Shandong Dongyue Organosilicon Materials Co.Ltd(300821)
Internal control report 2021
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 Shandong Dongyue Organosilicon Materials Co.Ltd(300821) (hereinafter referred to as the "company") 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 as of December 31, 2021 (benchmark date of internal control evaluation report).
1、 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 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, due to changes in the situation, the company's internal control system may become inappropriate, or the degree of compliance with control policies and procedures may be reduced. It is risky to speculate the effectiveness of internal control in the future according to the internal control evaluation results.
2、 Internal control evaluation conclusion
According to the identification of major defects in the company's internal control over financial reporting, on the benchmark date of the internal control evaluation report, the company has no major defects in the internal control over financial reporting. 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.
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
According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas. The company and its wholly-owned subsidiaries Sichuan Jiayi Silicon Technology Co., Ltd. and Guizhou Xinyi Silicon Technology Co., Ltd. are included in the evaluation scope. 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 operations and matters included in the scope of evaluation include:
(1) The company and governance, development strategy, organizational structure, human resources, corporate culture, professional ethics and professional competence, information and communication, internal supervision and other processes involved in the company level control in the company's internal control management manual and relevant implementation rules;
(2) Various processes and high-risk areas involved in business level control, such as capital, investment, procurement, sales, inventory, intangible assets, engineering projects, R & D, related party transactions, etc.
The above businesses and matters included in the evaluation scope and high-risk areas cover the main aspects of the company's operation and management, and there are no major omissions.
（2） Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation according to the requirements of enterprise internal control standard system. The board of directors of the company studied and determined the specific identification standards of internal control defects applicable to the company according to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, combined with the factors such as the company's size, industry characteristics, risk preference and risk tolerance, respectively for the internal control of financial reports and non-financial reports, which are consistent with the previous years.
1. Identification standard of internal control defects in financial reporting
The company divides the defects of internal control over financial reporting into major defects, important defects and general defects. The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Major defect: the property loss caused by this defect is greater than or equal to 1% of the total assets in the financial statements;
Important defect: the property loss caused by this defect is greater than or equal to 0.5% of the total assets in the financial statements, but less than 1%;
General defect: the property loss caused by this defect is less than 0.5% of the total assets in the financial statements.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Major defect: a defect in internal control, alone or in combination with other defects, has a reasonable possibility, which makes it impossible to prevent, detect and correct major misstatement in the financial report in time. For example:
(1) Fraud by directors, supervisors and senior managers;
(2) The enterprise corrects the published financial report;
(3) The certified public accountant finds that 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 enterprise audit committee and internal audit institution on internal control is invalid;
(5) Other defects that may affect the correct judgment of report users.
Important defects: internal control defects, alone or in combination with other defects, have a reasonable possibility to prevent, detect and correct the misstatement in the financial report that should be paid attention to by the board of directors and management although it does not reach or exceed the importance level.
General defects: internal control defects that do not constitute major defects and important defects.
2. 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:
Major defect: the property loss caused by this defect is greater than or equal to 1% of the total assets in the financial statements;
Important defect: the property loss caused by this defect is greater than or equal to 0.5% of the total assets in the financial statements, but less than 1%;
General defect: the property loss caused by this defect is less than 0.5% of the total assets in the financial statements.
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Under the following circumstances, it can be identified as a major defect, and under other circumstances, it can be identified as a major defect or a general defect according to its degree of influence.
(1) The decision-making procedure of enterprises is unscientific;
(2) Violation of national laws and regulations, such as environmental pollution;
(3) Loss of management personnel or technicians in key positions;
(4) Frequent negative news in the media;
(5) The results of internal control evaluation, especially major or important defects, have not been rectified;
(6) Lack of institutional control or systematic failure of important business.
(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 and 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.
4、 Description of other major matters related to internal control
During the reporting period, the company has established internal control over the businesses and matters included in the evaluation scope. The company's current internal control system covers all aspects of the company's production and operation activities and has no major defects in integrity, rationality and effectiveness. At the same time, the company strictly implemented the internal control system during the reporting period, achieved the goal of the company's internal control, effectively ensured the effective progress of the company's production and operation business, and there were no major defects. With the change of external environment, the rapid development of business and the improvement of management requirements, the company's internal control will continue to be improved, enriched and improved, so as to strengthen the supervision and inspection of internal control, promote management innovation and ensure the sustainable, healthy and rapid development of the company.
Shandong Dongyue Organosilicon Materials Co.Ltd(300821) board of directors March 22, 2022
