Chongqing Water Group Co.Ltd(601158)
Internal control evaluation report in 2021
Chongqing Water Group Co.Ltd(601158) 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 headquarters of the company and its subordinate Chongqing water supply company (including Jiulongpo business management office), Chongqing Yunan water supply Co., Ltd. (including Jiangnan business pipe network office and Yudong business pipe network office), Chongqing Yudong water Co., Ltd. (including Wanchuan sewage treatment company and Yunyang drainage company), Chongqing Yuxi Water Co., Ltd. (including Biqing water Co., Ltd. and Jiangjin drainage company) Chongqing Yushui Water Machinery Co., Ltd. and Chongqing Yushui Environmental Protection Technology Co., Ltd. (including Chongqing Luoyu Environmental Protection Technology Co., Ltd. and Chongqing Zeyu building materials Co., Ltd.). 2. Proportion of evaluation units:
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 85.29
The total operating income of the units included in the evaluation scope accounted for 73.63% 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:
Corporate Governance: organizational structure, development strategy, human resources, social responsibility and corporate culture.
Business process level: triple and big, capital activities, procurement business, asset management, sales business, related party transactions, engineering projects, external guarantee, subsidiary control management, financial report, comprehensive budget, contract management, internal information transmission, information system, internal audit, expense management, cost management, current account management and tax management. 4. High risk areas of focus mainly include:
Capital activities (including working capital management, budget management, investment and financing management), procurement business, asset management (mainly including fixed assets and inventory management), sales business, related party transactions, engineering projects, external guarantee, information system, cost management and expense 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 (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 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 total profit: ≥ 10% of total profit or 5% of total profit of RMB 200 million or RMB 100 million ≤ misstatement ＜ 0.5% of total profit or RMB 100 million ≤ misstatement ＜ 10% of total profit or 5% of total profit of RMB 200 million or RMB 100 million
Potential misstatement of total assets: ≥ 1% of total assets, 0.5% of total assets ≤ misstatement ＜ 1% of total assets, 0.05% of total assets ≤ misstatement ＜ 0.5% of total assets
Potential misstatement of owner’s equity misstatement ≥ 5% of total owner’s equity 1% ≤ misstatement 0.25% of total owner’s equity ≤ misstatement 5% of total owner’s equity 1% of total owner’s equity
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
The major defect is not the fraud of the company’s directors, supervisors and senior managers that may have a significant impact on the company found by the company; Major defects are not found or controlled within a reasonable time after rectification; Major misstatement discovered by external audit rather than first discovered by the company; Events that have a significant negative impact on the disclosure of periodic reports; Invalid control environment; Other defects that may affect the substantive judgment of report users.
The important defect is not the fraud of the middle management found by the company; The general defects found in the internal control evaluation have not been rectified in time after a reasonable time; Punished by national government departments, but did not have a significant negative impact on the disclosure of the company’s periodic reports.
The general defect is not the fraud found by the company; Punished by government departments below the provincial level (including the provincial level), but did not have a negative impact on the disclosure of the company’s periodic reports.
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
Potential risk events cause more than 200 million yuan, 100 million yuan to 200 million yuan (including 210 million yuan to 100 million yuan (including 10% of direct property loss)
Loss amount (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
The company has a general internal control mechanism, which makes it impossible to take self-control actions in the internal control process due to the internal control defects found in the daily audit, that is, it is impossible to take self-control actions in the internal control process. 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
There may be general defects in the internal control process in the daily operation. As the company’s internal control has a dual supervision mechanism of self-evaluation and internal audit, corrective actions will be taken once the defects are found and confirmed, so as to make the risk controllable and have no material impact on the company’s financial report. 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
The company has established a relatively perfect corporate governance structure and a sound internal control system. The system design is effective and the implementation is in place. In 2021, focusing on system optimization, management improvement, value enhancement and risk prevention, the company continued to strengthen internal control and risk management, and checked and supplemented the internal control system and business process through internal control self-assessment and internal control audit, timely found the defects and deficiencies in the implementation process, standardized rectification within a reasonable period, effectively promoted the continuous improvement of internal control, standardized decision-making and compliant operation. In the future, the company will continue to improve and optimize the internal control system, strictly implement the internal control system, strengthen supervision and inspection, take internal control as a normal work, and establish a long-term mechanism to promote the sustainable, stable and healthy development of the company. 3. Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Zheng Rubin Chongqing Water Group Co.Ltd(601158) April 2, 2022
