Avary Holding (Shenzhen) Co.Limited(002938) 2021 annual internal control audit report
Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd
Internal control evaluation report in 2021
Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. all shareholders:
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 relevant internal control systems of Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. (hereinafter referred to as the company), on the basis of daily and special supervision of internal control, The audit department evaluated the effectiveness of the company’s internal control on December 31, 2021 (benchmark date of internal control evaluation report).
1、 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 audit department believes that the company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise 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 audit department found no major defects in the internal control over non-financial reports on the benchmark date of the internal control evaluation report. In addition, 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.
2、 Internal control evaluation
(I) evaluation scope of internal control
The audit department shall determine the main units, businesses and matters included in the evaluation scope and high-risk areas in accordance with the risk-oriented principle; The main units included in the evaluation scope include Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. and its wholly-owned subsidiaries Qingding precision electronics (Huai’an) Co., Ltd., hongqisheng precision electronics (Qinhuangdao) Co., Ltd., honghengsheng Electronic Technology (Huai’an) Co., Ltd., Pengding International Co., Ltd., Pengding Technology Co., Ltd Avary Technology (India) private limited, avarysingapore private limited and Avary Holding (Shenzhen) Co.Limited(002938) investment (Shenzhen) Co., Ltd; The total assets of the units included in the evaluation scope account for 98.95% of the total assets in the company’s consolidated financial statements, and the total operating revenue accounts for 99.45% of the total operating revenue in the company’s consolidated financial statements; The main businesses and matters included in the evaluation scope include: internal environment (organizational structure, human resources, social responsibility, corporate culture), risk assessment, control activities (capital activities, procurement business, production management, sales business, asset management, research and development, project, guarantee business, business outsourcing, comprehensive budget, contract management) Information and communication (internal information transmission, information system, financial report), internal supervision; The high-risk areas of focus mainly include: sales business, procurement business, production management and asset management.
The major risks and omissions of the company’s business and management areas are included in the above-mentioned business scope.
(II) basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system.
In accordance with Article 17 of the guidelines on internal control evaluation and Article 16 of the rules for the preparation and reporting of information disclosure of companies offering securities to the public No. 21 – General Provisions on annual internal control evaluation report, the audit department distinguishes between internal control over financial reports and internal control over non-financial reports for major defects, important defects and general defects, Taking into account the guidelines of “auditing standards for Chinese certified public accountants No. 1221 – importance in planning and executing audit work”, the reference value of importance level, combined with the factors such as company size, industry characteristics, risk preference and risk tolerance, and taking into account the peers and comparison, it is suggested that the identification standards of internal control defects are as follows:
1. Identification criteria for defects in internal control over financial reporting
Quantitative and qualitative criteria
① Fraud of directors, supervisors and senior managers of the company; ② The company corrects the published financial report;
Occurred or caused by internal control defects
(3) major misstatement in the current financial report that is found by the certified public accountant but not recognized by the company’s internal control and reported ≥ 1% of the operating revenue;
④ The internal control supervision of the audit committee and the audit department is invalid.
① Invalid control environment;
② Failure to select and apply accounting policies in accordance with GAAP; 0.5% of operating revenue ≤ internal control deficiency
③ no anti fraud procedures and control measures have been established for the occurred or annual pre fraud;
Important defects
Accounting (possible) misstatement ＜ business ④ accounting treatment for unconventional or special transactions does not account for 1% of business income
Corresponding control mechanism or not implemented and there is no corresponding compensatory control;
Internal control defect refers to the error defect that has occurred or refers to other general control defects other than the above major defects and important defects, which is expected (may) occur in the year.
Report ＜ 0.5% of operating revenue
2. Identification standard of internal control defects in non-financial reporting
Quantitative and qualitative criteria
May cause direct property losses ① serious violation of national laws and regulations;
Greater than 1% of operating revenue ② unscientific decision-making procedures lead to major mistakes;
Major defects (including), or lack of institutional control or systematic failure of important businesses under the national government;
The punishment of the government department resulted in a large loss of key management personnel or important talents of the company;
⑤ frequent negative news in the media;
May cause direct property losses ① important property losses caused by management errors of the company shall be controlled
The activity reaching 0.5% of the operating revenue failed to prevent the error;
Major defect (including) ~ 1%, or provincial ② property loss, although it does not reach or exceed the importance level,
The punishment imposed by the government department will cause damage to the company, but from the nature, it should still attract the attention of the board of directors and management
Negative impact;
Other control deficiencies that may cause direct property losses other than the above major defects and important defects
Less than 0.5% of the operating income.
General defects or being punished by municipal government departments
The penalty has a negative impact on the company
ring
(III) identification and rectification of internal control defects
1. Identification and rectification of internal control defects in financial reporting
According to the above identification standards of internal control defects in financial reporting, the company has no major defects or important defects in internal control of financial reporting during the reporting period.
2. Identification and rectification of internal control defects in non-financial reports
According to the above identification standards of internal control defects in non-financial reports, no major defects or important defects in the company’s internal control over non-financial reports were found during the reporting period.
3、 Description of other major matters related to internal control
The company has no explanation of other major matters related to internal control.
Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. board of directors March 16, 2022
