Company code: China Railway Signal & Communication Corporation Limited(688009) company abbreviation: China Railway Signal & Communication Corporation Limited(688009)
China Railway Signal & Communication Corporation Limited(688009)
Internal control evaluation report in 2021
China Railway Signal & Communication Corporation Limited(688009) 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 company’s (hereinafter referred to as the company’s) internal control system and evaluation methods, and on the basis of daily and special supervision of internal control, we evaluated the effectiveness of the company’s internal control on December 31, 2021 (the benchmark date of internal control evaluation report). I 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. II Internal control evaluation conclusion 1 On the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting
□ yes √ no
2. Evaluation conclusion of internal control over financial reporting
√ valid □ invalid
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. 3. Whether major defects in internal control over non-financial reporting are found
□ yes √ no
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.
4. Factors affecting the evaluation conclusion of internal control effectiveness from the benchmark date of internal control evaluation report to the date of issuance of internal control evaluation report □ applicable √ not applicable
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. 5. Whether the internal control audit opinion is consistent with the company’s evaluation conclusion on the effectiveness of internal control over financial reporting
√ yes □ No 6 Whether the disclosure of major defects in internal control of non-financial reports in the internal control audit report is consistent with the disclosure of the company’s internal control evaluation report √ yes □ no III Internal control evaluation (I) Scope of internal control evaluation
According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas. 1. The main units included in the evaluation scope include China Railway Signal & Communication Corporation Limited(688009) and all its wholly-owned and holding companies. 2. Proportion of units included in the scope of evaluation:
Proportion of indicators (%)
The ratio of the total assets of the units included in the evaluation scope to the total assets of the company’s consolidated financial statements 100
The total operating income of the units included in the evaluation scope accounts for 100% of the total operating income in the company’s consolidated financial statements The main operations and matters included in the scope of evaluation include:
Internal control environment includes organizational structure, development strategy, human resources, social responsibility, corporate culture, internal supervision and other internal environmental control; Key business activities include asset management, capital activities, sales business, procurement business, engineering projects, research and development, guarantee business, business outsourcing, financial reporting and other key business internal control activities; Control means include comprehensive budget, contract management, information system, internal information transmission and other internal control means. 4. High risk areas of focus mainly include:
Market competition, safety, quality, accounts receivable, technological innovation and other fields. 5. 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. Is there any major omission □ yes √ No 6 Is there a statutory exemption
□ yes √ no
7. Other explanatory matters
None. （2） Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation based on the company’s internal control system, internal control evaluation management measures and comprehensive risk management and internal control manual in accordance with the provisions of the enterprise’s internal control standard system and internal control supporting guidelines and other internal control supervision requirements. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ no
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. 2. Identification standard of internal control defects in financial reporting
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
Potential misstatement of profits: the amount of misstatement ≥ 3% of the total profits ≤ the amount of misstatement 3% of the total profits; the amount of misstatement 5% of the total profits
explain:
None.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Qualitative standard of defect nature
Major defects 1 The fraud of directors, supervisors and senior managers has caused great losses and serious negative impact to the company;
2. The company’s supervision over the internal control of financial reporting is invalid;
3. Correcting the published financial report due to the discovery of material misstatement in the previous year (except for the retroactive adjustment of the previous year due to the change of policy or other objective factors);
4. Material misstatement and omission in the current financial report found by the Registered Auditor but not identified by the company’s internal control.
Important defects 1 Failure to select and apply accounting policies in accordance with GAAP;
2. Failure to establish anti fraud procedures and control measures;
3. There is no internal oversight body or the internal oversight body does not perform its basic functions.
Other internal control defects in financial reporting where general defects do not constitute major defects or important defects.
explain:
None. 3. 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:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
Economic loss 0.5% of sales revenue due to internal control failure ≤ direct economic loss due to internal control failure ≥ sales revenue direct economic loss due to internal control failure 1% of sales revenue economic loss 0.5% of sales revenue
explain:
None.
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Qualitative standard of defect nature
Major defects 1 Lack of democratic decision-making procedures or major mistakes caused by decision-making procedures;
2. Serious violation of national laws and regulations and punishment;
3. Serious loss of key management personnel or important talents;
4. Lack of system control or failure of system for important business;
5. Major defects in internal control have not been rectified for a long time.
Important defects 1 Democratic decision-making procedures exist but are not perfect or there are major mistakes in decision-making procedures;
2. Violating the internal rules and regulations of the enterprise, resulting in large losses;
3. Serious loss of business personnel in key positions;
4. There are important defects in the important business system or system;
5. Major defects in internal control have not been rectified for a long time.
Other non-financial reporting internal control defects that do not constitute major defects or important defects.
explain:
None. （3） Identification and rectification of internal control defects 1 Identification and rectification of internal control defects in financial reporting 1.1 Major defects
Whether the company has major defects in internal control over financial reporting during the reporting period □ yes √ no 1.2 Important defects
Whether the company has significant defects in internal control over financial reporting during the reporting period □ yes √ no 1.3 General defect
General defects have been rectified. 1.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting that have not been rectified □ yes √ no 1.5 After the above rectification, on the benchmark date of the internal control evaluation report, whether the company has any important defects in the internal control of financial reporting that have not been rectified □ yes √ No 2 Identification and rectification of internal control defects in non-financial reporting 2.1 Major defects
Whether the company found any major defects in internal control over non-financial reporting during the reporting period □ yes √ no 2.2 Important defects
Whether the company found any significant defects in internal control over non-financial reporting during the reporting period
2.3. General defect
General defects have been rectified. 2.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in the non-financial reporting internal control that have not been rectified □ yes √ no 2.5 After the above rectification, on the benchmark date of the internal control evaluation report, whether the company finds any important defects in non-financial reporting internal control that have not been rectified □ yes √ no IV Description of other major matters related to internal control 1 Rectification of internal control defects in the previous year
√ applicable □ not applicable
The internal control evaluation of the company in the previous year found no major defects and important defects. In view of the general defects in the company’s internal control, each defect responsible unit has formulated rectification measures to clarify the rectification responsibility. The internal control defects have been rectified, and the company’s internal control has been further strengthened and improved. 2. Operation of internal control in this year and improvement direction in the next year
√ applicable □ not applicable
In 2021, the company’s businesses and matters included in the evaluation scope have established internal control, which has been effectively implemented and achieved the goal of internal control. The internal control is adapted to the company’s strategy, business scale, business scope, competition and risk level, and adjusted in time with the changes of internal and external environment. In 2022, the company will further strengthen the construction of internal control system, continuously improve the internal control system, standardize the implementation of internal control system, strengthen the process control of major risks, increase the supervision and inspection of internal control, and realize the preventability and controllability of major risks. 3. Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Zhou Zhiliang China Railway Signal & Communication Corporation Limited(688009) March 25, 2022
