Company code: Hengdian Entertainment Co.Ltd(603103) company abbreviation: Hengdian Entertainment Co.Ltd(603103) Hengdian Entertainment Co.Ltd(603103)
Internal control evaluation report in 2021
Hengdian Entertainment Co.Ltd(603103) 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. 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. 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: Hengdian Entertainment Co.Ltd(603103) , 45 subsidiaries 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:
Organizational structure, development strategy, human resources, corporate culture, capital activities, procurement business, asset management, sales business, engineering project, financial report, comprehensive budget, contract management, internal information transmission and information system. 4. High risk areas of focus mainly include:
Capital activity risk, raw material procurement risk, engineering project risk, inventory management risk, sales management risk, asset management risk and accounting information risk. 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
The company has no explanation of other major matters related to internal control. （2） Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation in accordance with the enterprise internal control standard system, enterprise internal control application guidelines, enterprise internal control evaluation guidelines and other relevant regulations, and in combination with the actual situation of the company’s operation and management. 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
Total profit potential misstatement ≥ 5% of the group’s consolidated pre tax profit ≤ potential misstatement potential misstatement 10% of the group’s consolidated pre tax profit 10% of the group’s consolidated pre tax profit 5% of the group’s consolidated pre tax profit
explain:
The identification standard of the internal control defect of the company’s financial report is determined by the importance of the defect that may lead to the misstatement of the financial statements, which mainly depends on two factors: first, whether the defect has a reasonable possibility that the internal control cannot prevent, detect and correct the misstatement of the financial statements in time; Second, the amount of potential misstatement that may be caused by the defect alone or together with other defects, so that the defect of internal control over financial reporting can generally be determined quantitatively.
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 violations of the company’s accounting statements, financial reports and information disclosure; Major defects in the audit committee and
The audit institution of the Ministry fails to effectively perform its supervision function;
The preparation of the company’s accounting statements and financial reports does not fully comply with the accounting standards for business enterprises and disclosure requirements, resulting in important defects in the financial statements
Material misstatement; Major misstatements in the financial reports announced by the company in previous years need to be retroactively adjusted
General defects and other internal control defects that do not constitute major defects and important defect standards
explain:
Determine the defect level according to the information disclosure of the company’s accounting statements and financial reports.
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
Direct property loss direct loss amount ＞ 0.5% of total assets ＜ direct loss amount ≤ 1% of total assets amount ≤ 0.5% of total assets amount
explain:
Determine the defect level according to the amount of property loss.
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
The company’s business activities seriously violate the national legal system; Decision making procedures lead to major mistakes; Lack of institutional control of important businesses, major defects or systematic timeliness, and lack of effective compensatory control; Serious loss of middle and senior managers and senior technicians; The results of internal control evaluation, especially major defects, have not been rectified; Other situations that have a significant negative impact on the company
General mistakes in decision-making procedures; Defects in important business systems or systems; Serious loss of personnel in key positions; Internal important defects
The results of the Department’s control evaluation, especially the important defects, have not been rectified; Other situations that have a great negative impact on the company
The efficiency of decision-making procedure is not high; Defects in general business system and system; Serious loss of business personnel in general posts; General defects
Defects not rectified
explain:
The defect level shall be determined according to the business activities of the company. （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 any major defects in internal control over financial reporting during the reporting period
□ yes √ no 1.2 Important defects
Whether the company has any significant defects in internal control over financial reporting during the reporting period
□ yes √ no 1.3 General defect
nothing
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, does the company have 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
None 2.4 After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in 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, does the company find any important defects in the internal control of non-financial reporting 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
2. Operation of internal control in this year and improvement direction in the next year
√ applicable □ not applicable
According to the identification standard of the company’s internal control defects, the board of Directors believes that there are no significant defects and major defects in the internal control of financial reports and non-financial reports on the benchmark date of the internal control evaluation report. The company has maintained effective internal control in accordance with the relevant provisions of the enterprise’s internal control standard system. At the same time, there is no event affecting the effectiveness conclusion of the internal control evaluation report from the benchmark date of internal control evaluation to the date of report issuance.
In 2022, the company will continue to improve the construction of internal control system, sort out and optimize the business execution process, solidify the business process through information means, improve the standardization of business process operation, improve the level of internal control management, effectively prevent various risks and promote the healthy and sustainable development of the company. 3. Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Xu Tianfu Hengdian Entertainment Co.Ltd(603103)
March 10, 2022
