Shenzhen Fluence Technology Plc(300647) : self evaluation report on internal control in 2021

Shenzhen Fluence Technology Plc(300647)

Self evaluation report on internal control in 2021

Shenzhen Fluence Technology Plc(300647) all shareholders:

In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements, combined with the internal control system and evaluation methods of Shenzhen Fluence Technology Plc(300647) (hereinafter referred to as "the company"), on the basis of daily and special supervision of internal control, the board of directors evaluated the effectiveness of the company's internal control as of December 31, 2021 (the benchmark date of internal control evaluation report).

1、 Important statement

According to the requirements of the enterprise's internal control norms, it is the responsibility of the company's board of directors to establish, improve and effectively implement internal control, evaluate its effectiveness, and truthfully disclose the internal control evaluation report. The board of supervisors supervises the establishment and implementation of internal control by the board of directors, and 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 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 the efficiency and effect of operation and management, and promote the realization of the company's 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 the situation may lead to inappropriate internal control or reduced compliance with 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、 Evaluation conclusion of the company's internal control

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 ensured 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 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

(I) evaluation scope of internal control

The company determines the main units, businesses and matters included in the evaluation scope according to the risk oriented principle. The main units included in the evaluation scope include the company and all subsidiaries within the scope of consolidated statements. 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.

The main businesses and matters included in the evaluation scope include: corporate governance structure, organizational structure, internal audit, human resources policy, corporate culture, fund management, financial management, subsidiary management, related party transactions, foreign investment, foreign guarantee, procurement business, sales business, inventory management, contract management, etc.

The above units, businesses and matters included in the evaluation scope have covered the main aspects of the company's operation and management, and there are no major omissions.

1. Internal environment

(1) Corporate governance structure

The corporate governance structure is sound, including the general meeting of shareholders, the board of directors, the board of supervisors and senior management. The general meeting of shareholders is the authority of the company, the board of directors is the executive body of the general meeting of shareholders, the general manager is responsible for the daily operation and management of the company, and the board of supervisors is the internal supervision organization of the company. The general meeting of shareholders, the board of directors, the board of supervisors and the management have clear rights and responsibilities, mutual checks and balances and good cooperation, forming a set of reasonable, complete and effective operation and management framework, It has laid a solid foundation for the standardized operation and steady development of the company. The board of directors of the company has four special committees to perform their duties and provide decision-making suggestions in accordance with the implementation rules of the special committees of the board of directors. (2) Organization

The company has established an organization that meets the needs of the company's business scale and operation and management in accordance with the provisions of relevant standardized operation system and internal management system; Following the principle of separation of incompatible positions, reasonably set up departments and posts, and scientifically divide responsibilities and authorities, so as to ensure the normal and orderly operation of the company and prevent business risks. (3) Internal audit

The company has a special audit department. Under the leadership of the audit committee of the board of directors, the audit department independently carries out the internal audit and supervision of the company according to law. The company has established and improved the internal audit system and conducted independent inspection and supervision on the authenticity and integrity of the company's financial information, the establishment and implementation of the internal control system through routine audit, special audit and other businesses.

(4) Human resources policy

The company pays attention to human resources work, attaches importance to the introduction and training of talents, formulates human resources management policies, and clearly stipulates management methods such as recruitment, promotion, performance appraisal, salary reward and punishment, so as to ensure that the management and all employees have corresponding competence and effectively perform their duties. In order to support the improvement of employees' ability, the company implements training management, adheres to the combination of internal training and external training, and establishes a multi-channel and multi-level talent training mechanism to promote the long-term and stable development of the company.

(5) Corporate culture

Focusing on the R & D and application of heat dissipation technology, the company takes "providing global customers with new systematic heat dissipation solutions for electronic products" as its mission and "becoming a world-class industrial design and manufacturing enterprise" as its vision, forming the core values of "transcendence, responsibility and win-win".

The company integrates the construction of corporate culture into its daily business activities, pays attention to cultivating employees' positive values and sense of social responsibility, and advocates adhering to the original intention, hard work and innovative development. All employees of the company can agree with the enterprise concept, abide by the company's management systems and earnestly perform their post responsibilities.

2. Risk assessment

According to the control objectives and development strategies and in combination with the characteristics of the industry, the company adopts scientific and reasonable analysis methods, comprehensively and systematically collects relevant information according to the set control objectives, accurately identifies internal and external risks, comprehensively uses risk avoidance, risk reduction, risk sharing and risk tolerance and other risk response strategies, timely carries out risk assessment and realizes the effective control of risks, And put forward risk response measures and strategies. Ensure that the risks of the company's main business and decision-making of major events are known, preventable and controllable, meet the requirements of relevant national laws and regulations and normative documents, promote the sustainable, healthy and stable development of the company and achieve business objectives. 3. Control activities

(1) Fund management

The company regards fund management as the most important part of the company's internal control. In this regard, the company has formulated and implemented the management measures for raised funds and the fund management and control system, established a perfect fund use approval and management system, and done a good job in fund management in strict accordance with the relevant management system. All monetary capital flows must be handled in accordance with the specified process and authorized approval, so as to ensure the safe, reasonable and efficient use of the company's funds.

(2) Financial management

The company has formulated and implemented the financial management system to monitor the use of funds and the operation of assets in various business departments of the company, so as to ensure the safety of the company's property.

The financial management system regulates the company's financial behavior from the aspects of financial work management, asset management, liability management, shareholders' equity management, income and profit management, cost management, fund management and so on.

(3) Subsidiary management

The company manages its subsidiaries in strict accordance with relevant laws and regulations and relevant provisions of listed companies, and has formulated and implemented the subsidiary management system. The system stipulates the management system and measures for subsidiaries, clearly stipulates the responsibilities and authorities of subsidiaries, guides, serves and supervises the relevant businesses and management of subsidiaries, and implements effective management and control of subsidiaries from the aspects of corporate governance, financial management, information disclosure, external guarantee and so on. The company implements unified financial policies and accounting standards for its subsidiaries, provides professional guidance and supervision to its subsidiaries through internal audit, special inspection and other means, and timely grasps the operation and management situation.

(4) Related party transactions

In accordance with relevant laws and regulations and in combination with the articles of association, the company has formulated and implemented the related party transaction decision-making system and the management system to prevent the controlling shareholders, actual controllers and other related parties from occupying funds. The system strictly standardizes the approval procedures of related party transactions, defines the approval authority of the board of directors and the general meeting of shareholders for related party transactions, and establishes a long-term mechanism to prevent controlling shareholders, actual controllers and other related parties from occupying the company's funds. During the reporting period, the directors, supervisors and senior managers of the company did not encroach on the interests of the company and did not damage the interests of the company and other shareholders.

(5) Foreign investment

The company has formulated and implemented the foreign investment management system, which has made detailed provisions on the approval authority, organization and decision-making mechanism of the company's foreign investment. Through the board of directors, the general meeting of shareholders and other relevant institutions, the company comprehensively evaluates its important factors such as risk, income and cost, further strengthens the company's foreign investment management, and ensures the preservation and appreciation of the company's foreign investment, Maintain the overall image of the company and the interests of investors.

(6) External guarantee

The company has formulated and implemented the external guarantee management system, defined the review procedures of external guarantee, stipulated the approval authority and approval process of the board of directors and the general meeting of shareholders on external guarantee, and standardized the management and information disclosure of external guarantee. During the reporting period, the company strictly followed the approval procedures for external guarantees and disclosed the progress announcement as required. There was no violation of external guarantees and no damage to the interests of the company and all shareholders, especially the rights and interests of minority shareholders, through external guarantees.

(7) Procurement business

The company has formulated and implemented the supply chain management procedure and other systems, formulated strict processes and control procedures in the formulation of procurement plan, procurement application, procurement implementation and feedback, supplier assessment and management, material acceptance process, payment and accounts payable processing, post evaluation of procurement business, reasonably planned the post responsibilities of procurement business, and established a price supervision mechanism, Ensure that the material procurement meets the production and operation needs of the company.

(8) Sales business

The company has formulated and implemented a series of systems related to sales and collection management, which clearly stipulates the relevant contents such as sales policy, customer credit policy, bad debt policy and the responsibilities and authorities of departments and posts involved in sales business. The company standardizes a series of work requirements such as product pricing, order management, delivery and return, revenue recognition and collection, bad debt accrual and so on, so as to ensure the normal development of the company's sales business and the timely recovery of the payment for goods.

(9) Inventory management

The company has established and improved the internal inventory management system, standardized the operation processes of procurement, acceptance, warehousing, storage, outbound, accounting and other links, and provided guarantee for controlling inventory management risks. The company regularly counts the inventory. If there are differences in the inventory, trace the reasons, and make corresponding adjustments after audit to ensure the consistency between accounts and reality.

(10) Contract management

In order to strengthen contract management and reduce contract risks, the company has formulated and implemented the contract management system, which defines the post responsibilities, approval authority and working procedures of contract management, and makes provisions and specifications from the aspects of contract signing, contract performance and contract custody, which has played a positive role in ensuring the legality and compliance of the contract. 4. Information and communication

The company has established a good information and communication system. In terms of external information disclosure, the company has formulated and implemented information disclosure related systems such as information disclosure management system, insider registration management system and internal reporting system of major information, which further standardized the information disclosure, ensured the transparency of internal and external information, and ensured the authenticity, accuracy and integrity of all the information disclosed by the company. In terms of internal communication, the company has established an information management system focusing on office automation - OA office system, which has realized the company's online document approval, administrative management, document management, collaborative office and information resource sharing, improved the efficiency of internal information transmission, established effective communication channels for internal employees and improved the work efficiency of the whole company. 5. Internal supervision

The company has established a corporate governance mechanism and a perfect internal control and supervision system. The board of supervisors of the company is responsible for supervising the performance of directors and senior managers and the legal operation of the company. Independent directors make independent judgments and objective suggestions on the company's business decisions based on their professional knowledge and practical experience, so as to safeguard the overall interests of the company. The company has formulated an internal audit system and set up a special internal audit institution under the leadership of the audit committee of the board of directors, which is responsible for supervising and inspecting the implementation of internal control, regularly or irregularly auditing and routine inspecting the finance, internal control, major projects and other businesses of the company's subordinate functional departments and branches, as well as the internal control defects found in the process of supervision and inspection, Report to the audit committee in a timely manner.

(II) basis of internal control evaluation and identification standard of internal control defects

The board of directors of the company shall organize and carry out internal control evaluation in accordance with the provisions of relevant laws and regulations and the requirements of the enterprise's internal control standard system.

The board of directors distinguishes the identification of major defects in the company's internal control system from the identification of major defects in the company's internal control system and the preference of the company's internal control system according to the characteristics of the company's internal control system. Based on the changes of the company's business scale and the recognition standards of Listed Companies in the same industry, the quantitative standard for the evaluation of internal control defects in this year is adjusted to the relative ratio of total assets, and the qualitative standard is implemented with reference to the previous years. The identification standards of internal control defects determined by the company are as follows:

1. Identification standard of internal control defects in financial reporting

(1) The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:

Quantitative standard of defect properties

Major defect misstatement ≥ 1% of total assets

0.5% of total important defective assets ≤ misstatement 1% of total assets

General defect misstatement 0.5% of total assets

(2) The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:

Qualitative standard of defect nature

Major defects 1. Fraud of directors, supervisors and senior managers of the company, causing important losses and adverse effects to the enterprise; 2. There is a material misstatement in the current financial report, and the corresponding control activities fail to identify the misstatement,