Guangzhou Echom Sci.&Tech.Co.Ltd(002420)
Self evaluation report on internal control in 2021
Guangzhou Echom Sci.&Tech.Co.Ltd(002420) 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).
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 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.
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
（1） Scope of internal control evaluation
According to the principle of risk orientation, the company determines the main units, businesses, matters and high-risk fields included in the scope of internal control evaluation. The units included in the evaluation scope include the parent company Guangzhou Echom Sci.&Tech.Co.Ltd(002420) and all subsidiaries. The total assets of the units included in the evaluation scope account for 97.75% 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 and matters included in the evaluation scope include corporate governance, organizational structure, development strategy, human resources, corporate culture, sales business, R & D business, procurement business, financial report, guarantee business, capital activities, asset management, budget management, contract management, information disclosure, related party transactions, etc. We evaluated the effectiveness of the company’s internal control in 2021 from the aspects of internal environment, risk assessment, control activities, information and communication, internal supervision and other factors. The assessment is as follows:
1. Internal environment
(1) Corporate governance and organizational structure
① Corporate governance structure
In strict accordance with the requirements of the company law, the securities law, the guidelines for the governance of listed companies and other laws and regulations, the company has established and improved the corporate governance structure, established a modern enterprise system and standardized the company’s operation. The specific conditions of corporate governance are as follows: shareholders and the general meeting of shareholders: the general meeting of shareholders is the highest authority of the company. The company holds the general meeting of shareholders in strict accordance with the requirements of the articles of association and the rules of procedure of the general meeting of shareholders to ensure that all shareholders can normally exercise their legitimate rights. An ordinary resolution made at the general meeting of shareholders shall be adopted by more than half of the voting rights held by the shareholders (including shareholders’ agents) attending the general meeting of shareholders; A special resolution made at the general meeting of shareholders shall be adopted by more than two-thirds of the voting rights held by the shareholders (including their agents) attending the general meeting of shareholders. The company is independent of shareholders in terms of business, assets, personnel, institutions and finance, and fully protects the rights and interests of all shareholders. The general meeting of shareholders of the company also employs lawyers to attend and witness, and the operation is standardized.
Directors and board of directors: the company elects directors in strict accordance with the relevant provisions of the company law and the articles of association. The composition of the board of directors meets the requirements of laws, regulations and the articles of association. The board of directors of the company has three special committees: strategy, nomination and salary assessment, and audit. The board of directors of the company carries out its work in strict accordance with the articles of association and the rules of procedure of the board of directors, and each special committee carries out its work in accordance with the rules of procedure of the development strategy committee, the rules of procedure of the nomination and salary assessment committee and the rules of procedure of the audit committee.
Supervisors and board of supervisors: the company elects supervisors in strict accordance with the relevant provisions of the company law and the articles of association. The composition of the board of supervisors meets the requirements of laws, regulations and the articles of association. The board of supervisors of the company shall perform its duties in accordance with the requirements of laws and regulations and the articles of association, supervise and inspect the performance and financial reports of the directors and senior managers of the company, and safeguard the rights and interests of the company and all shareholders.
② Organizational structure of the company
According to the needs of operation and management, the company has set up functional modules such as marketing, R & D, procurement, management and finance, and defined the corresponding functional positioning and post responsibilities. Incompatible posts are separated, and they cooperate with and contain each other in work.
(2) Establishment of internal audit institutions
In order to establish and improve the internal audit supervision, the company has established the audit department under the audit committee of the board of directors, formulated the internal audit system and internal audit norms, and supervised and reviewed the internal control and financial accounting of the company and its subordinate units. The audit department reports the work situation to the audit committee and the corresponding management of the company, and requires the auditee to implement the audit rectification opinions. The audit department timely tracks and checks the implementation of various rectification measures. Through audit and supervision, continuously improve the company’s internal control, prevent major risks and improve the company’s operating efficiency.
(3) Corporate culture
The company’s vision is to “become a trusted leader in industrial design system integration”, take “creating value for customers, creating a platform for employees and creating returns for shareholders” as its mission, establish the core values of “moving customers, pursuing excellence, continuous innovation and co creation and sharing”, and carry forward the enterprise spirit of “loyalty, unity, vitality and speed”, Build a cadre team that “has the courage to take responsibility, is capable and efficient, has a clean air and can win wars”, and actively promote the transformation from “made in China” to “created in China”. In terms of management mode, it emphasizes system and process management, pays attention to risk prevention while taking into account the improvement of efficiency, and strives to improve the quality of development.
(4) Human resource management
In order to meet the needs of the company’s operation and management, the company has established and implemented corresponding personnel management systems such as talent employment, training, assessment, reward and punishment, job rotation, promotion and elimination. Promote flat organization and management by setting posts and staffing and optimizing management process, so as to effectively improve the operation efficiency and per capita benefit of the company; By strengthening staff training, strengthen the echelon construction of employees at all levels of the company, improve labor relations, improve performance appraisal and incentive mechanism, and actively mobilize the initiative of employees at all levels; By strengthening staff communication and exchange, organize various forms of team activities, create a harmonious working atmosphere, meet the spiritual and cultural needs of employees, and enhance the sense of honor and cohesion of employees.
2. Risk assessment
(1) Target management
① Objectives of the company’s internal control
Reasonably ensure the legal compliance of the company’s operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the company to realize its development strategy.
② Basic principles that the company should follow in establishing and implementing internal control
Principle of comprehensiveness: it runs through the whole process of decision-making, implementation and supervision, covering all kinds of businesses and matters of the company and its subordinate units. Importance principle: on the basis of comprehensive control, pay attention to important business matters and high-risk areas.
Principle of checks and balances: form mutual restriction and supervision in the aspects of governance structure, institutional setting, distribution of rights and responsibilities, business process, etc., and take into account the operation efficiency at the same time.
Adaptability principle: adapt to the company’s business scale, business scope, competition and risk level, and adjust it in time with the changes of the situation.
Cost benefit principle: weigh the implementation cost and expected benefit, and realize effective control with appropriate cost.
(2) Risk identification and assessment
According to the set control objectives, the company comprehensively, systematically and continuously collects relevant information, identifies internal and external risks, timely carries out risk assessment and makes the risk controllable. Risk assessment is to accurately identify the internal and external risks related to the realization of control objectives and determine the corresponding risk tolerance. According to the results of risk analysis, combined with risk tolerance, weigh the risks and benefits, and determine the risk response strategy.
(3) Risk countermeasures
Combined with the risk assessment results, the company uses corresponding control measures to control the risk within the tolerable degree through the combination of manual control and automatic control, preventive control and discovery control. Control measures generally include: incompatible job separation control, authorization approval control, accounting system control, property protection control, budget control, operation analysis control and performance evaluation control.
① Transaction authorization: the company has formulated the business approval authority and process table, which defines the scope, authority, procedures, responsibilities and other relevant contents of authorization and approval. The management at all levels within the company must exercise the corresponding authority within the scope of authorization, and the handling personnel must also handle all businesses according to the specified process.
② Division of responsibilities: the company issued the organizational structure and defined the responsibilities of departments and posts. Through the division of powers and responsibilities, all departments and posts cooperate and restrict each other. Incompatible positions mainly include: authorization approval and business handling, business handling and accounting records, accounting records and property custody, business handling and business audit, authorization approval and supervision, etc.
③ Voucher and record control: the company has reasonably formulated voucher circulation procedures, and all kinds of businesses and transactions must be recorded; After the business occurs, the relevant business posts are required to fill in the corresponding reimbursement documents, attach the relevant documents and submit them to the relevant leaders for approval, and submit them to the finance department in time. The finance department reviews the relevant documents according to the requirements of the accounting standards, makes the corresponding accounting treatment, binds the vouchers and files them in order.
④ Asset contact and use records: the company strictly restricts the direct contact of unauthorized personnel with assets, keeps and controls assets through warehouse in and out management, regular inventory, purchase of property insurance, and strengthens the ex factory release management of materials to ensure the separation of asset storage and recording personnel, so as to effectively control the safety of assets.
⑤ Accounting system control: in accordance with the requirements of the company law on financial accounting and the provisions of the accounting law, accounting standards for business enterprises and other laws and regulations, the company has established a standardized, complete and suitable accounting system and financial management system for the company’s business characteristics, established an independent accounting organization, equipped with qualified accounting personnel, and done a solid job in the basic work of accounting, Clarify the processing procedures of accounting vouchers, accounting books and financial reports to ensure the authenticity, accuracy and integrity of financial data.
3. Control activities
Key business control activities include:
(1) Control of procurement and payment activities
The company has made clear a series of working procedures such as purchase application, purchase approval, purchase execution, goods acceptance, accounts payable accounting and payment approval, so as to control inventory cost and turnover while ensuring the supply of production materials. The company’s payment of accounts payable and prepayments shall be applied for by the procurement department after completing the relevant documents, approved by the relevant competent leaders according to the authority, and reviewed and approved by the person in charge of accounting and finance; The financial department shall make a plan for fund revenue and expenditure, and basically make payment on a monthly basis as planned, so as to ensure the safety of the fund chain. In terms of payment method control, except for a small amount of cash payment, the payment for goods is generally settled by bank transfer or acceptance bill. The finance department shall regularly check the data with the procurement department and the supplier to ensure the accuracy of accounts payable data. Within the authorization scope of the company’s headquarters, subordinate enterprises can independently handle procurement and payment business according to the specified procedures. (2) Control of sales and collection activities
The company has formulated sales management systems such as customer credit management system, customer quotation management system, accounts receivable and issued goods management system, which not only do a good job in customer credit management, but also standardize a series of work from receiving customer orders to arranging production, delivery, accounting management, accounts receivable control and so on, It effectively ensures the normal development of the company’s sales business and the timely and safe recovery of payment for goods. The company has strengthened the management of sales price, especially the improvement and approval of low gross profit business, and made great efforts to improve the profitability of the company. In 2021, the company strengthened the collection and assessment management of overdue accounts receivable, improved the credit and accounts receivable control mechanism, effectively controlled the bad debt risk and improved the turnover of accounts receivable; The company attaches importance to the risk control of commercial bills. If it is necessary to receive commercial acceptance bills under special circumstances, it shall be reviewed by the financial center and approved by the company’s leaders.
(3) Asset management control
The company has formulated corresponding fixed assets and inventory management systems according to the actual situation, defined the approval procedures for asset purchase, use and disposal, and clarified the custody responsibilities of relevant departments for relevant assets; The financial department shall carry out accounting according to the requirements of the accounting system, and regularly check and verify all assets to ensure the safety of assets and the consistency between accounts and reality; Regularly analyze and report the use and turnover of assets, and timely deal with idle assets to improve the use efficiency of assets.
(4) Control of financial management and reporting activities
The company has formulated accounting and financial management systems such as financial management system. The financial department prepares accounting vouchers and issues accounting statements in strict accordance with the relevant provisions of the national accounting standards, and timely and accurately reflects the company’s financial status and operating results; At the same time, the financial department conducts financial analysis every month in combination with the company’s business characteristics and management requirements, and reports the company’s financial status and existing problems at the business analysis meeting, so as to provide financial support for the company’s improvement of operation and management and promote the sustainable and healthy development of the company’s business. The company has formulated the budget management system to determine the annual business objectives of each unit through the connection of budget management and strategic planning, decompose the annual budget objectives into months and relevant subjects, track the budget implementation gap every month, and take corresponding measures to improve to ensure the smooth achievement of the company’s business objectives.
(5) Management control of holding subsidiaries
The company has formulated the subsidiary management system. The headquarters of the company carries out matrix management on the market, R & D, procurement, manpower and finance of the subsidiaries to ensure that the headquarters and subsidiaries form a unified, standardized, coordinated, efficient and orderly operation, which helps to improve the overall risk control ability of the company and safeguard the legitimate rights and interests of the company and investors.
(6) Control of related party transactions
In order to regulate the related party transactions of the company, according to the company law, securities law and other laws
