Internal control evaluation report in 2021
China Jushi Co.Ltd(600176) 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 company’s (hereinafter referred to as the company’s) internal control system and evaluation methods, and 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 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 main holding subsidiaries 2 Proportion of units included in the scope of evaluation
Proportion of indicators (%)
The ratio of the total assets of the units included in the evaluation scope to the total assets of the company’s consolidated financial statements 100
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
Related to financial reports include capital activities, procurement business, engineering projects, asset management, sales business, related party transactions, contract management, financial reports, etc; The company’s internal responsibility, research and disclosure of information, including human resources, social responsibility, information system, etc. 4. High risk areas of focus mainly include:
Strategic risk, market risk (raw material risk), financial risk (financing activity risk, investment activity risk, exchange rate risk), operational risk (fund recovery risk, management risk) and legal risk. 5. The above units, businesses and matters included in the evaluation scope and high-risk areas cover the main aspects of the company’s operation and management. Is there any major omission
□ yes √ no
6. Is there a statutory exemption
□ yes √ No 7 Other explanatory matters
None (II) Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation in accordance with the enterprise internal control standard system, the company law, the securities law, the guidelines for internal control of listed companies on Shanghai Stock Exchange and the company’s internal rules and regulations. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ no
The board of directors of the company distinguished the internal control of financial report from the internal control of non-financial report according to the identification requirements for major defects, important defects and general defects of the enterprise internal control standard system, combined with the factors such as the company’s size, industry characteristics, risk preference and risk tolerance, and studied and determined the specific identification standards of internal control defects applicable to the company, which are consistent with the previous years.
2. Identification standard of internal control defects in financial reporting
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
1. Total assets in consolidated financial statements
0.125% ≤ potential misstatement amount ≤ 1. Potential misstatement amount consolidation meeting 1. Potential misstatement amount 0.25% of total assets in the consolidated financial statements of the consolidation meeting; 0.25%； 2. Consolidated financial statements 0.125%; 2. Potential misstatement amount potential misstatement amount of financial statements 2. Potential misstatement amount 0.25% of consolidated business income ≤ potential misstatement amount 0.5% of consolidated business income of consolidated financial statements; Reported amount ≤ 0.25% of consolidated financial statements; 3. Potential misstatement amount 3. Potential misstatement amount 0.5% of consolidated business income; 3. Consolidated amount 5% of the total profits in the consolidated financial statements and 2.5% of the total profits in the financial statements
2.5% ≤ potential misstatement amount ≤ consolidation
5% of total profit in accounting statements
explain:
The identification standard of the internal control defect of the company’s financial report is determined by the importance of the defect that may lead to the misstatement of the financial statements, which mainly depends on: 1. Whether the defect has a reasonable possibility that the internal control cannot prevent, find and correct the errors of the financial statements in time; 2. The classification and identification of various defects can be classified into relevant types only if one of the above conditions is met, and strict standards are followed.
The qualitative evaluation criteria of the company’s internal financial control report are as follows:
Qualitative standard of defect nature
If the company has the following signs, it usually indicates that there may be major defects in the internal control of financial reporting: (1) fraud by directors, supervisors and senior managers; (2) The certified public accountant found that there was a material misstatement in the current financial report, and the internal major defect control department failed to find the misstatement in the operation process; (3) The supervision of the audit committee and internal audit institutions on internal control is invalid; (4) Major defects in information application control are related to or caused by general control defects of information system; (5) It can be reasonably proved that the significant loss is caused by one or more control defects.
There are important misstatements identified according to quantitative standards in the current financial report, the control activities fail to identify the misstatements, or the published financial report needs to be corrected due to important defects; Although the importance level is not reached or exceeded, the nature of the misstatement should still attract the attention of the board of directors and management.
General defects and other internal control defects that do not constitute major defects or important defects.
explain:
Determine the defect level according to the information disclosure of the company’s accounting statements and financial reports. 3. Identification standard of internal control defects in non-financial reporting
The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
1. Total assets in consolidated financial statements
1. Direct loss amount 0.125% of the consolidated meeting ≤ direct loss amount ≤
0.25% of the total assets in the statement of potential risk events; Of total assets in consolidated financial statements
2. Direct loss amount 0.25% of business income; 2. The of operating income is less than 0.5% of the amount of important defects; 3. Direct loss 0.25% ≤ direct loss amount ≤ outside the business
Amount 5% of total profit and 0.5% of industrial income; 3. Profit
2.5% of the total amount ≤ direct loss
Amount ≤ 5% of total profit
Note: the defect level is determined according to the amount of direct property loss.
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Qualitative standard of defect nature
If the company has the following signs, it usually indicates that there may be major defects in the internal control of non-financial reporting: (1) it has seriously violated national laws and regulations, has been punished by the regulatory authority, and has a serious negative impact on the company or caused major losses; (2) The lack of democratic decision-making procedures or unscientific decision-making procedures for the “three important and one large” matters of the enterprise lead to decision-making mistakes; (3) A large number of key management personnel or important talents are lost, which seriously affects the company’s operation; (4) The frequent occurrence of negative news in the media has led to significant impact on the corporate reputation or major economic losses; (5) Due to non objective reasons, the major defects of internal control evaluation have not been rectified.
If the company has the following signs, it usually indicates that there may be important defects in the internal control of non-financial reporting: (1) violating national laws and regulations, being punished by the regulatory authority, and causing great negative impact or loss to the company; (2) Violating the “three important and one big” decision-making procedure, resulting in decision-making mistakes and causing great losses to the company; (3) A large number of key management personnel or important talents are lost, which has a great impact on the company’s operation; (4) Negative news often appears in the media, resulting in great impact on the corporate reputation or great economic losses; (5) Due to non objective reasons, the important defects found have not been effectively rectified.
General defects other internal control defects except the above major and important defects.
Note: the defect level is determined according to the actual loss and the degree of negative impact on the enterprise operation. （3） Identification and rectification of internal control defects 1 Identification and rectification of internal control defects in financial reporting 1.1 Major defects
Whether the company has major defects in internal control over financial reporting during the reporting period □ yes √ no 1.2 Important defects
Whether the company has significant defects in internal control over financial reporting during the reporting period □ yes √ no 1.3 General defect
During the internal control evaluation of this year, the company found no general internal control defects related to financial reports. 1.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting that have not been rectified □ yes √ no 1.5 After the above rectification, on the benchmark date of the internal control evaluation report, does the company have any important defects in the internal control of financial reporting that have not been rectified □ yes √ no
2. Identification and rectification of internal control defects in non-financial reporting 2.1 Major defects
Whether the company found non-financial assets during the reporting period
