Fujian Rongji Software Co.Ltd(002474)
Self evaluation report on internal control in 2021
According to the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements, combined with the internal control system and evaluation methods of Fujian Rongji Software Co.Ltd(002474) (hereinafter referred to as “the company”), 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). The report on the company’s internal control in 2021 is as follows:
1、 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 the goal of the company’s 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 the change of 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.
2、 Objectives and principles of internal control system
(I) objectives followed by the company in establishing internal control system
1. Establish and improve the corporate governance structure that meets the requirements of modern enterprise management, form a scientific decision-making mechanism, implementation mechanism and supervision mechanism, improve the efficiency and effect of the company’s operation, and promote the company to realize its development strategy. 2. Establish an effective risk control system, strengthen risk management, improve risk awareness, and ensure the healthy operation of the company’s business activities.
3. Standardize the company’s operation mechanism and ensure the authenticity, accuracy and integrity of the company’s financial report and relevant information disclosure.
4. Establish a good internal control environment, plug loopholes, eliminate hidden dangers, prevent and timely detect and correct errors and fraud, and protect the safety and integrity of the company’s assets.
5. Ensure the implementation of relevant national laws and regulations, normative documents and the company’s internal rules and regulations. (II) basic principles followed by the company in establishing internal control system
1. Principle of legality. The company must engage in business activities within the scope stipulated by national laws and regulations, and cannot engage in illegal operations, let alone engage in illegal activities with the help of internal control, or evade the supervision of national norms through internal control.
2. The principle of comprehensiveness. Internal control covers all economic businesses and relevant posts of the company, and implements the key control points in the business processing process to decision-making, implementation, supervision, feedback and other links.
3. Principle of importance. Internal control should pay attention to important business matters and high-risk areas on the basis of comprehensive control.
4. Principle of checks and balances. Internal control ensures the reasonable setting of internal institutions and positions and the reasonable division of responsibilities and authorities, adheres to the separation of incompatible positions, and ensures that different institutions and positions have clear rights and responsibilities, restrict and supervise each other.
5. Cost benefit principle. Internal control will have a good effect in protecting the integrity of assets, the authenticity of information and the realization of enterprise objectives. Internal control should achieve the best control effect with reasonable control cost. It can not have a great negative impact on the enterprise due to the defects of internal control, nor can it blindly pursue perfection and produce expenditure without restraint.
6. Principle of adaptability. Internal control shall be adapted to the business scale, business scope, competition and risk level of the enterprise, and shall be adjusted in time with the changes of the situation. Internal control is constantly revised and improved with the change of the external environment, the adjustment of the company’s business functions and the improvement of management requirements.
3、 Internal control defects and identification standards
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. The identification standards of internal control defects determined by the company are as follows: 1. Identification standards of internal control defects in financial reports
(1) The quantitative evaluation criteria of the company’s internal financial control report are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
The misstatement of financial statements is greater than the most recent fiscal year and is located in the most recent fiscal year. The company’s audited consolidated statement year is less than or equal to the most recent amount. The company’s audited fiscal year is the company’s audited fiscal year
10% of the net profit of the consolidated statement 5% of the net profit of the consolidated statement between 10% and 5%
Greater than the most recent fiscal year, located in the most recent fiscal year, less than or equal to the most recent audited consolidated statement year of the potential company, the audited fiscal year of the company, 1% of the company’s audited impact on the operating revenue, and 0.5% of the revenue between 0.5% – 1% of the consolidated statement’s operating revenue
(2) The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
(1) Involving fraud of directors, supervisors and senior management; (2) The certified public accountant found that there was a material misstatement in the current financial statements, but the internal control failed to find the misstatement in the operation process; (3) Failure of internal control environment related to financial reporting.
(1) Failure to select and apply accounting policies in accordance with GAAP; (2) For the accounting treatment of unconventional or special transactions, there is no corresponding control mechanism, and the qualitative standard of important defects is not established or implemented and there is no corresponding compensatory control; (3) There are one or more defects in the control of the financial report at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the goal of authenticity and accuracy.
General defect qualitative standard refers to other control defects except major defects and important defects.
2. Quantitative and qualitative criteria for the evaluation of internal control defects in non-financial reports
(1) 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
Greater than the latest accounting year, located in the latest accounting year less than or equal to the latest audited consolidated year of the company that will cause direct economic loss, 1% of the total audited statement assets of the company in the audited accounting year, and 0.5% – 1% of the total consolidated statement assets
(2) The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
(1) Lack of democratic decision-making procedures, such as the lack of qualitative standard decision-making procedures for major problems, the appointment and removal of important cadres, the investment decision-making of major projects, and the use of large amounts of funds (three important and one large); (2) The development direction seriously deviates from the strategic goal, investment direction, business structure and business model, which can not support the realization of the strategic goal; (3) Serious violation of national laws and administrative regulations; (4) The results of internal control evaluation, especially major defects, have not been rectified.
(1) There are serious defects in the collective decision-making process, which may lead to the loss of important decision-making and the wrong qualitative standard; (2) The development direction deviates from the strategic goal seriously, and the investment direction, business structure and business model can not support the realization of the strategic goal to a great extent; (3) Important defects in internal control evaluation have not been rectified.
General defect qualitative standard and other matters except important and major defects.
4、 Internal control evaluation conclusion
According to the identification of major defects in the company’s internal control over financial reporting, there were no major defects in the internal control over financial reporting on the benchmark date of the internal control evaluation report. 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. 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. 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、 The company’s internal control and its implementation
(I) internal control system of the company
1. Control environment
(1) Business philosophy of the company
The company has established a clear corporate purpose, adhered to the main business of software products and services, formed the core competitiveness of the enterprise, and is committed to serving the fields of China’s social production informatization, public service and social management informatization. The company has always focused on the research and development of industrial application software, system integration and operation and maintenance services, and provided the whole life cycle of information system for the party and government, customs, energy, justice, environmental protection and other industries A full range of professional services. It is the unswerving principle of the company to rely on talents, give full play to their intelligence, create social wealth, win the development of the enterprise by virtue of the contribution of the enterprise to the society, and take a healthy path of enterprise growth. The company has formulated relatively perfect post responsibilities for employees, and paid attention to the training of employees at all levels to convey the company’s business philosophy to all employees.
(2) Corporate governance
The organizational framework of the company is as follows:
In accordance with the requirements of the company law, securities law and other laws, regulations and the articles of association, the company has established a standardized corporate governance structure and rules of procedure, clarified the responsibilities and authorities in decision-making, implementation and supervision, and formed a scientific and effective division of responsibilities and check and balance mechanism. The company has established a standardized governance organization with the general meeting of shareholders, the board of directors and the board of supervisors as the core, and clarified the functions and powers of the general meeting of shareholders, the board of directors and the board of supervisors by formulating the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors and the rules of procedure of the board of supervisors.
The general meeting of shareholders is the authority of the company, enjoying the legal rights stipulated in laws and regulations and the articles of association, and exercising the voting rights on major matters such as the company’s business policy, financing, investment, profit distribution and so on. The general meeting of shareholders of the company has formulated clear rules of procedure for the general meeting of shareholders, which specify the convening and voting procedures of the general meeting of shareholders, as well as the authorization principle of the general meeting of shareholders to the board of directors. Through the shareholders’ meeting system, the company has established and improved effective channels of communication with shareholders, actively listened to the opinions and suggestions of shareholders, ensured that all shareholders have equal rights to know, participate and vote on major matters of the company stipulated in laws, administrative regulations and the articles of association, and ensured the work efficiency and scientific decision-making of the shareholders’ meeting, so as to enable investors to obtain good investment returns.
The board of directors is the executive body of the general meeting of shareholders. It is responsible for the general meeting of shareholders and exercises the business decision-making power of the enterprise according to law. The company elects directors in strict accordance with the selection and appointment procedures stipulated in the company law and the articles of association. The number and composition of the board of directors of the company meet the requirements of laws and regulations. The board of directors of the company is composed of 9 directors, including 3 independent directors. There are four special committees under the board of directors: Strategy Committee, audit committee, nomination committee and salary and assessment committee, with corresponding systems. Each special committee of the board of directors shall have a clear division of responsibilities, carry out relevant work in strict accordance with the rules of procedure of each committee, and give full play to their respective functions.
The board of supervisors is the internal supervision organization of the company. The board of supervisors of the company strictly implements the relevant provisions of the company law and the articles of association. The number and personnel of the board of supervisors meet the requirements of laws and regulations. The board of supervisors of the company is composed of three supervisors, including one employee representative supervisor. The general meeting of shareholders of the company formulated the rules of procedure of the board of supervisors to clarify the discussion methods and voting procedures of the board of supervisors, so as to ensure the effective supervision of the board of supervisors. The articles of association stipulates that the board of supervisors shall enjoy the right to know, suggestion, report and supervision conferred by laws and regulations.
The main management departments set up by the company include: President’s office, human resources department, finance department, audit department, project management department, logistics department and quality management department. Through the rational division of department management responsibilities and post responsibilities, and the establishment of effective incentive and restraint mechanism, the division of labor between various departments is clear, cooperate with each other, check and balance each other, so as to ensure the orderly and healthy operation of the company’s production and operation activities and ensure the realization of control objectives.
(3) Personnel policy and practical operation
Through the personnel management system, labor contract management measures, attendance management system, salary management system, performance appraisal management regulations and other systems, the company has carried out various links such as personnel introduction, labor contract conclusion, attendance management, salary structure, performance rewards and punishments
