Swancor Advanced Materials Co.Ltd(688585)
Self evaluation report on internal control in 2021
Swancor Advanced Materials Co.Ltd(688585) 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 Swancor Advanced Materials Co.Ltd(688585) , Shangwei (Tianjin) wind power materials Co., Ltd., Shangwei (Jiangsu) new materials Co., Ltd., Shangwei Suzhou Xingye Materials Technology Co.Ltd(603928) Co., Ltd. (Taiwan), swancorind (m) SDN.BHD. (Shangwei Malaysia), Shangwei (Xianggang) Investment 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 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
3. The main operations and matters included in the scope of evaluation include:
Sales and collection cycle, procurement and payment cycle, production and inventory management, R & D and development cycle, human resource management, information system cycle, engineering management, fixed assets and intangible assets, financial report preparation, tax management, seal management, subsidiary management, associated transaction, external guarantee, fund management, etc; The items included in the evaluation scope of the company include internal environment, risk assessment, information and communication, internal supervision and control activities. 4 The high-risk areas of focus mainly include:
Sales and collection, purchase and payment, production and inventory management 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, the company’s internal control manual and the actual situation of operation and management. 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
Quantitative indicator – operating revenue a ≥ 1% 0.5% ≤ a 1% a 0.5%
Quantitative index – total assets a ≥ 1% 0.5% ≤ a 1% a 0.5%
Note: a) a represents the amount of financial reporting errors that may be caused by the defect alone or in combination with other defects. B) the exchange rate of RMB to Taiwan dollar is calculated at 4.3.
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. Fraud of directors, supervisors and senior managers of the company.
2. The company corrects the published financial report.
3. Major errors found by certified public accountants but not identified by the company’s internal control in the current financial report. 4. The supervision of the audit committee and the audit department on the company’s external financial report and internal control over financial report is invalid.
Significant defects 1. Failure to select and apply accounting policies in accordance with generally accepted accounting standards.
2. No anti fraud procedures and control measures have been established.
3. For the accounting treatment of unconventional or special transactions, no corresponding control mechanism is established or not implemented and there is no corresponding compensatory control.
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 true and complete goal.
General defects, major defects and important defects are excluded.
Violation of relevant laws and regulations may result in punishment or fine to the company, the chief financial officer and the person in charge of the company.
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
Quantitative indicator – operating revenue a ≥ 1% 0.5% ≤ a 1% a 0.5%
Quantitative index – total assets a ≥ 1% 0.5% ≤ a 1% a 0.5%
Note: a) a represents the amount of financial reporting error that may be caused by this defect alone or in combination with other defects
b) The exchange rate of RMB to Taiwan dollar is calculated at 4.3.
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 1. The possibility of defect occurrence is high
2. Defects can seriously reduce work efficiency or effectiveness.
3. Defects can seriously deviate from the expected goal.
4. Defects will seriously increase the uncertainty of the effect.
Important defect 1. The possibility of defect occurrence is high
2. Defects can significantly reduce work efficiency or effectiveness.
3. Defects can significantly deviate from the expected goal.
4. Defects will significantly increase the uncertainty of the effect.
General defect 1. The possibility of defect occurrence is small
2. Defects may affect the effectiveness of business processes and reduce work efficiency or effectiveness.
3. Defects may cause the results to deviate from the expected objectives.
4. Defects may increase the uncertainty of the effect.
5. There are defects in the operation process, but it does not affect the true and complete objectives expressed in the final financial report and other similar situations.
Note: 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 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
None 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 □ yes √ no 2.3 General defect
None 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 2 Operation of internal control in this year and improvement direction in the next year
√ applicable □ not applicable
In 2021, the company’s internal control was implemented effectively, and no major and important defects were found in financial reports and non-financial reports. In 2022, the company will continue to improve the internal control system, standardize the implementation of the company’s internal control system, strengthen the supervision and inspection of internal control, strengthen the publicity and training of internal control, improve the management level of internal control and ensure the long-term and healthy development of the company in strict accordance with the basic norms of enterprise internal control and supporting guidance documents and in combination with the actual production and operation of the company. 3. Description of other major events
□ applicable √ not applicable
Chairman: Cai Chaoyang Swancor Advanced Materials Co.Ltd(688585) March 30, 2022
