Company code: Shanghai Huayi Group Corporation Limited(600623) company abbreviation: Shanghai Huayi Group Corporation Limited(600623)
900909 Huayi B shares
Shanghai Huayi Group Corporation Limited(600623)
Internal control evaluation report in 2021
Shanghai Huayi Group Corporation Limited(600623) 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.
□ 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: the headquarters of the company, shuangqian Tire Group Co., Ltd. and its 8 subordinate companies, Shanghai Tianyuan (Group) Co., Ltd. and its 6 subordinate companies, Shanghai Shanghai Huayi Group Corporation Limited(600623) Investment Co., Ltd. and its 7 subordinate companies, Shanghai Soap Making (Group) Co., Ltd. and its 4 subordinate companies, Shanghai Huayi energy and Chemical Co., Ltd. and its 3 subordinate companies, Shanghai Huayi Fine Chemical Co., Ltd. and its 7 subordinate companies, Shanghai Huayi new materials Co., Ltd. and its 2 subordinate companies, Shanghai Huayi Information Technology Co., Ltd., Shanghai Shanghai Huayi Group Corporation Limited(600623) Finance Co., Ltd., Shanghai Huayi Group Corporation Limited(600623) (Hong Kong) Co., Ltd., Guangxi Huayi new materials Co., Ltd., Shanghai Huayi Group Corporation Limited(600623) (Thailand) Co., Ltd. 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 is 94.21
The total operating income of the units included in the evaluation scope accounts for 95.08% of the total operating income in the company’s consolidated financial statements
3. The main operations and matters included in the scope of evaluation include:
Internal control at the company level has evaluated businesses and matters such as organizational structure, development strategy, human resources, social responsibility, corporate culture, risk management, information and communication, internal supervision, etc.
Internal control at the business process level aims at the control processes of financial report, budget management, equity investment, procurement management, sales management, production and inventory management, engineering management, asset management, fund management, research and development, credit management, human resources, information system management, contract management and so on. 4. High risk areas of focus mainly include:
Asset management, sales management, procurement management, contract management, fund management, production and inventory management, etc.
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 (II) Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and relevant internal rules and regulations of the company. 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 criteria for defects in internal control over 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
Profit before tax 5% of profit before tax ≤ 2.5% of profit before tax ≤ misstatement misstatement 2.5% of profit before tax and 5% of profit before tax
Note: when the company’s operating performance fluctuates greatly, the revised indicators are as follows: (1) if the pre tax profit of the current year is reduced by more than 50% compared with the previous year, select 2.5% to 5% of the average pre tax profit of the past three years.
(2) If the pre tax profit of the current year is zero or negative, select 0.5% to 1% of the audited main business income of the latest year.
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 Major fraud of current directors, supervisors and senior managers;
2. It is found that there are significant potential misstatements in the current financial report, but the potential misstatements are not found during the operation of internal control;
3. The supervision of the company’s audit committee and internal audit institutions on internal control is invalid;
4. Major defects found and reported to the management are not corrected within a reasonable time;
5. Other major defects that may affect the judgment of statement users.
Important defects 1 Fraud of personnel in key positions;
2. When there is a material misstatement in the financial report and the corresponding control activities fail to identify the misstatement;
3. Failure of compliance supervision function and violation of laws and regulations may have a significant impact on the reliability of financial reporting;
4. It has been reported to the management, but after a reasonable period of time, the management still fails to correct the important defects; 5. Other important defects that may affect the correct judgment of report users.
In addition to the above-mentioned major defects and control defects.
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
5% of pre tax profit of potential risk events ≤ 2.5% of pre tax profit of misstatement ≤ 5% of direct pre tax profit caused by misstatement 2.5% of pre tax profit
Loss of production. Note: when the company’s operating performance fluctuates greatly, the revised indicators are as follows: (1) if the pre tax profit of the current year is reduced by more than 50% compared with the previous year, select 2.5% to 5% of the average pre tax profit of the past three years. (2) If the pre tax profit of the current year is zero or negative, select 0.5% to 1% of the audited main business income of the latest year.
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. Have a significant impact on the operation system (such as permanent damage to facilities, abandonment of production line and shutdown of production time); 2. Negative news circulates all over the country, and the government or regulatory agencies conduct investigations to attract public attention, causing irreparable damage to the enterprise’s reputation;
3. Causing serious pollution to the surrounding environment or requiring high recovery costs, or even unable to recover;
4. Serious loss of middle and senior managers and technicians;
5. Serious violation of laws and regulations, resulting in the replacement of regulators and the dismissal of senior managers.
Important defects 1 Moderate impact on the operation system (such as shutdown caused by production failure);
2. Negative news spreads in a certain area, causing medium damage to the enterprise’s reputation;
3. The environmental pollution and damage are within the controllable range without causing permanent environmental impact;
4. Serious loss of business personnel in key positions;
5. Violation of laws and regulations, resulting in warning, criticism and rectification within a time limit.
General defects 1 General impact on the operation system (the production line is temporarily unable to produce, affecting the delivery of goods);
2. Negative news spreads within the company or locally, causing slight damage to the enterprise’s reputation;
3. No pollution and no permanent environmental impact;
4. Serious loss of business personnel in general posts;
5. There are minor violations of laws and regulations, or lead to adverse feedback from regulators.
Note: at the same time, the following signs usually indicate that there may be significant defects in the internal control of non-financial reporting; (1) Lack of collective decision-making procedures for “three important and one major” matters; (2) Unscientific decision-making procedures, such as wrong decision-making, lead to unsuccessful M & A; (3) Lack of system or systematic failure of important business. （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 any major defects in internal control over financial reporting during the reporting period
□ yes √ no
1.2. Important defects
Whether the company has any significant defects in internal control over financial reporting during the reporting period
□ yes √ no 1.3 General defect
For the general defects of internal control over non-financial reporting found during the reporting period, the company has actively implemented rectification. 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, does the company have 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
□ yes √ no 2.3 General defect
For the general defects of internal control over non-financial reporting found during the reporting period, the company has actively implemented rectification. 2.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in 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, does the company find that the rectification has not been completed
