Bohai Securities Co., Ltd
Verification opinions on self-evaluation report of internal control in Shenzhen Xinhao Photoelectricity Technology Co.Ltd(301051) 2021
Bohai Securities Co., Ltd. (hereinafter referred to as “Bohai Securities” or “recommendation institution”) is the recommendation and continuous supervision institution of Shenzhen Xinhao Photoelectricity Technology Co.Ltd(301051) (hereinafter referred to as “company” or ” Shenzhen Xinhao Photoelectricity Technology Co.Ltd(301051) “) for initial public offering and listing on GEM, In accordance with the provisions of relevant laws, regulations and normative documents such as the measures for the administration of securities issuance and listing recommendation business, the Listing Rules of Shenzhen Stock Exchange on the gem, the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of listed companies on the gem, the Shenzhen Xinhao Photoelectricity Technology Co.Ltd(301051) self evaluation report on internal control in 2021 has been carefully verified. The verification results are as follows:
1、 Verification of recommendation institutions
The recommendation institution has carefully consulted the self-evaluation report of the company’s internal control, through consulting the documents of the third meeting of the company, various businesses, management systems and internal control systems; Interview the company’s chief financial officer, the Secretary of the board of directors and the head of the internal audit department; Check the integrity, rationality and effectiveness of the company’s internal control from the aspects of the company’s internal control environment and the construction and improvement of the internal control system, as well as the authenticity and objectivity of Shenzhen Xinhao Photoelectricity Technology Co.Ltd(301051) “self evaluation report on internal control in 2021”.
2、 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 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 operating revenue accounts for 100% of the total operating revenue in the company’s consolidated financial statements.
The main businesses included in the evaluation include: corporate governance structure, development strategy, organizational structure, internal audit, human resources and corporate culture construction; As well as budget management control, purchase and payment control, inventory management control, sales and collection control, monetary capital control, financing and investment, long-term asset management, production and storage, related party transaction control, information and communication.
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, and there are no major omissions.
1. Internal environment
(1) Governance structure
In strict accordance with the requirements of the company law and other laws and regulations, the company has established and improved governance institutions, rules of procedure and decision-making procedures such as the general meeting of shareholders, the board of directors and the board of supervisors, and performed various duties specified in the company law and the articles of association. Major decision-making matters, such as the approval of the company’s business policy and investment plan, the election and replacement of directors and supervisors, and the amendment of the articles of association, shall be deliberated and approved by the general meeting of shareholders. The board of directors is responsible for implementing the decisions made by the general meeting of shareholders and reporting to the general meeting of shareholders. Important decisions on major investment projects, mergers and acquisitions, the purchase of important assets and the signing of important contracts and agreements shall be decided by the board of directors. The chairman is the legal representative of the company. When the board of directors is not in session, the board of directors authorizes the chairman to exercise some functions and powers of the board of directors. The board of supervisors is the supervisory organ of the company, which is responsible for and reports to the general meeting of shareholders. It is mainly responsible for supervising whether directors and senior managers violate laws and regulations and infringe on the interests of the company and shareholders when performing their duties, and inspecting the financial situation of the company.
Establish the general manager responsibility system under the leadership of the board of directors. In accordance with the provisions of the articles of association, the company’s senior managers (including the general manager, deputy general manager, chief financial officer, Secretary of the board of directors and technical director) shall be appointed and dismissed by the board of directors. The general manager is the person in charge of the company’s management and makes decisions within the authorization of the board of directors in terms of major business and contract signing. The deputy general manager and other senior managers are responsible for handling the work under the leadership of the general manager.
(2) Development strategy
Based on the comprehensive analysis and scientific prediction of the current situation and future trend, the company formulates and implements long-term development objectives and strategic planning. Divide the core strategy into long-term development strategy and short-term strategy according to the time span, and set the time interval of long-term development strategy as three years to meet the challenges of industry competition and the changes of China’s macro environment; Set the time interval of short-term development strategy as 1 year (equivalent to annual business objectives and plans); At the end of each year, according to the changes of internal and external factors and competitive situation, combined with the implementation of the strategic objectives of the previous year, formulate the business objectives and annual plan of the company for the next year, and adjust the strategic development plan if necessary.
The company will continue to adhere to the core business philosophy of “achieving partners and realizing enterprise value”, focus on glass protective screen products, take technological development and meeting customer needs as the starting point, and continue to provide customers with the most cost-effective glass protective screen solutions by continuously strengthening production, R & D, service and internal management, so as to drive the continuous improvement of the company’s business performance and give back to the society and investors. Specifically include: 1. Promote the construction of raised investment projects and improve the scale competitiveness; 2. Strengthen R & D and innovation to adapt to market changes; 3. Integrate resources and seek extensive development; 4. Improve internal management and explore intelligent manufacturing.
(3) Organization
Combined with the actual situation of the company, the company has set up marketing center, manufacturing center, R & D center, quality center, human resources administration center, material department, planning department, procurement department, finance department, audit department, securities affairs department, system management department, Songgang branch and Yanluo branch, information department and other departments, and formulated corresponding department and post responsibilities. Each department has a clear division of labor, takes its own responsibilities, cooperates with each other, restricts and supervises each other.
The organizational structure of the company is shown in the figure below:
(4) Internal audit
The audit committee of the board of directors of the company has set up an independent audit department, equipped with full-time auditors, and formulated the internal audit management system to independently and objectively supervise and evaluate the authenticity, legitimacy and effectiveness of the company’s financial revenue and expenditure, business performance, asset quality, construction projects and other relevant economic activities, as well as the appropriateness, legitimacy and effectiveness of internal control. Through internal audit, special inspection and other means, timely find and rectify the problems existing in the process of business activities, and effectively prevent business risks and financial risks.
(5) Human resources
The company has established and implemented scientific and systematic organization planning, personnel employment, training, job rotation, assessment, reward and punishment, promotion and elimination and other relevant management systems, defined various processes of human resource management, clarified the responsibilities of each post, hired qualified employees and completed all work of the company.
(6) Enterprise culture construction
The company’s business philosophy, code of conduct and core values
Business philosophy: focus on customers, pursue excellence, harmony and win-win results
Code of conduct: attitude, details, goals, actions
Core values: Hospitality enthusiasm, courage and responsibility; Integrate innovation and pursue excellence; Make good use of resources and achieve harmony and win-win results
2. Risk assessment
The company has formulated long-term overall objectives, supplemented by specific strategies and business process plans to clearly convey the business objectives to every employee.
The company has established an effective risk assessment process, established an audit department and held regular management meetings 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. Main control activities
(1) Budget management control
The company has formulated the comprehensive budget management system to clarify the responsibilities, tasks, working procedures and specific requirements of various departments and links such as budget preparation, approval, implementation, analysis and assessment. The business scope of budget management of the company mainly includes business budget, investment budget, financing budget and financial budget. Implement comprehensive budget to effectively ensure the achievement of business objectives.
(2) Purchase and payment control
The procurement department of the company is fully engaged in the procurement of raw materials and other businesses. The company has formulated the procurement and payment management system, designed effective procurement and payment processes, adopted the mode of centralized procurement, nearby procurement and sporadic procurement, and made provisions and authorized approval for procurement plan, purchase requisition approval, supplier selection, bidding and inquiry comparison, quality control, return processing, payment control, accounting processing and other links, so as to reduce procurement costs under the condition of orderly procurement, Improve the efficiency of fund use.
(3) Inventory management control
The company has formulated inventory management system and material delivery management system. The relevant posts engaged in inventory management business have formulated the post responsibility system, which can effectively control the key links such as acceptance and warehousing, receiving and issuing, storage and disposal of physical assets, and take measures such as separation of responsibilities, regular physical inventory and irregular sampling, registration account, account and actual verification, property insurance and so on. Ensure the integrity and safety of assets.
(4) Sales and collection control
The marketing center of the company is responsible for selling goods and after-sales service. The company has formulated the “sales and collection management system”, “accounts receivable management system” and “credit management measures” and other systems. Clearly specify the marketing strategy, bidding quotation, contract signing, management, settlement, Dunning, collection and risk control. Ensure the effective implementation of control measures in all links.
(5) Monetary capital control
The company’s financial department is responsible for the full-time management of monetary funds. The company has formulated management regulations on expense reimbursement and monetary fund management system to separate incompatible posts and personnel, authorize and approve, and separate accounts and accounts, so as to ensure the safety of funds.
(6) Related party transaction control
The company adopts the principles of fairness, impartiality, voluntariness and good faith in related party transactions, formulates the related party transaction management system, clearly divides the decision-making authority of the general meeting of shareholders and the board of directors on related party transactions, clearly defines related party transactions and related parties, standardizes and reduces related party transactions, and ensures that the related party transactions of the company do not damage the legitimate rights and interests of the company and non related shareholders.
4. Information and communication
The company attaches great importance to the effective communication and full utilization of operation and management information among internal management levels. The company has established an effective information collection system and communication channels by means of Internet, e-mail, telephone and fax, regular business meetings, special coordination meetings, employee manuals, enterprise wechat and other means, so as to realize the accurate and timely transmission and sharing of required internal and external information within the company.
The company has established an external communication mechanism to communicate with customers in time through regular and irregular visits to major customers; Communicate with suppliers through industrial exhibitions, business negotiations and other forms. Timely obtain suggestions, opinions, complaints and other relevant information from external units and deal with them in a timely manner.
The company has set up a securities affairs department, which is responsible for the management of information disclosure and investor relations. The company’s information disclosure follows the principles of timeliness, accuracy, authenticity and integrity to ensure that stakeholders can obtain relevant information fairly.
(II) basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation with reference to the company’s internal audit management system in accordance with the standard system of enterprise internal control, the guidelines for self discipline supervision of Listed Companies in Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM, the rules for the preparation and reporting of information disclosure of companies offering securities to the public No. 21 – General Provisions on annual internal control evaluation report and other documents.
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
According to the importance of financial report misstatement that may be caused by defects, the company uses a combination of qualitative and quantitative methods to divide defects and determine major defects, important defects and general defects.
Major defect: refers to the combination of one or more control defects, which may seriously affect the effectiveness of the enterprise’s internal control, resulting in the failure of the enterprise to prevent or find serious deviations from the control objectives in time;
Important defect: refers to the combination of one or more control defects. Although its severity is lower than that of major defects, it is still likely to cause the enterprise to be unable to prevent or find deviations from the control objectives in time, which must attract the attention and attention of the board of directors and managers of the enterprise;
General defects: refer to other defects except major defects and important defects.
(1) Quantitative standard
If the loss caused or likely to be caused by internal control defect is related to the income statement, it shall be measured by the total profit index. If the amount of misstatement in the financial report caused by the defect alone or in combination with other defects is less than or equal to 3% of the total profit, it shall be recognized as a general defect; If it exceeds 3% of the total profit but is less than or equal to 5%, it is recognized as an important defect; If it exceeds 5% of the total profit, it is recognized as a major defect.
Losses caused or likely to be caused by internal control defects related to asset management shall be measured by the total asset index. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than or equal to 0.5% of the total assets, it is recognized as a general defect; If it exceeds 0.5% of the total assets and is less than or equal to 3%, it is recognized as an important defect; If it exceeds 3% of the total assets, it is recognized as a major defect.
(2) Qualitative criteria
The following situations are identified as major defects: ① fraud of directors, supervisors and senior managers of the company; ② The company corrects the published financial report; ③ Material misstatement in the current financial report found by the certified public accountant but not identified by the company’s internal control; ④ The supervision of the company’s audit committee and audit department on internal control is invalid; ⑤ Lack of system control or failure of system for important business; ⑥ Major or important defects in internal control have not been rectified.
The following situations are identified as important defects: ① no anti fraud procedures and control measures are established; ② Failure to select and apply accounting policies in accordance with GAAP; ③ Serious loss of middle and senior managers and senior technicians; ④ 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 goal of authenticity and accuracy.
Other internal control defects that do not constitute major defects or important defects are recognized as general defects.
2. Identification standard of internal control defects in non-financial reporting
The identification of non-financial report defects of the company is mainly based on the severity of the business nature involved, the nature of direct or potential negative impact, the scope of impact and other factors, and the defects are divided into major defects, important defects and general defects.
(1) Quantitative standard
heavy
