Avic Heavy Machinery Co.Ltd(600765) : internal control evaluation report in 2021

Avic Heavy Machinery Co.Ltd(600765)

Internal control evaluation report in 2021

Avic Heavy Machinery Co.Ltd(600765) 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 the company and its holding subsidiaries Shaanxi Hongyuan aviation Forging Co., Ltd., Guizhou anda aviation Forging Co., Ltd. and its subsidiaries (Guiyang anda Yuhang Material Engineering Co., Ltd.), AVIC Liyuan Hydraulic Co., Ltd. and its subsidiaries (Liyuan Hydraulic System (Guiyang) Co., Ltd.) China Aviation Technology (Group) Co., Ltd., China Aviation Technology (Group) Co., Ltd., China Aviation (Group) Co., Ltd. and its subsidiaries 12 companies including AVIC excellence forging (Wuxi) Co., Ltd. Therefore, it has not been included in the business scope of Shenyang Hi Tech Co., Ltd. according to the requirements of "slimming", so it has not been included in the business scope of Shenyang Hi Tech Co., Ltd. 2. Proportion of units included in the scope of evaluation:

Proportion of indicators (%)

The total assets of the units included in the evaluation scope accounted for 99.8% of the total assets in the company's consolidated financial statements

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:

The scope of this internal control evaluation includes 18 main business processes and high-risk business areas, including organizational structure, corporate strategy, human resources, social responsibility, corporate culture, capital activities, asset management, guarantee business, financial report, comprehensive budget, contract management, internal information transmission, information system and so on:

(1) Organizational structure

In accordance with relevant national laws and regulations and the articles of association, the company has established a standardized corporate governance structure and rules of procedure, defined the responsibilities and authorities in decision-making, implementation and supervision, and formed a scientific and effective division of responsibilities and check and balance mechanism. The company reasonably sets up internal institutions and defines responsibilities and authorities in combination with development strategy, business characteristics and internal control requirements.

(2) Enterprise strategy

The strategic development committee under the board of directors is mainly responsible for studying and making suggestions on the company's medium and long-term development planning, major investment and financing schemes, major capital operation and asset management project decisions. The company has formulated relevant systems of development strategy management, defined the procedures for the formulation, implementation, evaluation and adjustment of development strategy, and standardized the content of development strategy, so as to enhance the company's core competitiveness and sustainable development ability and ensure the realization of the company's strategic objectives. According to the development objectives specified in the Avic Heavy Machinery Co.Ltd(600765) "14th five year plan", the company implements the company's development strategy into the annual production and operation activities through annual business plan and comprehensive budget management, so as to ensure that the company's development plan is implemented step by step. (3) Human resources

The company attaches importance to the construction of human resources. According to the development strategy, combined with the human resources situation and future demand forecast, the company has formulated the "14th five year plan" and medium and long-term human resources development plan, established human resources development objectives, and defined various policies and systems such as the introduction, development, use, training, assessment, incentive and withdrawal of human resources, Establish a scientific and effective employment mechanism and salary system, realize the rational allocation of human resources and comprehensively improve the company's core competitiveness.

(4) Social responsibility

The company attaches importance to the performance of social responsibility, earnestly implements the national and local laws and regulations on safety production, environmental protection and occupational health, establishes a strict safety production management system, operation specifications and emergency plan, practically achieves safety production, implements the responsibility of safety production, and the safe investment of human and material resources can ensure the timely detection and elimination of production safety hazards.

The company's long-term interests and social benefits are coordinated with the company's long-term interests and social benefits, and the company's long-term economic development and social benefits are coordinated with each other.

(5) Corporate culture

The company has established and improved the corporate culture management system, formulated the key points of annual corporate culture publicity, steadily promoted the "14th five year plan" of corporate culture construction, strengthened the leadership of corporate culture construction, and strictly implemented the "Trinity" cultural leadership mechanism. By strengthening the corporate spirit and integrating the construction of corporate culture into daily business activities, we can enhance the confidence and sense of responsibility of employees, enhance the cohesion and centripetal force of the company, establish the overall image of the company and ensure the stable operation of the company.

(6) Financial activities

According to the actual situation, the company comprehensively combs the monetary capital business process, scientifically sets up the organization and posts, and defines the responsibilities, authorities and post separation requirements of each link of monetary capital; Follow the relevant regulations on the management of cash, bank accounts, bills and seals to effectively protect the safety of the company's monetary funds; Improve the reporting system of monetary fund information, regularly or irregularly inspect and evaluate fund activities, and implement the accountability system to ensure the safe and effective operation of funds.

(7) Procurement business

Combined with the actual situation, the company has improved the procurement business process and the relevant management system of procurement business. The company has formulated the post responsibility system for relevant posts engaged in procurement business, and defined their respective rights and responsibilities and mutual restriction requirements and measures in the links of procurement and approval, inquiry and determination of suppliers, negotiation and approval of procurement contracts, procurement, acceptance and relevant accounting records, payment application, approval and Implementation. The procurement pricing management system and supplier assessment management system are established, the weak links in the procurement process are regularly inspected and evaluated, and effective control measures are taken to ensure that the material procurement meets the production and operation needs of the company.

(8) Asset management

A. The fixed assets company comprehensively combed the business processes of fixed assets investment, acceptance, use, maintenance and disposal, scientifically set up the organization and posts, and defined the responsibilities, authorities and post separation requirements of all links of fixed assets business. Control the investment scale of fixed assets scientifically and reasonably, and standardize the technical indicators and operation requirements for the acceptance, use and maintenance of fixed assets. Strengthen the insurance of fixed assets to ensure the safety and integrity of fixed assets. Formulate the cost accounting and depreciation accrual methods of fixed assets that meet the unified requirements of the state, pay attention to the signs of impairment of fixed assets, reasonably confirm the impairment loss of fixed assets, and ensure the authenticity and reliability of the financial information of fixed assets.

B. In the inventory management activities, the inventory company comprehensively combs the inventory business process, scientifically sets up the organization and posts, clearly stipulates the procedures and systems of inventory related business activities, timely finds the weak links in inventory management, and takes effective measures to improve. Pay attention to the signs of inventory impairment, reasonably confirm the inventory impairment loss, and continuously improve the asset management level of the company.

C. The intangible assets company has strengthened the management of intangible assets, comprehensively sorted out the business processes such as acquisition, acceptance, use, preservation and disposal of intangible assets, defined the responsibilities, authorities and post separation requirements of all links of intangible assets business, and improved the specific rules and regulations for acceptance, use and maintenance of intangible assets. Strengthen the protection of the company's brand and other intangible assets to ensure that the legitimate rights and interests of the company are not infringed. Formulate the cost accounting, amortization and other methods of intangible assets that meet the unified requirements of the state to ensure the authenticity and reliability of the financial information of intangible assets.

(9) Sales business

By improving the sales management system, the company has standardized and controlled the main links of sales business, determined appropriate sales policies and strategies, defined the responsibilities and authorities of each position, and ensured the separation of incompatible positions. Sales control covers the formulation of sales budget and sales plan, customer development and management, order receiving management, contract management, price management, delivery control, collection and other related matters, which matches the actual sales situation of the company, improves the efficiency of sales work and ensures the realization of sales objectives.

(10) Research and development

The company attaches great importance to product development. According to the development strategy and in combination with the requirements of market development and technological progress, the company scientifically formulates process R & D and product development plans, strengthens the whole process management of process R & D and product development, standardizes process R & D and product development, and promotes the effective utilization of new technologies, new processes and new product achievements, Continuously improve the company's independent innovation ability.

(11) Project

The company has improved the project management system, sorted out the possible risk points in each link, and standardized the work processes such as project budget, bidding, construction, supervision and acceptance. Clarify the responsibilities and authorities of relevant departments and posts, and separate incompatible posts such as feasibility study and decision-making, budget preparation and audit, completion final accounts and audit from each other. Strengthen the monitoring of the whole process of project construction, strengthen bidding management, and implement accountability to ensure the quality, progress and capital safety of the project.

(12) Guarantee business

The internal control of the company's external guarantee follows the principles of legality, prudence, mutual benefit and safety, and strictly controls the guarantee risk. In accordance with the company law of the people's Republic of China, the securities law of the people's Republic of China, the guarantee law of the people's Republic of China and other laws and regulations, as well as the relevant provisions of the Avic Heavy Machinery Co.Ltd(600765) articles of association, the company has formulated the measures for the administration of economic guarantee to review the object of external guarantee, decision-making authority, business review procedures, contract signing procedures, implementation monitoring of external guarantee The information disclosure process and other business links are specified in detail to strictly control the guarantee risk.

(13) Business Outsourcing

The company has established and improved the management system of business outsourcing, stipulated the scope, methods, conditions and implementation of business outsourcing, defined the responsibilities and authorities of relevant departments and posts, strengthened the monitoring of the whole process of business outsourcing and prevented outsourcing risks.

(14) Financial Report

According to the requirements of relevant national laws and regulations and its own actual situation, the company comprehensively combs the business processes of financial report preparation, external provision, analysis and utilization, defines the division of responsibilities and post separation of all links of financial report, and the organization setting and staffing are basically scientific and reasonable.

The preparation methods, procedures, contents and approval procedures of the company's financial report are in strict accordance with the requirements of relevant national laws and regulations, ensuring the authenticity, integrity, sufficiency and timeliness of the financial report. The company scientifically designs the contents of the financial report, effectively analyzes the information disclosed in the financial report, and uses this information to meet the needs of the company's operation and management decisions.

The company has formulated the financial management system for related party transactions in accordance with relevant laws, administrative regulations, departmental rules, listing rules and other relevant provisions, clearly divided the approval authority of the general meeting of shareholders and the board of directors on related party transactions, and stipulated the deliberation procedures and requirements for avoiding voting on related party transactions. With reference to the listing rules and other relevant provisions, the company determines the list of related parties of the company and updates it in time to ensure that the list of related parties is true, accurate and complete. When the company and its wholly-owned subsidiaries have transaction activities, the relevant responsible persons carefully check the list of related parties to carefully judge whether it constitutes related party transactions. If it constitutes a connected transaction, it will perform the obligations of examination and approval and reporting within their respective authorities.

The company has formulated the information disclosure management system in strict accordance with securities laws and regulations. The chairman is the ultimate responsible person for the company's information disclosure; The Secretary of the board of directors is the main person responsible for information disclosure and is responsible for managing the company's information disclosure and investor relations management. The company appoints a special department to be responsible for information disclosure. Under the direct leadership of the Secretary of the board of directors, it is responsible for the daily information disclosure of the company. The company shall perform the obligation of information disclosure in strict accordance with the provisions of information disclosure, disclose relevant information truthfully, accurately, timely and completely, treat all shareholders fairly, and ensure that all shareholders of the company have equal access to the company's information,