Tianshui Zhongxing Bio-Technology Co.Ltd(002772)
Self evaluation report on internal control in 2021
Tianshui Zhongxing Bio-Technology Co.Ltd(002772) 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 internal control system of Tianshui Zhongxing Bio-Technology Co.Ltd(002772) (hereinafter referred to as the “company”), on the basis of consulting various management rules and regulations of the company, Checked the operation and effectiveness of the company’s internal control as of December 31, 2021 (benchmark date of internal control evaluation report), and prepared the 2021 annual internal control self-evaluation report, as follows:
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 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.
2、 Self evaluation of 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 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) scope of internal control evaluation
In accordance with the objectives of internal control and the principles of legality, comprehensiveness, importance, effectiveness, checks and balances, adaptation and cost-effectiveness of internal control, the company has established effective internal control in all business links within each subsidiary and basically formed a sound internal control system.
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 main units included in the evaluation scope include the company and its subsidiaries. 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: organizational structure, development strategy, human resources, social responsibility, corporate culture, procurement business, sales business, asset management, financial report, management of subsidiaries, fund-raising, related party transactions, external guarantee, external financial assistance, major investment, disposal of subsidiaries, etc.
The high-risk areas of focus mainly include procurement management, sales management, financing management, management of subsidiaries, foreign investment, foreign guarantee, etc. The units, 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.
(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 guidelines for the standardized operation of listed companies of Shenzhen Stock Exchange and other relevant provisions, and in combination with the actual situation of the company.
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.
The identification standards of internal control defects determined by the company are as follows:
Defect identification standard
Category financial report non-financial Report
1、 Major defects: ineffective control environment; I. major defects of the company: the decision-making process leads to major losses, fraud and errors of directors, supervisors and senior managers; The lack of institutional control or systematic qualitative standards for important businesses has caused important losses and adverse effects to the enterprise; External failure and lack of effective compensatory control; During the audit, it was found that there was a major error in the current financial report, the loss of senior managers and senior technicians, and the internal control operation failed to find the serious error; The results of internal control evaluation are particularly important
Report; Major defects of the board of directors or its authorized institution and internal audit department have not been rectified; Other internal control and supervision of the company are invalid. Significant negative impact.
2、 Significant defects: failure to comply with GAAP II. Significant defects: decision-making procedures lead to the selection and application of accounting policies; Failure to establish a general error of anti fraud; Procedures and control measures exist in important business systems or systems; For unconventional or special defects; Serious loss of business personnel in key positions; The accounting treatment of the transaction has not established corresponding internal control evaluation results, especially the important lack of system mechanism or has not been implemented and has not been rectified; Others have great compensatory control over the company; Negative impact on the ending financial reporting process.
The control has one or more defects and cannot be combined. General defects: the efficiency of decision-making procedure is not high; The manager guarantees that the financial statements prepared are true and accurate, and there are defects in the general business system or system; General and specific objectives. Serious loss of post business personnel; Three major defects: general defects not rectified.
Other financial reporting control deficiencies other than defects
Sink.
1、 Major defect: the defect or combination of defects I. major defect: the amount of potential misstatement in the financial report that may be caused by the non-financial report of the major defect is ≥ 5% of the total profit of the company’s direct property loss caused by the control defect or the corresponding importance level is more than 10 million yuan (inclusive).
of 2、 Important defect: 5 million yuan ≤ the above direct defect II. Important defect: the property loss caused by the defect or defect combination is less than 10 million yuan.
Potential misstatement amount of financial report caused by quantitative standard III. general defects: the above direct property loss accounts for 20% – 100% of 5% of the total profit or less than 5 million yuan.
It should be 20% – 100% of the overall importance level.
3、 General defect: the defect or combination of defects
Potential misstatement amount of financial report that may result20% of 5% of the total profit or corresponding to the overall weight
20% of the sex level.
(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 did not have 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 and 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 no other major matters related to internal control that need to be explained.
Tianshui Zhongxing Bio-Technology Co.Ltd(002772) board of directors March 23, 2022
