Gemac Engineering Machinery Co.Ltd(301048) : self evaluation report on internal control in 2021

Gemac Engineering Machinery Co.Ltd(301048)

Self evaluation report on internal control in 2021

Gemac Engineering Machinery Co.Ltd(301048) (hereinafter referred to as "the company" or "the company") 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 "enterprise internal control normative system"), combined with the internal control system and evaluation methods, on the basis of daily and special supervision of internal control, Evaluated the effectiveness of the company's internal control on December 31, 2021 (benchmark date of internal control evaluation report).

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 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, due to changes in operating conditions that 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、 Evaluation conclusion of internal control

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. 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.

3、 Internal control evaluation

During the reporting period, the company continuously improved and optimized the company's internal control system in accordance with the basic norms of enterprise internal control, guidelines for the application of enterprise internal control and guidelines for the internal control of listed companies of Shenzhen Stock Exchange, so as to adapt to the changing external environment and internal management requirements.

(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. The scope of this evaluation mainly covers the company, subsidiaries and branches. The total assets of the units included in the evaluation scope account for 100% of the total assets in the company's consolidated financial statements, and the total operating revenue accounts for 100% of the total operating revenue in the company's consolidated financial statements. The items included in the evaluation scope include: internal environment, risk assessment, control activities, information and communication, and internal supervision.

The main businesses and matters included in the scope of evaluation are as follows:

1. Internal environment

(1) Governance structure

The company has established a "three board and one layer" corporate governance structure of the general meeting of shareholders, the board of directors, the board of supervisors and the management according to law, formulated rules and regulations such as the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors, the rules of procedure of the board of supervisors, the working rules of the general manager and the working system of independent directors, clarified the responsibilities and authorities in decision-making, implementation and supervision, and formed a reasonable division of responsibilities and check and balance mechanism, It ensures the standardized operation of "three meetings and one layer".

The general meeting of shareholders is the highest authority of the company and exercises voting rights according to law. The board of directors is the company's permanent decision-making body, which consists of a strategy committee, an audit committee, a nomination committee and a remuneration and assessment committee. The board of directors is responsible for the general meeting of shareholders, deliberating and making decisions on major matters in the company's business activities, or submitting them to the general meeting of shareholders for deliberation. The duties of the board of directors and supervisors of the company are the regular review of the company's financial reports and the supervision of the company's senior management personnel. The management is responsible for the daily operation and management of the company.

(2) Organization

In order to promote the standardized operation of the company, improve the corporate governance structure and operation mechanism, and promote the stable and healthy development of the company, some institutions and functions of the company were adjusted in August 2021: an office (party masses work office), a strategic planning department (responsible for information disclosure and investor Relations), a legal affairs department, a sales center, a Shanghai Sales Service Department, a parts sales and maintenance business department, and an engineering service business department, Abolish the Party committee office, the company office, the operation and management department, the property management center, the marketing department, the customer service department, the Process Research Institute under the Construction Machinery Research Institute and the urban railway sales service department; The audit department was renamed the audit and risk control department, the equipment measurement department was renamed the equipment technology department, the urban rail transit equipment business department was renamed the core components business department, and the international trade department was renamed the overseas sales service department. After the change, the company's organization is mainly composed of 12 departments and offices such as the Office (party masses work office), 5 sales departments such as Beijing sales service branch, 5 production-oriented organizations such as large machinery business department, 2 production (service) and operation organizations such as engineering service business department, as well as engineering machinery research institute and its subsidiary Wuhan Wuhan rail car repair Co., Ltd. Clear responsibilities and division of labor among departments and posts, and form an operation mechanism of performing their duties, assuming their responsibilities, mutual restriction and coordination.

(3) Development strategy

The strategy committee under the board of directors of the company has formulated the working rules of the strategy committee, which is mainly responsible for studying and making suggestions on the company's long-term development strategy and major investment decisions. As a professional research institution for the company's long-term strategy and major investment, the strategy committee improves the scientificity and effectiveness of the company's decisions. The Strategy Committee formulates and optimizes the company's strategic plan according to the company's internal and external environment.

The company earnestly implements the working ideas and requirements of "high-standard positioning, innovative development, courageous responsibility and striving for first-class", practices the working theme of "strengthening the foundation, meeting the standards, improving quality and efficiency", adheres to the general tone of "seeking progress while maintaining stability" according to the development concept of innovation, coordination, green, openness and sharing, takes the market as the guidance, and continues to maintain its leading position in the field of track engineering equipment through continuous product innovation, Further enhance international competitiveness; Driven by innovation, explore the supply and maintenance mode of rail engineering equipment in the whole life cycle, adapt to and serve the reform of railway management mode, and strive to build a leading rail engineering equipment enterprise in China with international competitiveness.

(4) Social responsibility

The company attaches importance to the performance of social responsibilities and strives to coordinate economic and social benefits, short-term and long-term interests, self-development and social development, so as to realize the harmonious development of the enterprise, employees and society. The company actively performs its social responsibilities from the aspects of safety production, product quality, environmental protection, employee rights and interests protection, social welfare undertakings and so on, and integrates the expectations and needs of enterprise stakeholders into daily production and operation activities.

The company strictly abides by the labor law and other labor and social security laws and regulations, signs labor contracts with employees according to law, pays employees' wages in full and on time, pays legal social insurance and housing provident fund for employees, and establishes a sound leave system to effectively protect the legitimate rights and interests of workers.

The company actively consolidated and expanded the achievements of poverty alleviation, consolidated the Rural Revitalization work, focused on helping Guanfang village, Zijing Town, Gucheng County, Xiangyang City, Hubei Province, and took practical actions to help Guanfang village solve the problem of Shenzhen Agricultural Products Group Co.Ltd(000061) sales difficulty.

(5) Corporate culture

With the vision of "high-quality products, enterprise prosperity and employee happiness", the company cultivates the core values of "people-oriented, innovation driven, quality first, user first, co construction and sharing", adheres to the enterprise spirit of "focus, integrity and innovation", and adheres to the business philosophy of "market-oriented and user-centered", In the new development stage, it is proposed to accelerate the development strategy of "four equal changes" (quantitative expansion and quality improvement, equal changes in Chinese and international markets, manufacturing and engineering services, asset management and capital operation) and the goal and task of building a "world-class track engineering equipment enterprise", serve the railway, face the society, strive to promote the modernization of railway engineering machinery and create the best economic and social benefits. The leadership of the company set an example and created a good working atmosphere of honesty and trustworthiness, dedication and positive progress within the company.

(6) Human resource management

Over the years, the company has explored and implemented strategic human resource management, and continuously optimized the company's human resource reform according to the different business strategies and company development strategies implemented by the company at different development stages. The company sets up a human resources department, which is responsible for drafting the medium and long-term plan of the company's human resources strategy, determining the company's talent strategy, implementing social security benefits, and drafting human resources policies and systems. In order to continuously improve the quality of the company's talent reserve and continuously attract, cultivate and motivate excellent talents, the company has guaranteed the implementation of the company's human resource management policies, standardized the salary management of employees, guaranteed the common interests of the enterprise and employees, and mobilized the work enthusiasm of employees according to relevant national and local policies and regulations and combined with the actual situation.

2. Risk assessment

The company implements a sound risk management concept and takes a cautious approach to high-risk investment projects. On the basis of considering the strategic objectives, internal control objectives, development ideas and industry characteristics, the company identifies the innovation and technology risks, operation risks, internal control risks and financial risks faced by the company, and formulates different countermeasures to ensure that the risks are known, preventable and controllable and ensure the operation safety of the company.

3. Control activities

The company's main control measures are as follows:

(1) Separation control of incompatible positions: the company comprehensively and systematically analyzed and sorted out the incompatible positions involved in the business process, implemented corresponding separation measures, and formed a relatively reasonable working mechanism of performing their respective duties, assuming their respective responsibilities and restricting each other.

(2) Authorization approval control: authorization approval control. According to the provisions of conventional authorization and special authorization, the company has defined the scope of authority, approval procedures and corresponding responsibilities for each post to handle business and matters. Managers at all levels of the company shall exercise their powers and assume responsibilities within the scope of authorization. The company implements a collective decision-making system for major businesses and matters. No individual may make decisions alone or change collective decisions without authorization.

(3) Accounting system control: the company has established a relatively perfect financial accounting system in accordance with the accounting law, accounting standards for business enterprises and other laws and regulations related to finance and taxation. The company has set up an independent accounting organization, set up posts in financial management and accounting, formulated corresponding job instructions, and equipped with sufficient full-time personnel to ensure the smooth progress of financial work. The division of labor of accounting personnel is clear, and the post responsibility system is implemented. Each post can play a role of mutual restraint, and the approval, execution and recording functions are separated.

(4) Property protection and control: the company has established a system of daily management and regular inventory of property, defined the division of responsibilities of property use and management departments, and adopted measures such as property records, physical storage, account and physical verification, regular inventory and so on to ensure property safety.

(5) Budget control: the company implements budget management, defines the responsibilities and authorities of each responsible unit in budget management, standardizes the budget preparation, approval, release and implementation procedures, and combines it with the company's business objective control to achieve the company's business objectives through the requirements of budget control.

(6) Performance evaluation control: the company establishes and implements the performance evaluation system, scientifically sets up the performance evaluation management measures, defines the performance evaluation index system, regularly evaluates and objectively evaluates the performance objectives of each responsible department, business division and all employees of the company, and takes the evaluation results as the basis for determining employee salary, job promotion, excellent evaluation, demotion, cross-channel communication, post transfer, etc.

Key control activities of the company:

The company comprehensively applies the above control measures in the following main business activities, and focuses on high-risk areas such as investment management, management and use of raised funds, related party transactions, procurement business, sales business, quality management, R & D management, comprehensive budget, contract management and information disclosure. At the same time, the company implements effective control over various businesses and matters to promote the effective operation of internal control.

(1) Investment management

In accordance with the provisions of laws and regulations such as the guidelines for the standardized operation of companies listed on the gem of Shenzhen Stock Exchange and the articles of association, the company has formulated the foreign investment management system, which makes detailed and clear provisions on the procedures, registration, custody and disposal of investment, as well as the examination, research, decision-making, implementation, management and evaluation of investment projects. The formulation and effective implementation of the internal control system of investment management has standardized the company's investment behavior, ensured the safety of the company's foreign investment and prevented investment risks.

(2) Management and use of raised funds

The company has formulated the management system of raised funds, which stipulates the storage, use and management of raised funds. The company's raised funds are managed and used in strict accordance with the company law, securities law, Shenzhen Stock Exchange GEM Listing Rules, Shenzhen Stock Exchange GEM listed companies' standardized operation guidelines and other laws, regulations and normative documents, as well as the articles of association, raised funds management system and other documents, which meet the requirements of GEM listed companies and are all deposited in the regulatory account, Ensure that there is no illegal use of the raised funds. The company regularly discloses the deposit and use of raised funds and the progress of raised investment projects, legally performs the review procedures for relevant matters, and timely performs the obligation of information disclosure.

(3) Related party transactions

In accordance with the guidelines on internal control of listed companies of Shenzhen Stock Exchange, the articles of association and other relevant documents, the company has formulated the related party transaction management system in order to ensure that the related party transactions of the company do not damage the legitimate rights and interests of the company and non related shareholders on the principle of honesty, equality, voluntariness, fairness, openness and fairness. The system defines related parties and stipulates the transaction price, transaction decision-making, avoidance measures and information disclosure of related party transactions, which provides institutional support for safeguarding the legitimate rights and interests of the company, shareholders and creditors and ensuring the fairness of related party transactions of the company.

(4) Procurement business

According to the requirements of relevant systems of material management and in combination with the key control points of material procurement, the company has planned and established corresponding departments and posts, formulated business flow charts, combed and standardized the operation process of material procurement, purchase price approval, supplier selection and evaluation, clearly refined the scope of responsibilities of each post, assigned the responsibilities of each task to each person, and clearly defined the responsibilities and requirements of each link. The company shall select and