Self evaluation report on internal control in 2021
Hengdian Group Dmegc Magnetics Co.Ltd(002056) all shareholders:
In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control regulatory requirements (hereinafter referred to as the "enterprise internal control normative system"), combined with Hengdian Group Dmegc Magnetics Co.Ltd(002056) (hereinafter referred to as the "company") 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. Establish and implement the internal control of the board of supervisors. 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 this report, and bear individual and joint legal liabilities for the authenticity, accuracy and completeness 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 company to achieve development objectives. 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 within 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 internal control over non-financial reports within 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, businesses and matters included in the evaluation scope and high-risk areas. The main units included in the evaluation scope include the company and all its 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 total operating revenue accounts for 100% of the total operating revenue in the company's consolidated financial statements; The main businesses included in the evaluation scope include the R & D, production and sales of magnetic materials, silicon wafers, batteries, components, lithium batteries, devices and other products.
The main operations and matters included in the scope of evaluation include:
1. Organizational structure
According to the company law, the securities law and other relevant laws and regulations, the company has established a corporate governance structure based on the general meeting of shareholders, the board of directors and the board of supervisors, and established the general meeting of shareholders as the highest authority of the company and a corporate governance structure that performs its duties, performs its duties, coordinates and checks and balances with each other.
(1) The board of directors of the company is responsible for the general meeting of shareholders and exercises the company's business decision-making power according to law. It has four institutions: Audit Committee, nomination committee, strategic development committee and salary and assessment committee. The board of directors is responsible for the establishment, improvement and effective implementation of internal control. In addition, the company sets up the Secretary Office of the board of directors, which is responsible for the specific work of securities management, information disclosure, coordination of relevant affairs and investor relations management of listed companies.
(2) The board of supervisors of the company is responsible for the general meeting of shareholders and is the supervision organization of the company. It supervises and inspects the performance of duties and financial status of directors and senior managers according to law; Supervise the establishment and implementation of internal control by the board of directors.
(3) The management of the company is specifically responsible for implementing the resolutions of the general meeting of shareholders and the board of directors and carrying out the daily production, operation and management of the company.
2. Development strategy
The strategic development committee under the board of directors of the company studies and puts forward suggestions on the company's long-term development strategy, major investment and financing plans and capital operation.
In 2021, according to the company's strategic deployment of "strengthening magnetism and developing energy", adhere to innovation driven, increase R & D investment and the transformation of R & D achievements, so as to inject vitality into the company's development; Focus on project investment and enhance the scale effect of devices, photovoltaic and lithium batteries while consolidating the position of magnetic materials industry; Continue to invest in automation and digitization, actively explore intelligent manufacturing, and boost the transformation and upgrading of the company. During this period, 148 million high-performance lithium batteries, 4gw high-efficiency large-size single crystal cells and 2gw high-efficiency modules were completed and put into operation, and a joint venture was established in Vietnam to invest in the production of speaker magnetic steel and magnetic tiles, as well as a subsidiary in the Netherlands to further strengthen the development of new energy industrial markets such as photovoltaic and energy storage in Europe, At the same time, it can serve customers nearby, further improve the international service level and influence, improve the market share of the company's new energy industry, and realize the sustainable development of the company.
3. Human resources
In accordance with the provisions of national laws and regulations, the company has established a comprehensive human resources management system and defined the management requirements and systems for the introduction, development, use, training, assessment, incentive and withdrawal of talents. The company takes professional ethics and professional competence as important standards for the selection and employment of employees, earnestly strengthens employee training and continuing education, and continuously improves the quality of employees.
4. Social responsibility
The company operates legally and pays taxes according to law in accordance with the relevant provisions of the guidelines for self regulation and supervision of listed companies of Shenzhen Stock Exchange No. 1 - standardized operation of listed companies on the main board and the guidelines for self regulation and supervision of listed companies of Shenzhen Stock Exchange No. 1 - business handling Good progress has been made in environment and sustainable development, public relations and social public welfare undertakings. In the future operation and management, while pursuing economic benefits and protecting the interests of shareholders, the company will further actively protect the legitimate rights and interests of creditors and employees, treat suppliers and consumers in good faith, and actively engage in public welfare undertakings such as environmental protection and community construction, Strengthen the training and education of employees' social responsibility and promote the coordinated and harmonious development of the company itself and the society.
5. Corporate culture
The company believes that corporate culture is the highest and ultimate competitiveness of the enterprise. The concept system of corporate culture is the systematic thinking and sublimation of our successful experience in the past 41 years. It is the theoretical system to guide our progress. It is embodied in the guiding ideology and principles of all levels of operation and management. Vision of the company: unique and world-class; Mission of the company: East magnetic manufacturing, world leader; The company's core values: customer first, care for employees, unity, truth-seeking, tenacity and innovation; The company's development strategy: strong magnetism, energy development and appropriate investment; The work style of the company: tenacity, hard work and hard struggle.
6. Financial activities
The company has formulated financial management system, fund management system, securities investment and derivatives trading management system and other systems, formed strict fund approval and authorization procedures, standardized the company's investment, financing and fund operation activities, effectively prevented the risk of capital activities, improved the capital efficiency of the enterprise, and prepared for the long-term development of the enterprise.
7. Procurement business
The company has formulated systems such as procurement system and process, equipment bidding management, procurement execution management, three link procurement management system, bidding management rules and imported equipment approval procurement and operation process, defined the responsibilities and authorities of relevant departments and personnel and procedures such as purchase application, approval, acceptance and payment, standardized bidding process and strengthened bidding control, The loopholes in the procurement and supply links are prevented and the procurement risk is effectively reduced.
The company establishes a strategic material procurement decision-making group to analyze the material market every month, March, June, one year and three years; Hold strategic material procurement decision-making meetings and make collective decisions to reduce procurement risks; Some raw materials and equipment sign long order agreements with suppliers to ensure cost performance and supply and reduce procurement costs.
8. Sales business
The company has formulated the marketing management system, customer file management system and other systems, defined the review and audit procedures of sales links such as business negotiation, pricing, delivery, transportation, service and collection, defined the responsibilities and authorities of each sales post, and effectively prevented sales risks and bill fraud.
9. Research and development
The company has formulated various rules and regulations in the field of scientific and technological R & D. the company has improved relevant systems and methods from the aspects of R & D project initiation, feasibility study report, achievement acceptance, patent application, achievement protection and confidentiality, so as to effectively avoid the risk of R & D activities.
10. Internal audit
In order to strengthen the supervision and evaluation of internal control activities, effectively control risks and ensure the safety and integrity of the company's assets, the audit committee composed of more than half of the independent directors is responsible for comprehensively reviewing and supervising the effectiveness of the company's financial report, internal audit plan and internal control, and reviewing and reviewing the financial, operation, compliance and risk management. The Audit Department of the company is specially responsible for supervision and inspection, and is equipped with 6 full-time internal auditors with professional qualifications or professional knowledge. The audit department is responsible to the audit committee and reports its work to the audit committee. In 2021, the audit department tracked and comprehensively reviewed the implementation of the company's management system, foreign investment, information disclosure, major related party transactions, etc. every quarter. The nonconformities found through the audit will be required to be rectified and improved by the relevant responsible departments in time.
11. Financial Report
In order to ensure the authenticity and integrity of the financial report and improve the quality of accounting and information disclosure, the company has standardized the main business processes such as the preparation and review of the financial report and the accounting treatment. In strict accordance with the accounting laws and regulations and the national unified accounting standards system, the company has clarified the relevant work processes and requirements, implemented the responsibility system, and ensured the legality and compliance of the financial report True, complete and effective use.
12. Comprehensive budget
The company has strengthened the establishment of a comprehensive budget management system, defined the approval, decomposition, implementation and assessment of various budget indicators, ensured that the budget preparation basis is reasonable and the method is appropriate, and achieved various annual budget objectives through the implementation of budget control.
13. Contract management
The company has formulated the contract management system to strengthen the supervision and inspection of the performance of the contract, regularly count, classify and archive the contract, implement the closed management of the whole process of the contract, and carefully review and strictly control all foreign-related agreements and contracts of the enterprise in strict accordance with the provisions of the contract law, so as to effectively reduce the risk of contract management.
14. Internal information transmission
In order to standardize the company's information transmission and disclosure, the company has formulated the company's information disclosure management system, the company's internal reporting system of major information, the company's insider registration management system, the company's external information user management system and other systems to clarify the scope, responsibility division and authority of the company's major information, and the work flow of information reporting Provisions on confidentiality obligations and legal responsibilities to ensure the rapid transmission, collection and effective management of major information within the company, and ensure the true, accurate, complete and timely information disclosure of the company.
15. Information system
By transforming the equipment in the computer room and optimizing the basic network platform, the company ensures the security of network information and comprehensively improves the operation efficiency of the server; Establish a centralized, controllable and continuously improved financial accounting and management platform at the financial level with ERP system as the core; At the business level, take the order as the core, establish an end-to-end supply chain integration platform, and realize the comprehensive traceability management throughout the order; At the basic level, a unified management system, unified data model, integrated and shared information system platform is established. Through the Internet, gradually promote the application of EPS e-procurement platform, and use the central database to eliminate useless steps in transactions, reduce waste in written work and supply chain, reduce business costs, improve business activity cycle and improve procurement efficiency.
The high-risk areas that the above matters focus on mainly include: development strategy, fund management, financial management, major investment, entrusted wealth management, financial derivatives investment, related party transactions, management of holding subsidiaries, internal and external information communication, internal supervision and other high-risk areas.
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, and there are no major omissions.
(II) basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal evaluation in accordance with the basic norms of enterprise internal control and its supporting guidelines and other relevant provisions, in combination with the provisions of relevant systems, processes, guidelines and other documents of the company.
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 standards of internal control defects in financial reports
(1) Quantitative standard
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Category major defect important defect general defect
Potential misstatement of total assets ≥ 1% of total assets ≤ 0.5% of total assets ≤ misstatement ＜ 1% of total assets ＜ 0.5% of total assets
Potential misstatement of main business income ≥ total main business income misstatement of total main business income 1% of main business income ≤ misstatement main business income
1.5% of misstatements 1.5% of gross receipts 1% of gross receipts
Misstatement ≥ consolidated financial statement profit and total consolidated financial statement profit misstatement ＜ potential misstatement of total consolidated financial statement profit
