelines for the evaluation of enterprise internal control, the guidelines for the internal control of listed companies of Shanghai Stock Exchange and other laws, administrative regulations and normative documents, as well as the Luoyang Jalon Micro-Nano New Materials Co.Ltd(688357) articles of Association (hereinafter referred to as the "articles of association").
Article 2 the internal control evaluation mentioned in this system refers to the process in which the board of directors and the management comprehensively evaluate the effectiveness of internal control, form evaluation conclusions and issue evaluation reports.
Article 3 the evaluation object of internal control is the effectiveness of internal control, that is, the degree to which the establishment and implementation of internal control provide reasonable guarantee for the realization of control objectives, including the effectiveness of internal control design and internal control operation.
Article 4 according to the principle of "unified leadership and hierarchical management", the company comprehensively evaluates the design and operation of the company's internal control around the internal environment, risk assessment, control activities, information and communication, internal supervision and other elements.
Article 5 the implementation of internal control evaluation shall at least follow the following principles:
（1） The principle of comprehensiveness. The evaluation shall include the design and operation of internal control, covering various businesses and matters of the company, its branches and holding subsidiaries.
（2） Principle of importance. On the basis of comprehensive evaluation, the evaluation shall pay attention to important business departments, major business matters, high-risk areas, key control links and risk points.
（3） The principle of objectivity. The evaluation shall accurately reveal the risk status of operation and management and truthfully reflect the effectiveness of the design and operation of internal control.
Article 6 the company shall carry out internal control evaluation in an orderly manner in accordance with the internal control evaluation methods, procedures and requirements specified in this system.
Article 7 this system is applicable to the headquarters of the company, its wholly-owned subsidiaries and holding subsidiaries.
Chapter II Organization and responsibilities of internal control evaluation
Article 8 the board of directors shall be responsible for the authenticity of the internal control evaluation report and bear the ultimate responsibility for the internal control evaluation.
Article 9 the audit committee is responsible for organizing, leading and supervising the internal control evaluation, reviewing the internal control evaluation report, examining and approving the rectification opinions on important defects of internal control, and actively coordinating the problems encountered in the rectification process.
Article 10 the audit department is responsible for organizing the implementation, leading the establishment of an internal control evaluation working group to implement, manage and report the internal control evaluation.
Article 11 the board of supervisors is responsible for supervising the establishment and implementation of internal control by the board of directors and reviewing the internal control evaluation report.
Article 12 all departments and wholly-owned and holding subsidiaries of the company are responsible for organizing the internal control self inspection, testing and evaluation of all departments and subsidiaries, putting forward rectification plans and specific rectification plans for the found design and operation defects, and actively implementing them. The audit department is responsible for summarizing the internal control self-evaluation forms of all departments and subsidiaries and assessing the implementation.
Article 13 the responsibilities of relevant subjects in the internal control evaluation are as follows:
(I) board of directors
1. Review and approve the company's internal control evaluation plan;
2. Review and approve the company's system related to internal control evaluation;
3. Identify major defects in the company's internal control;
4. Review and approve the company's internal control evaluation results and relevant reports.
(II) audit committee of the board of directors
1. Review the company's internal control evaluation plan and submit it to the board of directors for approval;
2. Supervise the implementation and evaluation of the company's internal control system and report to the board of directors;
3. Review the company's standards related to internal control evaluation;
4. Review and approve the internal control evaluation results and relevant reports of the company;
5. Internal control problems and improvement methods found in communication with external intermediaries;
6. Complete other tasks assigned by the board of directors.
(III) audit department
1. Formulate annual internal control evaluation work plan and scheme;
2. Organize and implement internal control evaluation test and prepare internal control evaluation report;
3. Be responsible for the implementation of internal control evaluation of all functional departments of the company's headquarters and wholly-owned and holding subsidiaries;
4. Put forward rectification suggestions for internal control defects, track and check the acceptance rectification;
5. Regularly report the internal control supervision and inspection to the Audit Committee;
6. Communicate and coordinate with external regulators and auditors on matters related to internal control evaluation.
(IV) other departments
1. Cooperate with the audit department to carry out the internal control evaluation of the Department;
2. Implement defect rectification within the scope of responsibility;
3. Guide and supervise the internal control evaluation of subordinate counterpart departments.
(V) wholly owned and holding subsidiaries
1. Cooperate with the audit department to carry out the annual internal control evaluation of the company;
2. Supervise and implement the implementation and rectification of internal control.
Chapter III basis and content of internal control evaluation
Article 14 the company shall determine the specific contents of internal control evaluation and establish the core index system of internal control evaluation in accordance with the basic norms of enterprise internal control and other internal control systems of the company, combined with the requirements of Listing Supervision, focusing on the control environment, risk assessment, control activities, information and communication, internal supervision and other elements, Comprehensively evaluate the design and operation of internal control.
Article 15 the company shall identify and evaluate the design and actual operation of the internal control environment based on the application guidelines such as organizational structure, development strategy, human resources, corporate culture and social responsibility and in combination with the company's internal control system. Focus on whether the governance structure is reasonable and effective, whether the development strategy is feasible, whether the institutional settings overlap, whether the human resources policies and incentive and restraint mechanisms are scientific and reasonable, whether the corporate culture promotes the diligence of employees, and whether the social responsibility is effectively fulfilled. Article 16 when the company organizes the evaluation of risk assessment mechanism, it shall identify and evaluate the goal setting, risk identification, risk analysis and coping strategies in the process of daily operation and management according to the requirements of risk assessment in the basic norms of enterprise internal control and the main risks listed in various application guidelines, combined with the company's internal control system.
Article 17 the evaluation and application of the internal control measures of the company shall be based on the basic evaluation and application of the internal control measures of the company. Focus on whether the distribution of rights and responsibilities is clear, whether incompatible posts are separated, and identify and evaluate the effectiveness of various business control measures and process design and operation.
Article 18 the evaluation of information and communication organized by the company shall be based on the relevant application guidelines such as internal information transmission, financial report and information system, and in combination with the company's internal control system, to the timeliness of information collection, processing and transmission, the integrity of anti fraud mechanism, the authenticity of financial report and the security of information system, And the effectiveness of using information system to implement internal control.
Article 19 the company shall identify and evaluate the effectiveness of the internal supervision mechanism in accordance with the requirements on internal supervision in the basic norms of enterprise internal control and the provisions on daily control in various application guidelines, and in combination with the company's internal control system, focusing on the board of supervisors, the audit committee Whether the audit department plays an effective supervisory role in the design and operation of internal control.
Article 20 a working paper shall be formed for the internal control evaluation, which shall record in detail the contents of the evaluation carried out by the company, including evaluation elements, main risk points, control measures taken, relevant evidence and identification results, etc. The evaluation working paper shall be reasonably designed, with sufficient evidence, simple and easy to operate.
Chapter IV procedures for internal control evaluation
Article 21 the internal control evaluation procedure of the company generally includes the following four stages: preparation stage, implementation stage, summary stage, feedback and tracking stage.
Article 22 the preparation stage of internal control evaluation mainly completes the following work:
（1） Formulate the evaluation work plan. According to the company's internal supervision and management requirements, based on the analysis of high-risk areas and important business matters in the company's operation and management process, the audit department determines the inspection and evaluation methods of internal control, formulates the evaluation work plan, and defines the evaluation scope, work tasks, personnel organization, schedule, cost budget and other relevant contents, which can be implemented after being approved by the president. Comprehensive evaluation can also be adopted, focusing on the evaluation of work needs.
（2） Form an internal control evaluation working group. According to the approved evaluation work plan, the audit department forms an internal control evaluation working group to implement the internal control evaluation. The evaluation working group can include the principals or business backbones familiar with the situation of relevant departments within the company and involved in daily monitoring. Members of the evaluation working group shall implement the avoidance system for the internal control evaluation of their own department. The company may entrust accounting firms and other intermediaries to carry out internal control evaluation, but shall not choose intermediaries that provide internal control audit services for the company at the same time.
（3） Issue evaluation notice. According to the internal control evaluation plan, the internal control evaluation working group shall send a written evaluation notice to the evaluated unit two weeks in advance, including the evaluation time, scope and preparations to be made by the evaluated unit.
Article 23 in the implementation stage of internal control evaluation, the following work shall be completed:
（1） The internal control evaluation working group shall conduct on-site test on the evaluated unit, comprehensively use the methods of individual interview, questionnaire, special discussion, walk through test, on-site inspection, sampling and comparative analysis, widely collect the evidence of the effectiveness of the internal control design and operation of the evaluated unit, and truthfully fill in the evaluation working paper according to the specific contents of the evaluation, Study and analyze the defects of internal control.
（2） The internal control evaluation working group shall conduct on-site test on the evaluated unit according to the following steps:
(1) Understand the basic information of the evaluated unit. Fully communicate with the evaluated unit about the basic information of corporate culture and development strategy, organizational structure and division of responsibilities, composition and division of responsibilities of the leadership.
(2) Determine the scope and focus of inspection and evaluation. Further determine the evaluation scope, inspection focus and sampling quantity according to the mastered situation, and carry out reasonable division of labor in combination with the professional background of the evaluators. The inspection focus and division of labor can be adjusted in time according to needs.
(3) Carry out on-site inspection and test. According to the division of evaluation personnel, comprehensively use various evaluation methods to check and test the effectiveness of internal control design and operation, record relevant test results, and preliminarily identify the internal control defects found.
(4) Form working papers. Record in detail the contents of the implementation evaluation, including evaluation elements, evaluation standards, evaluation and test methods, main risk points, control measures taken, relevant evidence materials and identification results, and form a test draft.
Article 24 the summary stage of internal control evaluation mainly completes the following work:
（1） The internal control evaluation working group shall summarize the working papers of the evaluation personnel, cross review and sign the evaluation working papers according to the evaluation quality cross review system, and the person in charge of the evaluation working group shall strictly review and sign the identified evaluation results for confirmation. The formed on-site evaluation report together with the evaluation results shall be reported to the evaluated unit, signed and confirmed by the relevant responsible person of the evaluated unit, and submitted to the Audit Department of the company. （2） The audit department shall summarize the evaluation results of each internal control evaluation working group, and comprehensively review and classify the internal control defects preliminarily identified by the working group on site; Conduct quantitative or qualitative comprehensive analysis on the causes, manifestations and risk degree of defects, and determine the defect level according to the impact on the control objectives.
（3） The audit department shall, based on the summarized evaluation results and identified internal control defects, synthesize the overall situation of internal control, objectively, fairly and completely prepare the internal control evaluation report, submit it to the audit committee of the board of directors and the board of supervisors, and disclose it to the public after being finally approved by the board of directors.
Article 25 the feedback and tracking stage of internal control evaluation mainly completes the following work:
（1） After completing the internal control evaluation report, the audit department shall present the evaluation report to the management of the evaluated unit within five working days. If the management of the evaluated unit has different opinions after receiving the evaluation report, it can put forward and attach relevant evidence within 10 working days. The audit department shall make a decision on whether to modify the evaluation report within ten working days after identifying and studying the evidence provided by the evaluated unit.
（2） For the identified internal control defects, the audit department shall formulate a rectification plan in combination with the rectification opinions of the audit committee, urge the responsible unit to rectify in time and track the implementation of the rectification after being submitted for approval according to the specified procedures and authorities; If losses or negative effects have been caused, the company shall investigate the responsibilities of relevant personnel. Chapter V supplementary provisions
Article 26 this system shall be implemented from the date of approval by the board of directors of the company.
Article 27 matters not covered in this system shall be implemented in accordance with relevant national laws, administrative regulations, normative documents and the articles of Association; In case of any conflict between this system and laws, administrative regulations, normative documents or the articles of association modified by legal procedures, the relevant laws, administrative regulations, normative documents and the articles of association shall prevail.
Luoyang Jalon Micro-Nano New Materials Co.Ltd(688357) March 9, 2002
