Innuovo Technology Co.Ltd(000795)
Internal control report 2021
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 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 as of December 31, 2021 (benchmark date of internal control evaluation report). The report on the company’s internal control in 2021 is as follows:
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 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.
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.
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
(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 headquarters of the company Functional departments and holding subsidiaries (Zhejiang Lianyi Electric Machinery Co., Ltd., Zhejiang Innuovo Technology Co.Ltd(000795) Magnetic Industry Co., Ltd., Ganzhou dongci rare earth Co., Ltd., Zhejiang Hengdian Innuovo Technology Co.Ltd(000795) import and Export Co., Ltd., Zhejiang Innuovo Technology Co.Ltd(000795) Equipment Manufacturing Co., Ltd., Zhejiang corundum new energy Co., Ltd., Ganzhou Tongcheng magnetic material Co., Ltd., Zhejiang maikong Medical Technology Co., Ltd., Zhejiang Innuovo Technology Co.Ltd(000795) rehabilitation equipment Co., Ltd.) Company, Dongyang Lianyi electromechanical Co., Ltd., Zhejiang Innuovo Technology Co.Ltd(000795) New Energy Technology Co., Ltd., Zhejiang Dongyang dongci rare earth Co., Ltd., Dongyang Innuovo Technology Co.Ltd(000795) equity investment fund partnership (limited partnership), Dongyang Yinghua magnetic material Co., Ltd., Zhejiang Sanhuan Kangying Magnetic Industry Co., Ltd., Zhejiang Innuovo Technology Co.Ltd(000795) Gravity Technology Co., Ltd Ningbo Innuovo Technology Co.Ltd(000795) import and Export Co., Ltd., Zhejiang Innuovo Technology Co.Ltd(000795) Lianyi import and Export Co., Ltd.).
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 operations and matters included in the scope of evaluation include:
1. Internal environment
(1) Governance structure
In accordance with the company law of the people’s Republic of China, the securities law of the people’s Republic of China, the basic norms of enterprise internal control and its supporting guidelines and other laws and regulations, the company has timely revised the articles of association, the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors and the rules of procedure of the board of supervisors, Clarify the responsibilities and authorities in decision-making, implementation and supervision, and form a scientific and effective division of responsibilities and check and balance mechanism. The three committees and the first floor perform their respective duties and operate in a standardized manner.
The company has established the general meeting of shareholders, the board of directors and the board of supervisors according to law as the power organ, executive organ and supervisory organ of the company. In accordance with the principles of mutual independence, mutual checks and balances and clear rights and responsibilities, it is clear that the general meeting of shareholders is the highest power organ of the company, which manages and supervises the company through the board of directors and controls the company’s business policy, financing, investment Make decisions on major matters such as profit distribution; The board of directors shall be responsible to the general meeting of shareholders and manage and make decisions on the company within the scope of authority entrusted by the general meeting of shareholders; The general manager of the company is appointed by the board of directors. Under the leadership of the board of directors, he is responsible for the daily operation and management activities of the company and the implementation of relevant resolutions of the board of directors. The board of supervisors is the supervisory body of the company, which is responsible for supervising the behavior of the directors and managers and the company’s finance, and for the general meeting of shareholders.
The company has established four special committees, namely, the strategy committee, the audit committee, the nomination committee and the remuneration and assessment committee of the board of directors according to law. Each special committee is responsible to the board of directors. The proposals of each special committee are submitted to the board of directors for review and decision, and the detailed rules for the implementation of special committees of the board of directors are formulated in accordance with the relevant requirements of the standards for the governance of listed companies, The responsibilities, decision-making procedures and objectives of each special committee are described in detail. The corporate governance system regulates the organization and behavior of the company, protects the legitimate rights and interests of the company, shareholders and creditors, constructs the basic organizational structure and authorization and supervision system of the company, and ensures the efficient operation of corporate governance. (2) Organization
In order to promote the development of the enterprise, combined with the characteristics of the industry and the current management situation of the company, the company has adjusted and improved the organizational structure, and realized the unified management of administration, personnel, finance, operation, capital projects, procurement, legal affairs and brand information, which is conducive to the optimal allocation of resources and more efficient management. The company has clearly defined the main responsibilities of each functional department, formed an internal control system that performs its own duties, assumes its own responsibilities, cooperates with each other, restricts each other and links each other, and ensured the effective implementation of control measures.
Each holding or wholly-owned subsidiary of the company has established an independent and complete decision-making, implementation, supervision and feedback system, and set up internal institutions and business parts in accordance with the principle of mutual checks and balances. The company implements necessary supervision on the operation, capital, personnel, finance and other major aspects of its subsidiaries through effective system guarantee in accordance with the provisions of laws and regulations and the articles of association.
(3) Internal audit
The Audit Department of the company is responsible to the audit committee of the board of directors. Under the guidance of the audit committee, the audit department independently exercises audit functions and powers without interference from other departments and individuals. The audit department carries out the supervision and inspection of internal control through special personnel in various ways to supervise and inspect the implementation of the internal control system related to the financial statements, ensure the implementation of the internal control system, effectively ensure the implementation of the company’s rules and regulations, and deal with the internal control defects found in the supervision and inspection, Report in accordance with internal audit procedures; Have the right to report directly to the audit committee of the board of directors and the board of supervisors on the major defects of internal control found in the supervision and inspection.
(4) Human resources policy
According to relevant national regulations and policies and in combination with the company’s own characteristics, the company has formulated legal and effective human resources policies, and made detailed specifications for the organization setting, salary management and the signing, change, dissolution and termination of employee labor contracts. In terms of organization setting, the responsibilities and rights are clear and the management is scientific; In terms of staffing, it is capable, efficient and reasonable division of labor.
Based on the principle of respecting knowledge and talents, combined with business characteristics, the company provides various forms of training for employees, improves their professional ethics and business level, and enhances the overall quality of employees. (5) Corporate culture
The company has always paid attention to the construction of corporate culture and always adhered to the corporate culture as the booster to promote reform and development. Through excavation, cohesion and publicity, the company has constantly enriched the corporate spirit with “unity, cooperation, hard work, win-win” and “innovation is the future” as the core, and implemented the concept of “doing good with heart, serving customers and employees”, Pay equal attention to reform and development, share achievements with investors, create a fair and just management environment, create a strict and solid work style, create an ideological realm of cherishing happiness and gratitude, and create a spiritual pursuit of job-hunting innovation, strive to cultivate strong spiritual cohesion and cultural centripetal force, and promote the harmonious development of the company.
2. Risk assessment
According to the strategic objectives and development ideas, combined with the characteristics of the industry to which the company belongs, the company establishes and improves a perfect risk assessment system: comprehensively and systematically collect relevant information according to the set control objectives, accurately identify internal and external risks, and conduct risk assessment in time to make the risk controllable. At the same time, the company has established an emergency mechanism for emergencies, formulated emergency plans for various risks, defined the monitoring, reporting and handling procedures and accountability system of various major emergencies, and effectively controlled various potential risks.
3. Control measures
Daily operation and management: Based on the company’s basic system, a series of regulations covering the production and operation processes such as product sales, production management, procurement of fixed assets and materials, related party transactions, external guarantee and financing, investment, etc. have been formulated to ensure that all work has rules to follow and orderly management, forming a standardized management system.
Corporate Governance: in accordance with the provisions of the company law, the securities law and other relevant laws and regulations, the company has formulated the articles of association, the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors, the rules of procedure of the board of supervisors, the working system of independent directors, the decision-making system of related party transactions, and the external guarantee system of the company The management system of the company’s raised funds, the management system of the company’s foreign investment, the implementation rules of the strategy committee of the company’s board of directors, the implementation rules of the audit committee of the company’s board of directors, the implementation rules of the nomination committee of the company’s board of directors, the implementation rules of the remuneration and assessment committee of the company’s board of directors, the work rules of the general manager of the company The working system of the Secretary of the board of directors of the company, the management system of the company’s investor relations, the management system of the company’s information disclosure affairs, the accountability system for major errors in the information disclosure of the company’s annual report, the registration and management system of insiders of the company Basic management systems such as the management system for the shares held by the company’s directors, supervisors and senior managers and their changes, so as to ensure the standardized operation of the company and promote the healthy development of the company.
(1) Internal control of sales and collection
According to the market conditions of the industry and the characteristics of the company’s products, in order to fully mobilize the enthusiasm of sales personnel and expand the market share of the company’s products, the company divides the product sales market into several sales areas, and the sales manager is responsible for the marketing activities of the sales area. At the same time, the sales task and payment return indicators are specifically implemented in the daily performance assessment of the product sales manager. The company has also formulated management systems suitable for the sales mode, such as order processing, credit management, sales contract management, finished product warehousing, release and delivery management, cargo transportation, sales invoice issuance, confirmation of income and accounts receivable, receipt of payment and its records, regular reconciliation with customers, etc., which standardize the processes of all links in the company’s sales activities, Avoid or reduce the occurrence of bad debts.
(2) Internal control of purchase and payment
In order to strengthen the internal control of procurement and payment, standardize the behavior of procurement and payment, and prevent errors and fraud in the process of procurement and payment, the company has formulated the procurement business management system, which standardizes the management procedures of quality and price comparison procurement of raw materials, bidding procurement, numbering, warehousing, counting, quality inspection, entry, collection, and use of raw materials according to the characteristics of production and operation Inventory and a series of management processes. For the procurement of bulk raw materials, the bidding or bid negotiation method shall be adopted uniformly, and the heads of relevant departments shall participate in the bidding and bid evaluation. The whole bidding and bid evaluation process shall be carried out in accordance with the principles of openness, fairness and notarization, so as to broaden the company’s procurement channels of raw and auxiliary materials, reduce the procurement cost and capital occupation cost of raw and auxiliary materials, and improve the company’s market competitiveness. For the procurement of goods with related parties, the company shall conduct procurement activities in accordance with the company’s related party transaction decision-making system. The formulation of the internal control system of procurement and payment has standardized the business behavior of procurement personnel, so that the company’s raw material circulation is orderly and payment is moderate. Physical asset management achieves regular inventory of the warehouse, regular financial verification, and the consistency of material inventory accounts, cards and materials, effectively ensuring the authenticity and reliability of the company’s production costs and the safety of assets.
(3) Internal control of production process
According to the production characteristics of the company’s products, in order to reasonably arrange the production plan, reduce inventory and improve the market share of products, the company has formulated relevant management systems according to the actual production situation of each branch factory. These systems define the procedures, main contents and responsibilities of production cooperation departments. It includes a series of operation processes such as formulating production plan, issuing material list, storing raw materials, putting into production, calculating product cost and quality control, which provides guarantee for the close connection of various production links, the establishment of normal production and operation order, cost control and quality control system, and has obtained the certification of ISO9001 quality management system and ISO14001 environmental management system. The company takes disaster prevention and accident prevention as the top priority of safety production. The three-level responsibility system of the company’s headquarters, subsidiaries and workshops has been established, which stipulates the safety responsibilities and authorities from the general manager and subsidiary managers to the workshops, teams and each operation post, strengthens the employees’ drilling and prevention of emergency accidents, strengthens the employees’ safety awareness and improves the employees’ ability of safety protection. Make the safety production activities under control and effectively ensure the safe operation of the whole production process.
(4) Internal control of fixed assets management
According to the production and operation characteristics of the industry, the company has clarified the management responsibilities and division of labor, improved and improved the control procedures of purchase and payment, and strengthened the control of approval, purchase, acceptance, payment, storage, maintenance, disposal and other links. For the purchase of large-scale equipment, compare the quality and price, and make transparent decisions, so as to plug the loopholes in the purchase link as much as possible. The maintenance and repair of the equipment are standardized to ensure that the life cycle cost of the equipment is the most economical and the comprehensive efficiency of the equipment is the highest, so as to reduce consumption and prolong the service life of the equipment. Detailed provisions have been made on the accounting of recognition, depreciation and impairment of fixed assets.
(5) Internal control of Monetary Fund Management
According to the characteristics of the company, the financial management system is formulated, and cashier and accountant posts are set separately. The accountant in charge supervises the daily business, and defines the responsibilities and authorities of each post. Formulate approval procedures for fund payment. The funds of each subsidiary (functional department) must be approved by the person in charge of the unit (Department) and the person in charge of finance. If the expenses are above the specified amount, go through the procedures of level by level approval. In accordance with the provisions of the Interim Regulations on cash management and the measures for bank settlement,
