Dark Horse Technology Group Co.Ltd(300688)
Self evaluation report on internal control in 2021
In accordance with the provisions of the basic norms of enterprise internal control jointly issued by the Ministry of finance, the CSRC and other departments and the guidelines on internal control of listed companies of Shenzhen Stock Exchange, as well as the specific requirements of relevant laws and regulations, Dark Horse Technology Group Co.Ltd(300688) (hereinafter referred to as “the company” or “the company”) follows the principles of objectivity, independence and impartiality, Conducted a comprehensive inspection on the company’s internal control in 2021, and comprehensively evaluated the rationality, integrity and implementation effectiveness of the company’s internal control on the basis of consulting the company’s various management systems and understanding the work done by relevant units and departments of the company in internal control.
1、 General situation of internal control
It is the basic responsibility of the company’s internal control law and the Shenzhen Stock Exchange to maintain the effectiveness of the company’s internal control law.
The purpose of the company’s internal control is to reasonably ensure the legal compliance of enterprise operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the realization of enterprise development strategy. In the process of establishing and improving internal control, the company strictly follows the principles of comprehensiveness, compliance, checks and balances, effectiveness and cost-effectiveness.
The company’s internal control has inherent limitations, so it can only provide reasonable assurance to achieve the above objectives; Moreover, the effectiveness of internal control may also change 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 internal control defects are identified, the company will take corrective measures immediately.
2、 Internal control evaluation
(I) evaluation scope of internal control
The scope of internal control evaluation mainly includes the main businesses and matters of the company’s headquarters, its subsidiaries and holding subsidiaries. (II) evaluation basis and identification standard
The company organizes and carries out internal control evaluation in accordance with the basic norms of enterprise internal control, guidelines for the application of enterprise internal control, guidelines for the evaluation of enterprise internal control, and the company’s internal control system and other relevant regulations jointly issued by the Ministry of Finance and other five ministries and commissions of the people’s Republic of China.
According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, combined with the actual situation of the company, the company distinguishes the internal control of financial report from the internal control of non-financial report, and studies and determines the specific identification standards of internal control defects applicable to the company.
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Quantitative standard of defect grade assets
Major defect misstatement ≥ 3% of total assets, misstatement ≥ 10% of total profits
> total amount of assets with defects ≥ 10.5% total amount of assets with errors ≥ 5%
0.5% of total general defective assets 5% of total misstated profits misstatement
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Qualitative standard of defect grade
(1) Fraud by directors, supervisors and senior managers;
(2) Make misstatement correction for the major errors in the announced financial report (except for the retroactive adjustment of previous years due to policy changes or other objective changes due to major defects);
(3) There is a material misstatement in the current financial report, but the internal control fails to find the misstatement in the operation process;
(4) The supervision of the audit committee and the internal audit department on the internal control of financial reporting is invalid.
(1) Failure to select and apply accounting policies in accordance with GAAP;
(2) Failure to establish anti fraud procedures and control measures;
(3) For the accounting treatment of unconventional or special transactions, no corresponding control mechanism has been established or implemented, and there are no corresponding important defects
Compensatory control of;
(4) There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the goal of authenticity and accuracy.
General defects are other control defects except major defects and important defects.
2. Identification standard of internal control defects in non-financial reporting
(1) The quantitative criteria for the evaluation of internal control defects in non-financial reports determined by the company are as follows: refer to the quantitative identification criteria for the evaluation of internal control defects in financial reports.
(2) Qualitative criteria for evaluation of internal control defects in non-financial reports:
1) Defects with the following characteristics are recognized as major defects:
① The company’s decision-making procedures lead to significant losses;
② Serious violation of laws and regulations;
③ Serious loss of senior managers and senior technicians of the company;
④ Negative news frequently appears in the media, involving a wide range and causing significant damage to the company’s reputation;
⑤ The company’s important business lacks institutional control or the institutional system fails. Although the important economic business has internal control system, it does not operate effectively;
⑥ Major or important defects in the company’s internal control have not been rectified;
⑦ The company is punished by the CSRC or warned by the stock exchange.
2) Defects with the following characteristics are recognized as important defects:
① The company’s decision-making procedures lead to major mistakes;
② Serious loss of business personnel in key positions of the company;
③ Negative news in the media, affecting local areas;
④ There are defects in the company’s important business system or system;
⑤ Major defects in the company’s internal control have not been rectified within a reasonable period of time.
3) General defects refer to other control defects other than the above major defects and important defects.
(III) internal control defects and rectification measures
The internal control system is a long-term systematic project. With the development of the company’s business and the changes of the internal and external environment, some defects and loopholes will inevitably appear. The company needs to constantly sort out the internal control system, continuously improve and improve it. Therefore, the company will constantly improve, perfect and perfect the internal control system of relevant control activities with defects found and improve the internal control system according to its own actual situation:
1. Continue to strengthen the publicity and study of the company law, the accounting law, the basic norms of enterprise internal control issued by the finance department, the standards for the governance of listed companies, as well as the laws and regulations related to the operation of the company, the internal control guidelines and the relevant rules of listed companies.
2. Continue to give full play to the supervision function of the internal audit department, strengthen the inspection of the company’s internal control systems, and conduct routine and continuous daily supervision and inspection on the establishment and implementation of the company’s internal control, so as to ensure the effective implementation of the internal control system. 3. Continue to carry out the training of relevant personnel, learn relevant laws, regulations, systems and guidelines, update knowledge in time, and continuously improve the corresponding work competence of employees.
3、 Contents of internal control evaluation
(I) control environment
1. Corporate governance
The company has established a standardized corporate governance structure and formed a scientific and effective division of responsibilities and check and balance mechanism in accordance with the requirements of the company law, the securities law and other laws and regulations as well as the regulations of the CSRC and other departments. The company has established a perfect “three meetings” system. The general meeting of shareholders, the board of directors and the board of supervisors exercise decision-making power, executive power and supervision power respectively according to their duties. The general meeting of shareholders shall exercise the decision-making power on major matters such as business policies, financing, investment and profit distribution of the enterprise according to law. The board of directors shall be responsible to the general meeting of shareholders and exercise the business decision-making power of the enterprise according to law. The board of directors has established four professional committees: Strategy Committee, audit committee, nomination committee and salary and assessment committee, which are responsible for the supervision of the company’s operation. Among the five directors set up by the company, two are independent directors. In addition to the strategy committee, the independent directors in other committees act as the convener. Matters involving specialty must be approved by the professional committee before they can be submitted to the board of directors for deliberation, so that the independent directors can better play their role. The board of supervisors shall be responsible for the general meeting of shareholders and supervise and inspect the performance of the company’s finance and senior executives. The management is responsible for the implementation of various resolutions and decisions of the general meeting of shareholders and the board of directors, and presides over the daily operation and management of the company.
According to the national laws and regulations and the articles of association, the company has established the rules of procedure of the “three meetings”, the working rules of the general manager and the working system of independent directors, clarified the responsibilities and authorities in decision-making, implementation and supervision, and established an effective internal check and balance mechanism. In accordance with relevant regulations, the company has completely separated the major shareholders and their affiliated enterprises from the company in terms of business, personnel, assets, institutions and finance, ensuring the independence of the company’s business, personnel, finance, institutions and assets. 2. Organizational structure
A standardized and efficient organization is the fundamental guarantee for the company to strengthen internal control. According to the characteristics of the industry and the particularity of the business, taking into account the requirements of centralized and flexible management of the company’s management, the company has established a standardized and reasonable organization and realized the effective operation of the company’s management.
The general meeting of shareholders is the authority of the company; The board of directors is the decision-making body of the company’s operation; The management is responsible for the daily business activities of the company and the board of directors. The board of supervisors is responsible for inspecting the company’s finance and supervising the board of directors and management. The audit committee under the board of directors, with independent directors as the convener, is responsible for reviewing the implementation of the company’s internal control system and coordinating internal audit and other related matters. The company sets up an internal audit department, which is responsible for and reports directly to the audit committee.
The establishment and division of labor of the above organizations effectively ensure the operation of the internal control system.
3. Human resources
The company is a comprehensive entrepreneurship and innovation service platform, which helps start-ups and small and medium-sized enterprises grow through media reports, brand promotion, training and learning, entrepreneurship financing, cooperation consulting and other services. Talent is the most critical and valuable asset of the company and the fundamental guarantee for providing innovation and entrepreneurship services. Therefore, the company is committed to continuously improving the human resource environment every year to better attract, develop and retain industry elites.
Talent attraction and recruitment: the company continuously improves the brand attraction of employers by continuously optimizing its internal management system and maintaining good communication with external talents; By maintaining, developing and optimizing the recruitment channels, clarifying the corporate culture and employment standards, strengthening the professionalism and standardization of talent selection, and actively introducing and mining various operation management and professional skilled talents matching the enterprise values and employment principles.
Salary and welfare: the company ensures the external competitiveness and internal fairness of the salary incentive system. We will legally pay social insurance and provident fund for employees everywhere, and provide supplementary commercial medical insurance to provide more humanized medical services for employees. The company provides employees with working meals, physical examination and other welfare projects, and regularly organizes birthday parties, League building meetings and other rich activities, so as to provide guarantee for employees’ physical and mental health and spiritual pleasure during their work in the company, and improve employees’ loyalty and cohesion to the company.
Training and development: provide policy, resources and financial support according to the company’s development plan and talent demand, and make continuous efforts to create an organizational atmosphere and team of learning, innovation and positive progress. Based on the growth needs of employees in different positions, a multi-level training and learning system has been established to continuously cultivate and reserve all kinds of excellent management talents and professionals to meet the needs of enterprise development; Through internal recruitment and selection of dark horse employees, implement the dark horse employee training plan to transport management successors and core backbone talents for the company.
4. Corporate culture
In the process of rapid development, the company has accumulated and precipitated continuously, and the corporate culture has been refined into three. First, founder’s feelings: This is the company’s values. Every leader and employee of the company has the mentality of the founder and considers and thinks from the perspective of the founder; Respect every founder, even the youngest entrepreneur; Carefully listen to the opinions and suggestions of each founder, even criticism. Second, result oriented, do what you say: regardless of hard work, take credit. This is the company’s executive culture. The mission will be achieved and the work will be promoted efficiently. Third, sunshine culture, everything speaks on the table: the company builds a simple working relationship and benefits from one hole. All work can withstand the comments of the company and colleagues, all for the sake of customers and work.
5. Social responsibility
(1) Protection of shareholders’ rights and interests
The company held the general meeting of shareholders in strict accordance with the provisions of the company law, securities law, stock listing rules and other laws and regulations, normative documents and the articles of association, and actively adopted online voting to expand the proportion of shareholders participating in the general meeting of shareholders. During the reporting period, the company continuously improved the corporate governance structure, guaranteed the realization of shareholders’ right to know, participation and dividend, and actively implemented the cash dividend policy to ensure the return on investment of shareholders; Continuously optimize and improve the internal control system, strictly fulfill the obligation of information disclosure, and disclose information to all shareholders truthfully, accurately, completely, timely and fairly; Communicate with investors and establish a good interactive platform through online performance briefing, investor telephone, fax, e-mail, investor relations interactive platform, receiving on-site investigation of investors and other ways. During the reporting period, the company did not occupy the company’s funds by major shareholders and related parties, nor did it provide funds directly or indirectly to major shareholders and related parties for use, and the company had no external guarantee in any form.
(2) Protection of employees’ rights and interests
The company adheres to the value that talents are the core driving force of the company’s development, strictly abides by the labor law, labor contract law and other relevant laws and regulations, protects the legitimate rights and interests of employees, and is committed to cultivating employees’ sense of identity and belonging. While realizing the development of the company, we will maintain the common growth of employees and enterprises, constantly improve and optimize the welfare system and talent introduction mechanism, and strive to provide employees with a better working environment and more humanistic care.
(II) risk assessment
Adhering to the principle of risk orientation, the company combs and optimizes major business processes, designs key control nodes, and establishes effective communication channels and mechanisms for suspicious and inappropriate matters and activities in the business process on the basis of risk assessment, so as to make the management, employees and customers
