Internal control evaluation report in 2021
Huaxin Cement Co.Ltd(600801) 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 the company’s headquarters and 164 subordinate branches and subsidiaries. 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 85.72
The total operating income of the units included in the evaluation scope accounts for 95.39% 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:
Occupational health and safety, organizational structure, development strategy, human resources, social responsibility, corporate culture, capital activities, procurement business, asset management, sales business, research and development, engineering projects, guarantee business, financial report, comprehensive budget, contract management, internal information transmission, information system, etc. 4. High risk areas of focus mainly include:
Sales business, procurement business, engineering projects, 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 the company’s internal control manual. 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 distinguishes the internal control of financial report from the internal control of non-financial report according to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, combined with the factors such as the size of the company, industry characteristics, risk preference and risk tolerance, and studies and confirms 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
Total profit misstatement ≥ 5% of total profit misstatement 5% of total profit for defects other than major defects and important defects, it will be regarded as general defects
Note: the identification of internal control defects should also be fully qualitative analysis before reaching a final conclusion.
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 defect a. the defect or combination of multiple defects may lead to the failure to prevent, detect and correct the misstatement of the financial report in time, reach or exceed the materiality level, and no effective compensatory control is implemented;
b. The relevant personnel responsible for supervising the company’s financial report and the company’s audit committee believe that the defect or a combination of defects may seriously affect the authenticity and integrity of the financial report and relevant information.
Important defects the relevant personnel responsible for supervising the company’s financial report believe that the defect or a combination of defects may seriously affect the authenticity and integrity of the financial report and relevant information, but the company’s Audit Committee believes that the impact is not serious.
General defect this defect or a combination of defects is unlikely to lead to misstatement of the financial report, or even if it may lead to misstatement of the financial report, the relevant personnel responsible for supervising the company’s financial report can reasonably guarantee the authenticity and integrity of the financial report and relevant information.
Note: 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
Total profit direct property loss ≥ total profit direct property loss total profit. Defects other than 5% defects that do not constitute major defects and important 5% defects will be regarded as general defects
Note: the identification of internal control defects should also be fully qualitative analysis before reaching a final conclusion.
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 defect a. the amount of direct property loss caused by the defect or the combination of multiple defects reaches or exceeds 5% of the total profit of the consolidated financial statements of the current year, and it is expected that the loss cannot be recovered in the future;
b. The company’s management and the audit committee believe that the defect or a combination of defects may cause the company to seriously deviate from strategic objectives, asset safety, business objectives and compliance objectives.
Important defect the management of the company believes that the defect or the combination of multiple defects may cause the company to seriously deviate from the strategic objectives, asset safety, business objectives and compliance objectives, but the audit committee of the company believes that the impact is not serious.
General defect this defect or the combination of multiple defects is unlikely to cause the company to deviate from the strategic objectives, asset safety, business objectives and compliance objectives, or even if it deviates from the objectives, the company’s management can still reasonably ensure the realization of the objectives.
explain:
None (III) 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
The general defects of internal control over financial reporting during the reporting period have been rectified before the reporting base date, which has no material impact on the authenticity and integrity of the company’s financial reports and relevant information. 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
The general defects of internal control over non-financial reporting during the reporting period have been rectified before the reporting base date, causing no direct property loss, and have no material impact on the realization of the company’s strategic objectives, asset safety, business objectives and compliance objectives. 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 any important defects in the internal control of non-financial reporting 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 2 Operation of internal control in this year and improvement direction in the next year
□ applicable √ not applicable 3 Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Xu Yongmo Huaxin Cement Co.Ltd(600801) March 30, 2022
