Jiangsu Yitong High-Tech Co.Ltd(300211) : self evaluation report on internal control in 2021

Jiangsu Yitong High-Tech Co.Ltd(300211)

Self evaluation report on internal control in 2021

Jiangsu Yitong High-Tech Co.Ltd(300211) all shareholders:

Jiangsu Yitong High-Tech Co.Ltd(300211) (hereinafter referred to as “the company”) in accordance with the requirements of relevant laws and regulations and normative documents such as the basic norms of enterprise internal control, the supporting guidelines for enterprise internal control, the guidelines for self discipline supervision of Listed Companies in Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on gem, and the guidelines for internal control of Listed Companies in Shenzhen Stock Exchange, In combination with the internal control systems of the company’s internal management control manual and basic procedures and the daily operation and implementation of various functional departments, we self evaluate the effectiveness of the company’s internal control on December 31, 2021 (benchmark date of internal control evaluation report) as follows: I. statement of the board of directors

According to the provisions of the enterprise’s internal control standard system, it is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control and evaluate the effectiveness, and truthfully disclose the internal control evaluation report. 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 company’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 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 to achieve the above objectives. The effectiveness of internal control may also be continuously improved with the changes of the company’s internal and external environment and business conditions. The company has an inspection and supervision mechanism for internal control. Once the defects of internal control are identified, the company will immediately take corresponding measures, implement rectification and implement continuous tracking. 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.

From the benchmark date of the company’s internal control evaluation report to the date of issuance of the internal control evaluation report (March 11, 2022), there are no factors affecting the evaluation conclusion of the effectiveness of internal control.

3、 Overall situation of 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. The units included in this annual evaluation report are Jiangsu Yitong High-Tech Co.Ltd(300211) and Hefei whale Microelectronics Co., Ltd., a wholly-owned subsidiary of the company. 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.

1. Evaluation elements: internal control evaluation is mainly carried out around five elements: internal environment, risk assessment, control activities, information and communication and internal supervision.

2. Internal control coverage: involving each business department and each operation link, the matters, businesses and processes included in the evaluation scope mainly include: organizational structure, capital activities, procurement business, planning and production operation, human resources, sales business, contract management, asset management, engineering management, financial report, information disclosure, R & D project management Information system management and other business processes and matters related to the authenticity and fairness of financial reports and information disclosure and internal control objectives. The high-risk areas included in the focus mainly include: major events, related party transactions, providing financial assistance, providing guarantees for others, entrusted financial management, engineering projects, and the appropriateness of going concern assumptions on which the accounting statements are prepared; Disposal or replacement of assets.

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) principles for establishing internal control

1. Principle of comprehensiveness: the internal control constraint mechanism involves all departments and posts within the company, and no one and all business links shall exceed the scope of internal control; The whole process of implementing, supervising and implementing the decision should be.

2. Principle of importance: internal control should pay attention to important business matters and high-risk areas of the company on the basis of comprehensive control.

3. Principle of checks and balances: internal control ensures the company’s internal governance structure, the reasonable setting of posts, the reasonable division of business processes and their responsibilities and authorities, adheres to the separation of incompatible posts, and ensures that different institutions and posts have clear rights and responsibilities, restrict and supervise each other.

4. Principle of adaptability: the internal control shall adapt to the company’s business scale, business scope, competition status and risk level, and shall be adjusted in time with the changes of the situation.

5. Cost benefit principle: the formulation of internal control system should take into account the relationship between cost and benefit, and try to control the cost reasonably to achieve the best control effect. (III) construction and operation of internal control system around five elements:

1. Internal environment

(1) Corporate governance structure

In accordance with the company law, securities law and other relevant laws and regulations, normative documents and the articles of association, the company has established a relatively perfect corporate governance structure, established the general meeting of shareholders, the board of directors and its special committees and the board of supervisors, formed a working mechanism with mutual independence, mutual restriction and clear rights and responsibilities, and formed a scientific and effective division of responsibilities Promote the company’s better standardized operation.

The general meeting of shareholders is the highest authority of the company. The board of directors is responsible to the general meeting of shareholders. It is the decision-making body of the company’s operation and management, responsible for the decision-making of the company’s development objectives and major business activities, and safeguarding the legitimate rights and interests of the company and all shareholders. The board of Directors consists of strategic development committee, audit committee, nomination committee and salary and assessment committee to promote more comprehensive, scientific and efficient decision-making of the board of directors. The internal audit department of the company is established as the internal audit organization of the company to inspect and supervise the establishment and implementation of the company’s internal control system and the authenticity and integrity of the company’s financial information. The internal audit department is responsible to the board of directors and reports to the board of directors. The audit committee of the board of directors guides and supervises the work of the internal audit department. The senior managers of the company are appointed by the board of directors. Under the leadership of the board of directors, the general manager is fully responsible for the daily operation and management activities of the company and organizes the implementation of various resolutions of the board of directors.

The board of supervisors is the internal supervision organization of the company, which is responsible to all shareholders, supervises the legality and compliance of the performance of duties of the company’s directors, executives and managers and the company’s financial situation, and protects the legitimate rights and interests of the company and shareholders.

Since its establishment, the “three meetings” of the company have been able to earnestly perform their duties and operate in accordance with relevant rules.

(2) Organizational structure of the company

According to its own business characteristics and business development needs, the company has established various functional departments that meet the company’s current business scale and business management needs, and implemented the principle of separation of incompatible positions. At present, the company has set up six management centers: Operation Center, technology center, financial center, marketing center, engineering center and administrative center. The main departments include: the office of the board of directors, the securities department, the human resources department, the technology department, the procurement department, the sales department, the finance department, the internal audit department, the quality assurance department, the technology department, the production planning and manufacturing department, the engineering project department, etc. the functional departments have a clear division of labor, separate rights and responsibilities, and form a check and balance mechanism of mutual coordination, mutual restriction and mutual supervision.

(3) Internal audit

The internal audit department of the company reports to the board of directors. At present, the company allocates full-time internal auditors to engage in internal audit according to the actual operation situation. The internal audit department shall independently exercise the audit and supervision authority within the scope of responsibilities and authorities entrusted to it, and carry out the establishment and implementation of the company’s internal control system, financial management, inventory management, project management Regular, daily or special supervision and inspection have been carried out on business links related to financial reports and information disclosure in business activities such as procurement and payment, sales and collection, and audit working papers have been standardized through communication with departments and access to relevant materials. At the same time, according to some problems existing in daily audit, timely track the implementation of departmental rectification, ensure the effective implementation of relevant internal control systems and business processes, and strictly control daily business risks.

(4) Human resources

Talent is the foundation of the long-term development of the enterprise. With the comprehensive talent cultivation strategy of “knowing people and making good use of them, respecting cultivation and cultivating high-quality teams”, the company has formulated a human resources system in line with the development of the company at this stage. Through the formulation of human resources management system, salary and examination management system and personnel recruitment Personnel training and other business processes to standardize the management of recruitment, employment, training, incentive, salary and assessment of the company’s employees, in which the comprehensive ability of employees is improved through internal and external expansion training; Mobilize the enthusiasm of employees through salary assessment mechanism; Actively carry out corporate culture construction and publicity to enhance employees’ sense of belonging and identity. The company always adheres to professional ethics and professional and technical competence as important standards for the selection and employment of employees, and constantly forms a good talent competition mechanism. In 2021, through the implementation of responsibility objectives at all levels, the company strengthened the objective responsibility and performance assessment of personnel in main posts, so as to clarify their responsibilities and conduct quantitative assessment, so as to continuously improve the human resource management system and improve the comprehensive quality of personnel.

(5) Corporate culture

In 2021, based on the development prospect of the industry, the market business environment and the actual situation of the enterprise, the company always adhered to the operation and management idea of “quality first, quality improvement and efficiency increase; steady operation and risk control”, and took “efficiency first, responsibility responsibility responsibility; integration, coordination and management improvement” as the business goal, Strengthen the standardization of daily operation and the implementation of efficiency management, and continue to deepen the construction of corporate culture. The company adheres to the enterprise development concept of “prospering the enterprise with science and technology, honest management, quality first and innovative development”, and continuously improves the comprehensive quality and professional skills of the company’s personnel; Through “taking science and technology as the guide and management as the main line”, we continue to cultivate a compound talent team suitable for the development of the company. After years of exploration, the company has now established a relatively perfect human resource management system, retained and introduced excellent professional and technical talents and comprehensive management talents through the incentive mechanism, and continuously improved and consolidated the comprehensive ability of the core technical personnel team and excellent management team. The company has always adhered to the construction of corporate culture as an important management means to improve core competitiveness, pool team strength, give full play to positive energy and support the long-term development of the enterprise. The company pays attention to social responsibility, earnestly safeguard the rights and interests of shareholders, employees, society and enterprise stakeholders, and promote the sustainable and healthy development of the company.

2. Risk assessment

According to national policies, industry characteristics and development direction, the company has gradually established a risk assessment system covering the whole business around the company’s strategic development objectives. The board of directors sets up strategic development committee, nomination committee, remuneration and assessment committee, audit committee, internal audit department and other institutions to identify and respond to major change risk factors that the company may encounter, including business risk, policy risk, financial risk, industry risk, management risk and so on. In view of possible or existing risks, the company shall timely give early warning, adjust, analyze, collect and formulate different measures in daily business activities to control the risks within the minimum acceptable range, especially focusing on sales business and collection, procurement and payment, technology development project management, contract management, engineering project management The existing or possible risk points in important matters such as financial management and inventory shall be collected and analyzed regularly to form regular summary and improvement within a time limit; By establishing and improving the company’s quality management system and quality environment system, strictly control the product quality and control the daily business risks; The approval authority of each business link is strictly controlled through the computer information system management platform to realize the effective control of risk from multiple aspects.

3. Control activities

According to the daily operation and the collection and analysis of risks, the company constantly revised, improved and supplemented the internal control management system, business workflow and procedure documents, and took corresponding measures in time to control the risks within an acceptable range. For important business and high-risk areas, the company has established a series of internal control and management systems for various business links such as financing and investment management, procurement and payment management, sales and collection management, inventory and fixed assets management, financial management and monetary fund management to ensure that all work has rules to follow and long-term standardized operation. In daily business activities, the main control procedures are: separation of incompatible positions, authorization approval control, accounting system control, property protection, performance appraisal and so on.

(1) Corporate governance

At present, the company has formed a relatively perfect corporate governance framework and supervision mechanism. All business departments can carry out daily work in accordance with relevant management systems, work processes and other regulations as well as the internal management requirements of the company. In the follow-up, according to the new requirements of laws and regulations, the company’s development objectives The new business and the actual situation of the implementation of various functional departments are constantly revised and improved, so as to better promote the standardized operation of the company.

(2) Daily operation and management

With the company’s internal control system as the guarantee and business process as the norm, a series of systems and processes covering the whole production and operation process have been formulated and implemented, including sales and collection management, production and manufacturing management, procurement and payment management, information disclosure, inventory management, financial management, product R & D management, quality management, engineering project management, etc, In order to ensure that all work of the company has rules to follow and form a set of standardized management system suitable for the development of the company, the main aspects are:

① Sales and collection management

In different links of internal control of sales business, the company has formulated management systems and business process control, such as sales and collection control system, product after-sales service process, finished product delivery approval process, return and exchange processing process, from formulating sales plan management, bidding management, contract management and order execution, customer credit management, inventory management The main control links such as accounts receivable management shall implement measures such as authorization approval, joint contract review, regular reconciliation, financial analysis, credit management, risk early warning and special management of key risk matters, so as to minimize and avoid business risks.

② Procurement and payment management

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