catalogue
1、 Assurance report of internal control Page 1-2 II. Description on the internal control system of financial reporting Page 3-9
About Tibet Duo Rui Pharmaceutical Co.Ltd(301075)
Assurance report of internal control
TJS [2022] No. 1160
Tibet Duo Rui Pharmaceutical Co.Ltd(301075) all shareholders:
We have verified the attached confirmation made by the management of Tibet Duo Rui Pharmaceutical Co.Ltd(301075) (hereinafter referred to as Tibet Duo Rui Pharmaceutical Co.Ltd(301075) company) on the effectiveness of internal control over financial reporting on December 31, 2021 in accordance with the self regulatory guidelines for listed companies on Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM (SZS [2022] No. 14).
1、 Description of significant inherent limitations
Internal control has inherent limitations, and there is the possibility of misstatement and undetected due to error or fraud. In addition, due to the change of circumstances, the internal control may become inappropriate, or the degree of compliance with control policies and procedures may be reduced. According to the internal control evaluation results, it is speculated that the effectiveness of internal control in the future has a certain risk.
2、 Restrictions on the users and purposes of the report
This assurance report is only used by Tibet Duo Rui Pharmaceutical Co.Ltd(301075) company when disclosing the 2021 annual report, and shall not be used for any other purpose. We agree that this assurance report, as a necessary document for the 2021 annual report of Tibet Duo Rui Pharmaceutical Co.Ltd(301075) company, shall be submitted together with other materials and disclosed to the public.
3、 Responsibilities of management
Tibet Duo Rui Pharmaceutical Co.Ltd(301075) the responsibility of the management of the company is to establish and improve the internal control and maintain its effectiveness. At the same time, in accordance with the guidelines for self discipline supervision of listed companies on Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM (SZS [2022] No. 14), the management shall determine the effectiveness of internal control on December 31, 2021 and be responsible for the above determination.
4、 Responsibilities of Certified Public Accountants
Our responsibility is to express assurance opinions on the effectiveness of internal control over financial reporting based on the implementation of assurance work.
5、 Job overview
We have carried out the assurance business in accordance with the provisions of other assurance business standards for Chinese certified public accountants No. 3101 – assurance business other than audit or review of historical financial information. The above provisions require us to plan and implement the assurance work to obtain reasonable assurance on whether the information of the assurance object is free from material misstatement. In the assurance process, we have implemented other procedures including understanding, testing and evaluating the rationality of the design and effectiveness of the implementation of the internal control system, as well as other procedures that we consider necessary. We believe that our assurance work provides a reasonable basis for expressing opinions.
6、 Assurance conclusion
We believe that Tibet Duo Rui Pharmaceutical Co.Ltd(301075) company has maintained effective internal control over financial reporting in all major aspects on December 31, 2021 in accordance with the self regulatory guidelines for listed companies on Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM (SZS [2022] No. 14).
This conclusion is formed under the inherent limitations pointed out in the assurance report. Tianjian Certified Public Accountants (special general partnership) Chinese certified public accountant:
Hangzhou, China Certified Public Accountant:
March 23, 2002
Tibet Duo Rui Pharmaceutical Co.Ltd(301075)
Notes on the internal control system of financial reporting
1、 Basic information of the company
Tibet Duo Rui Pharmaceutical Co.Ltd(301075) (hereinafter referred to as the company or the company) was formerly Tibet Tibet Duo Rui Pharmaceutical Co.Ltd(301075) Co., Ltd. (hereinafter referred to as dorui Co., Ltd.), which was invested and established by Tibet Jiakang times Pharmaceutical Technology Development Co., Ltd. (now renamed Tibet Jiakang times Technology Development Co., Ltd.) and registered with Changdu Administration for Industry and Commerce on December 22, 2016. The registered capital of dorui Co., Ltd. was 20 million yuan when it was established. With December 31, 2019 as the base date, dorui Co., Ltd. was changed into a joint stock limited company. It was registered with Changdu market supervision and Administration Bureau on February 28, 2020, and its headquarters is located in Changdu, Tibet Autonomous Region. The company now holds a business license with a unified social credit code of 9154030ma6t1trq34, with a registered capital of 80 million yuan and a total of 80 million shares (par value of 1 yuan per share). Among them, the tradable shares with limited sales conditions: 60 million a shares; There are 20 million A-Shares in circulation with no sale conditions. The company’s shares were listed and traded on Shenzhen Stock Exchange on September 29, 2021.
The company belongs to the pharmaceutical manufacturing industry. The main R & D and sales activities of Ringer sodium acetate injection are R & D and sales. Ringer sodium acetate injection is the main product.
2、 Objectives and principles for the company to establish internal control system for financial reporting
（1） Objectives of the company’s internal control system over financial reporting
1. Standardize the accounting behavior of the company and ensure the authenticity and integrity of accounting materials.
2. Plug loopholes, eliminate hidden dangers, prevent and timely detect and correct errors and fraud, and protect the safety and integrity of the company’s assets.
3. Ensure the implementation of relevant national laws and regulations and the company’s internal rules and regulations.
（2） Basic principles for the establishment of the company’s internal control system for financial reporting
1. The internal control of financial reporting complies with relevant national laws and regulations and the requirements of relevant provisions such as the guidelines for self discipline and supervision of Listed Companies in Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM (SZS [2022] No. 14) and the actual situation of the company.
2. The internal control of financial reporting restricts all personnel involved in accounting work within the company, and no individual shall have the power to go beyond the internal control of financial reporting.
3. The internal control of financial report covers all economic businesses and relevant posts involving accounting work within the company, and implements the key control points in the process of business processing to decision-making, implementation, supervision, feedback and other links.
4. The internal control of financial reporting ensures the reasonable setting of institutions and posts involved in accounting work and the reasonable division of responsibilities and authorities within the company, adheres to the separation of incompatible posts, and ensures that different institutions and posts have clear rights and responsibilities, restrict and supervise each other.
5. The internal control of financial reporting follows the principle of cost-benefit, and achieves the best control effect with reasonable cost control.
6. The internal control of financial reporting is constantly revised and improved with the changes of the external environment, the adjustment of the company’s business functions and the improvement of management requirements.
3、 Relevant information of the company’s internal control system for financial reporting
The establishment and implementation of the company’s internal control system for financial reporting on December 31, 2021 are as follows:
（1） Internal control elements of the company
1. Control environment
(1) Communication and implementation of integrity and moral values
Integrity and moral values are an important part of the control environment and affect the design and operation of important business processes of the company. The company has always attached importance to the creation and maintenance of this atmosphere, established a series of internal norms such as the employee manual, and implemented these in multiple channels and all directions through the severe punishment system and the practice of senior managers.
(2) Emphasis on Competence
The management of the company attaches great importance to the setting of the use ability level required for specific jobs, as well as the requirements for the knowledge and ability necessary to achieve this level. At present, the company has 299 employees, including 6 with senior titles, 13 with intermediate titles and 8 with primary titles; Among them, there are 2 doctors, 18 postgraduates, 72 undergraduates and 74 junior college students. The company also carries out various forms of post training and education for different posts according to the needs of actual work, so that employees can be competent for their current jobs.
(3) Participation procedures of governance
The responsibilities of the management have been clearly stipulated in the articles of association and policies of the company. Through its own activities and with the support of the audit committee, the governance layer supervises the company’s accounting policies and internal and external audit work and results. The responsibilities of the governance layer also include supervising whether the policies and procedures designed to review the effectiveness of internal control are reasonable and effective.
(4) Management philosophy and business style
The management of the company is responsible for the operation of the enterprise and the formulation, implementation and supervision of business strategies and procedures. The board of directors and the audit committee effectively supervise it. The management attached great importance to internal control, including information technology control, information management personnel and accounting personnel, and timely and properly handled the reports on internal control weaknesses and violations received. The company adheres to the business theory of “integrity casts quality and innovation wins the future”, develops and innovates, pursues perfection, takes quality as the root and service as its business style, and operates honestly and legally.
(5) Organizational structure
In order to effectively plan, coordinate and control business activities, the company has reasonably determined the form and nature of organizational units, implemented the principle of separation of incompatible positions, scientifically divided the responsibilities and authorities within each organizational unit, and formed a mutual check and balance mechanism. At the same time, we will earnestly achieve “five independence” from the controlling shareholder of the company. The company has designated special personnel to be specifically responsible for internal audit and ensure the implementation of relevant accounting control systems.
(6) Distribution of authority and responsibility
The company adopts the method of assigning control responsibilities to the team, establishes a set of authorization mechanism for performing specific functions (including transaction authorization), and ensures that everyone clearly understands the reporting relationship and responsibilities. In order to effectively control the authorized use and supervise the company’s activities, the company has gradually established a budget control system, which can modify the control policies of the accounting system in a timely manner according to the changes of the situation. The financial department reasonably ensures that business activities are carried out in accordance with appropriate authorization through various measures; Reasonably ensure that transactions and events can be recorded in appropriate accounts in a timely manner with the correct amount in the appropriate accounting period, so that the preparation of financial statements meets the relevant requirements of accounting standards.
(7) Human resources policy and Practice
The company has established and implemented more scientific personnel management systems such as employment, training, job rotation, assessment, reward and punishment, promotion and elimination, and hired enough personnel to complete the assigned tasks.
2. Risk assessment process
The company has formulated the long-term overall goal of benefiting people’s health and committed to becoming a high-quality high-tech pharmaceutical enterprise in China, supplemented by specific strategies and business process plans to clearly convey the business objectives of the enterprise to every employee. The company has established an effective risk assessment process and a Strategy Committee Department to identify and respond to major and generally influential changes that the company may encounter, including business risks, environmental risks, financial risks and so on.
3. Information system and communication
The company has established a powerful information system to provide timely and effective performance reports to the management. The information system personnel (including financial personnel) are scrupulous and diligent, and can effectively perform their assigned responsibilities. The management of the company also provides appropriate human and financial resources to ensure the normal and effective operation of the whole information system.
The company has established effective communication channels and mechanisms for suspicious inappropriate matters and behaviors, so that the management can effectively communicate with employees’ responsibilities and control responsibilities. The adequacy of internal communication enables employees to effectively perform their duties, communicate effectively with customers, suppliers, regulators and other outsiders, and enable the management to take timely and appropriate further actions in the face of various changes.
4. Control activities
The company has necessary control policies and procedures for its main business activities. The management has clear objectives for budget, profit, other financial and operating performance. The company has clear records and communication on these objectives, and actively monitors them. The financial department has established appropriate protection measures to reasonably ensure that the contact and handling of assets and records are properly authorized; Reasonably ensure that the book assets are consistent with the actual assets on a regular basis.
In order to reasonably ensure the realization of various objectives, the company has established relevant control procedures, mainly including transaction authorization control, responsibility division control, voucher and record control, asset contact and record use control, independent inspection control, electronic information system control, etc.
(1) Transaction authorization control: it defines the scope, authority, procedures, responsibilities and other relevant contents of authorization and approval. The management at all levels within the unit must exercise corresponding functions and powers within the scope of authorization, and the handling personnel must also handle economic business within the scope of authorization.
(2) Control of responsibility division: reasonably set the division of labor, scientifically divide the responsibilities and authorities, implement the principle of separation of incompatible positions and each person’s work can automatically check the work of another person or more people, and form a mutual check and balance mechanism. Incompatible positions mainly include: authorization approval and business handling, business handling and accounting records, accounting records and property custody, business handling and business audit, authorization approval and supervision and inspection, etc.
(3) Voucher and record control: the voucher circulation procedure has been reasonably formulated, so that the operators can prepare relevant vouchers in time when executing transactions, and the prepared vouchers shall be sent to the accounting department as soon as possible for recording, and the registered vouchers shall be filed in order. Relevant records must be made for various transactions (such as employee salary records, perpetual inventory records, sales invoices, etc.), and the records must be independently compared with the corresponding entries.
(4) Control of asset contact and use of records: strictly restrict the direct contact of unauthorized personnel with property, and take measures such as regular inventory, property records, account verification and property insurance to ensure the safety and integrity of all kinds of property.
(5) Independent inspection and control: the company has set up a special internal audit organization to audit and assess the authenticity, accuracy and completeness of procedures of monetary funds, securities, vouchers and account books, material procurement, consumption quota, payment, salary management, entrusted processing materials and account reality.
(6) The company has formulated a relatively strict electronic information system control system, and has done more work in the development and maintenance of electronic information system, data input and output, document storage and custody, etc.
5. Supervision of control
The company regularly evaluates various internal controls, and on the one hand, establishes various mechanisms to enable relevant personnel to obtain evidence of the effective operation of internal control to a considerable extent when performing their normal post responsibilities; On the other hand, confirm the internal through external communication
