Tibet Duo Rui Pharmaceutical Co.Ltd(301075) : self evaluation report on internal control in 2021

Tibet Duo Rui Pharmaceutical Co.Ltd(301075)

Self evaluation report on internal control in 2021

Tibet Duo Rui Pharmaceutical Co.Ltd(301075) 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 Tibet Duo Rui Pharmaceutical Co.Ltd(301075) (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 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、 Internal control evaluation conclusion

According to the identification of major defects in the internal control of the company's financial report, there are no major defects in the internal control of financial report on the benchmark date of the internal control evaluation report. The board of Directors believes that the company has maintained effective internal control of financial report 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, main businesses and matters and high-risk areas included in the evaluation scope.

1. The main units included in the scope of evaluation include:

The total assets of the company and its wholly-owned subsidiaries and holding subsidiaries included in the evaluation scope account for 100% of the total assets in the company's consolidated financial statements, and the total operating income accounts for 100% of the operating income in the company's consolidated financial statements.

2. The main operations and matters included in the scope of evaluation include:

Corporate governance structure, organizational structure, development strategy, social responsibility and corporate culture; Sales business, procurement business, contract management, fund management, subsidiary management, related party transactions, external guarantee, external investment, asset management, information disclosure, etc.

3. The high-risk areas of focus mainly include:

Capital, procurement, assets, sales, contract, guarantee, investment and subsidiary management. 4. 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.

(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 basic norms of enterprise internal control (CK [2008] No. 7), the notice on printing and distributing supporting guidelines for enterprise internal control (CK [2010] No. 11) and other relevant laws, regulations and rules. According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, and in combination with the company's scale, industry characteristics, risk preference, risk tolerance and other factors, the board of directors of the company distinguished the internal control of financial reports from the internal control of non-financial reports, and studied and determined the specific identification standards of internal control defects applicable to the company. The identification standards of internal control defects determined by the company are as follows:

1. Identification standard of internal control defects in financial reporting

First, whether the internal control standard is available to determine the extent to which the financial statement misstatement can not be corrected is mainly determined by whether the internal control standard is available; Second, the amount of potential misstatement that may be caused by the defect alone or in combination with other defects.

(1) The quantitative criteria for the evaluation of internal control defects in financial reports are as follows: when the existence of one or a group of internal control defects has a reasonable possibility to prevent or find any misstatement greater than or equal to 3% of the total assets in the company's consolidated accounting statements or 5% of the total pre tax profit in the financial reports, it is recognized as a major defect; When the existence of one or a group of internal control defects has a reasonable possibility that it is impossible to timely prevent or find that the financial report is less than 3% of the total assets in the consolidated financial statements or 5% of the total profit before tax, but greater than or equal to 0.5% of the total assets in the consolidated financial statements or 1% of the total profit before tax, it is recognized as an important defect; Defects other than major defects and important defects are regarded as general defects.

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

Recognition criteria for major defects: ① the financial statements of the enterprise have been or are likely to be given negative opinions or refused opinions by certified public accountants; ② The directors, supervisors and senior managers of the enterprise have been or are suspected of fraud, or the employees of the enterprise have colluded in fraud and caused important losses and adverse effects to the enterprise; ③ The audit committee and the audit department failed to effectively perform the supervision function of the company; ④ There is a material misstatement in the current financial statements, and the internal control fails to find the misstatement in the operation process.

Identification criteria for major defects: ① failure to select and apply accounting policies in accordance with generally accepted accounting standards; ② Failure to establish anti fraud procedures and control measures; ③ There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the true and complete goal.

Identification standard of general defects: refers to other control defects other than the above major defects and important defects.

2. Identification standard of internal control defects in non-financial reporting

The identification of internal control defects in non-financial reporting is mainly based on the impact of defects on the effectiveness of business processes and the possibility of occurrence.

The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows: when the existence of one or a group of internal control defects has a reasonable possibility to cause the direct property loss of the company to be greater than or equal to 3% of the total pre tax profit, it is recognized as a major defect; Defects that may cause the direct property loss of the company to be less than 3% but greater than or equal to 0.5% of the total pre tax profit are recognized as important defects; Defects that may cause the direct property loss of the company to be less than 0.5% of the total profit before tax are recognized as general defects.

The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows: if the possibility of defects is high, it will seriously reduce the work efficiency or effect, or seriously increase the uncertainty of the effect, or make it seriously deviate from the expected goal, it will be recognized as a major defect; If the possibility of defect occurrence is high, which will significantly reduce the work efficiency or effect, or significantly increase the uncertainty of the effect, or make it seriously deviate from the expected goal, it is recognized as an important defect; If the possibility of defects is small, it will reduce the work efficiency or effect, or increase the uncertainty of the effect, or make it deviate from the expected goal, which is a general defect.

(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 over 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、 Internal control construction of the company

(I) internal control environment

1. Corporate governance and organizational structure

In accordance with the requirements of establishing a modern enterprise system, the company has established the general meeting of shareholders, the board of directors, the board of supervisors and the management under the leadership of the board of directors in accordance with the company law, the securities law and other relevant laws and regulations, and operated effectively in accordance with their respective responsibilities. The articles of association and relevant internal regulations of the company specify the institutional arrangement of organization setting, responsibilities and authorities, staffing, working procedures and relevant requirements at all levels.

According to its own characteristics and the needs of future development, the company establishes and improves the organizational structure, defines the responsibilities and authorities in decision-making, implementation and supervision, forms a scientific and effective division of responsibilities and check and balance mechanism, and effectively prevents and resolves various risks in the process of operation. The general manager of the company has project department, sales department, operation management department, finance department, procurement department, marketing department, quality management department and other functional departments. Each department and company has clear responsibilities and mutual restraint. The company adopts the vertical management method for its subsidiaries, that is, the parent company carries out centralized and unified management on the production and operation plan, fund scheduling, personnel allocation and financial management of its holding subsidiaries.

2. Internal audit

The audit committee under the board of directors of the company is responsible for reviewing and supervising the effective implementation of internal control and self-evaluation of internal control, and coordinating internal control audit and other related matters. The audit department under the audit committee is responsible for the internal audit of the company's daily operation, financial status and the implementation of internal control, as well as the communication, supervision and verification with external audit in accordance with national laws and regulations and the requirements of the company's internal audit system. The division of functions of the audit department complies with national laws and regulations and the articles of association.

3. Development strategy

The company has a deep understanding of the overall development of the industry. Based on the comprehensive analysis and scientific prediction of the current situation and future trend, the company timely and efficiently formulates the development strategy in line with the actual situation of the company according to the current situation, development trend and market demand of the industry, so as to ensure the professionalism, efficiency and sustainability of the company's operation and management mode. The strategy committee is the deliberation and suggestion organization of the strategic planning. The general manager's office meeting is the organization and specific implementation organization of the company's strategic planning. It is responsible for organizing relevant departments to track, study and analyze the development strategic planning process, ensure the effective implementation of the company's development strategic planning, and promote the company to enhance its core competitiveness and sustainable development ability.

The company's strategic planning mainly includes strategic summary, environmental analysis, the company's overall development strategy, the company's development objectives, the company's main industrial development planning, the company's strategic measure planning, the company's organization adjustment and auxiliary support system adjustment, specifically including formulating annual work plan, preparing comprehensive budget, decomposing and implementing annual objectives, tracking and monitoring the implementation of the company's and its subsidiaries' development strategies according to the development strategic planning, Put forward opinions and suggestions, study and analyze major strategic issues, etc.

4. Social responsibility

In accordance with national laws and regulations and in combination with industry characteristics, the company actively performs social responsibilities and obligations in the process of production and operation, fully integrates them into the company's strategy and daily business activities, takes the social responsibility management system as the starting point, actively promotes the company's social responsibility work and improves the company's social image.

The company has established and improved the human resource management and labor employment system to promote employment and protect the legitimate rights and interests of employees. The company and its subsidiaries strictly abide by the requirements of national and local laws, regulations and normative documents on labor employment and social security, pay full social insurance for employees such as pension, unemployment, medical treatment, maternity and industrial injury according to law, formulate and implement a series of rules and regulations such as human resources management system, employee recruitment management system and performance appraisal management measures, so as to provide services for employee recruitment, training, promotion The design of salary, assessment, incentive and career has established system guarantee and system guarantee.

5. Safety, health and environmental protection

The company strictly implements the relevant national environmental protection systems and purchases environmental protection treatment equipment according to the needs of production and operation to ensure the legality and compliance of the company's daily production and operation. During the reporting period, the company had no environmental protection accidents. During the reporting period, the company and its production subsidiary Hubei Duorui were not punished by relevant administrative departments due to environmental pollution, there were no environmental protection accidents or major group environmental protection events, and there were no negative reports on the company's implementation of national industrial policies and environmental protection compliance during the reporting period.

The company strictly abides by the requirements of the production safety law of the people's Republic of China and other laws and regulations, and in combination with the industrial characteristics of the pharmaceutical industry, has formulated a series of institutional documents such as the compilation of production safety rules and regulations, the compilation of production safety and occupational health rules and regulations and operating procedures to standardize the whole process of production safety of the company; A "work safety committee" has been established, led by the general manager of Hubei Duorui, which is specially responsible for the production safety of the company; The company has set up a safety specialist to regularly maintain, maintain and safety test all kinds of production equipment, systems and other production facilities. Hubei Duorui implements the safety production responsibility system of all employees, implements the safety production responsibility to all departments and individuals, and regularly carries out safety training for employees. In August 2020, Hubei Duorui obtained the National Certificate of "class III enterprise (Medicine) of safety production standardization" (Certificate No.: e aqbyy Ⅲ 202000052).

6. Corporate culture

Since its establishment, the company has always adhered to the enterprise value of "integrity casts quality and innovation wins the future", and its development vision is "benefiting people's health and committed to becoming a leading enterprise in subdivided fields with Chinese characteristics". The company adheres to the guidance of clinical drug demand, attaches great importance to R & D investment and technological innovation, and has formed a strong market position and competitive advantage in the subdivided field of plasma substitutes.

(II) risk assessment

In order to promote the sustainable, healthy and stable development of the company and achieve its business objectives, the company comprehensively, systematically and continuously collects relevant information according to the established development strategy, combined with different development stages and business expansion, timely carries out risk assessment, dynamically carries out risk identification and risk analysis, and adjusts the risk response strategy accordingly to ensure that the risk is controlled within the tolerable range and improve the risk management ability, Escort the sustainable development of the company.

In the process of business decision-making, the company identifies risks through qualitative risk assessment, focusing on the following factors: organization