Guizhou Wire Rope Co.Ltd(600992)
Internal control evaluation report in 2021
Guizhou Wire Rope Co.Ltd(600992) 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. 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 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
√ valid □ invalid
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: all secondary units and business departments of the company and overseas sales branches. 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:
Company level control (including internal environment, risk assessment, control activities, information and communication and internal audit); Business level control (including financial report and disclosure, comprehensive budget, fund management, human resources, procurement and accounts payable, sales and accounts receivable, inventory and cost accounting, research and development, guarantee business, technical transformation and construction in progress, fixed assets and intangible assets); Information system control (including information technology company level control and information technology general level control); Sales branch control (including financial management, budget management, fund management, sales management, inventory management and asset management). 4. High risk areas of focus mainly include:
It refers to the uncertainty (risk) of various business and management activities of the enterprise that has a negative impact on the realization of the control objectives of the enterprise, such as engineering project management, sales and procurement, fund management, etc. 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 management manual and internal control evaluation manual. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ no
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. 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
Potential misstatement of total profit ≥ 5% of total profit ≤ 3% of total profit ≤ misstatement ＜ profit misstatement ＜ 3% of total profit
5% of the total reported profit
Potential misstatement of total assets ≥ 1% of total assets ≤ 0.5% of total assets ≤ misstatement ＜ 0.5% of total assets ＜ 1% of total assets
Potential misstatement of operating income ≥ 1% of total operating income, 0.5% of total operating income ≤ misstatement 1% of total operating income, 0.5% of total operating income
Potential misstatement of owner’s equity ≥ 0.5% of total owner’s equity ≤ misstatement 1% of total owner’s equity misstatement 0.5% of total owner’s equity
1%
explain:
The above importance mainly depends on two factors: ① whether the defect has a reasonable possibility to cause the enterprise’s internal control to fail to prevent or detect and correct the misstatement of financial reports in time.
② The amount of potential misstatement that may be caused by the defect alone or in combination with other defects. The potential misstatement amount is calculated according to the potential misstatement rate and the cumulative amount in the same direction of the corresponding account. The potential misstatement rate is determined according to the number of misstatement samples and the total number of samples taken.
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
Major defects (1) fraud of directors, supervisors and senior managers;
(2) correct the published financial report;
(3) the external audit found that there were significant misstatements in the current financial statements, while the internal control was in operation;
(4) the false report is not found in the process;
(5) other defects that may affect the correct judgment of report users.
An important defect is a control defect or a combination of multiple control defects in internal control that is less serious than a major defect but sufficient to attract the attention of the personnel responsible for supervising the financial report of the audited entity (such as the audit committee or similar institutions).
General defects are control defects existing in internal control except major defects and important defects.
Note: determine the defect level standard according to the amount of direct property loss caused by the internal defect. 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
The amount of direct property loss is 1 million yuan and above, 500000 yuan (including) – 1 million yuan, 50000 yuan (including) – 500000 yuan
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
Major defects (1) serious violation of laws and regulations;
(2) lack of institutional control over important business;
(3) for sampling test, the proportion of defects calculated or the proportion of control points not implemented exceeds 20%;
(4) the affiliated units lack the construction of internal control and the management is scattered;
(5) the merger and reorganization fails, or the operation of the newly expanded affiliated units is unsustainable;
(6) serious loss of management personnel and key positions;
(7) being exposed to negative news by the media, which has a great negative impact;
(8) major or important internal control defects that have been found and reported to the management have not been corrected after a reasonable time (major defects);
(9) major negative events occur and have a negative impact on the disclosure of the company’s periodic reports (major defects).
An important defect is a control defect or a combination of multiple control defects in internal control that is less serious than a major defect but sufficient to attract the attention of the personnel responsible for supervising the financial report of the audited entity (such as the audit committee or similar institutions).
General defects are control defects existing in internal control except major defects and important defects.
（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
There may be general defects in the internal control process in the daily operation. As the company’s internal control has a dual supervision mechanism of self-evaluation and internal audit, corrective actions will be taken once the defects are found and confirmed, so as to make the risk controllable and have no material impact on the company’s financial report. 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
There may be general defects in the internal control process in the daily operation. As the company’s internal control has a dual supervision mechanism of self-evaluation and internal audit, corrective actions will be taken once the defects are found and confirmed, so as to make the risk controllable and have no material impact on the company’s financial report. 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
In accordance with the basic norms of enterprise internal control and its supporting guidelines, and in combination with the relevant requirements of the company’s internal control system, the company has actively carried out rectification work for the general control defects existing in the early stage, and the defects have been improved. 2. Operation of internal control in this year and improvement direction in the next year
√ applicable □ not applicable
The company assigned internal control tasks according to the work plan for the implementation of internal control norms in 2020, and issued a notice on November 16, requiring all units to carry out departmental self-evaluation. The next year will focus on weak links and prepare the implementation work plan according to the implementation of internal control this year. 3. Other major events
