Self evaluation report on internal control in 2021
Hubei Yihua Chemical Industry Co.Ltd(000422) all shareholders:
In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines and other requirements for internal control supervision (hereinafter referred to as the “enterprise internal control normative system”), combined with 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).
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 continuously improve the level of internal control management through the design, operation, evaluation and continuous improvement of the company’s internal control system, establish a relatively perfect internal control system, reasonably ensure the legal compliance of operation and management, asset safety, authenticity and integrity of financial reports and relevant information, strengthen risk management, 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.
2、 Internal control evaluation conclusion
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
(I) evaluation scope of internal control
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 main units included in the evaluation scope include Hubei Yihua Chemical Industry Co.Ltd(000422) and all its holding companies. 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 main businesses and matters included in the evaluation scope cover five aspects: internal environment, risk assessment, control activities, information and communication and internal supervision, including: governance structure, organizational structure, development strategy, human resources, social responsibility, corporate culture, capital activities, procurement business, asset management, sales business, engineering projects, foreign investment, related party transactions, guarantee business, internal audit, financial report Comprehensive budget, contract management, internal information transmission, information system, etc. High risk areas of focus include: Sales and collection management, asset management, procurement and payment management, capital business management, engineering project management, contract management, related party transactions and external guarantees. 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, and there are no major omissions.
1. Governance structure
In strict accordance with the requirements of the company law, the securities law and the laws and regulations of the CSRC on listed companies, the company has continuously improved and standardized the organizational structure of the company’s internal control, ensured the standardized operation of the company’s general meeting of shareholders, the board of directors, the board of supervisors and other institutions, and safeguarded the interests of the company and investors.
The internal control structure of the company is complete, independent and standardized. The “three meetings and one layer” perform their respective duties, coordinate the operation and effectively check and balance. The general meeting of shareholders is the authority of the company. The board of directors is responsible to the general meeting of shareholders, the board of supervisors is responsible to all shareholders, independent directors safeguard the rights and interests of minority shareholders, and the management is responsible to the board of directors. The directors, supervisors, senior managers, holding companies and functional departments of the company perform their duties, are bound by the articles of association and various internal control systems, and are supervised by relevant internal departments and personnel.
2. Organization
In accordance with the requirements of the company law, the articles of association and relevant laws and regulations, and in combination with the actual situation, the company has established a standardized, effective and reasonable internal operation and management organization, and clearly defined the power and responsibility distribution system of management institutions and posts at all levels.
The corporate governance structure composed of the general meeting of shareholders, the board of directors, the board of supervisors and the management performs the functions of authority, decision-making body, supervision body and executive body respectively, and operates well. The board of directors of the company has a strategy committee, a nomination committee, an audit committee and a remuneration and assessment committee to provide professional decision-making support for the board of directors. All directors, supervisors and senior managers of the company are diligent and responsible. Independent directors have played the role of consultation and advice on major decision-making matters of the company in their professional fields, made independent judgments and performed their duties well. The company follows the principle of separation of incompatible positions, reasonably sets up internal institutions according to business and management needs, defines the terms of reference, staffing and working system, and forms a scientific and effective division of responsibilities and check and balance mechanism. Each functional department has a clear division of labor, performs its own duties, cooperates with each other, checks and balances each other, and ensures the standardized operation of the company.
The board of directors, the board of supervisors and the management of the company are committed to the construction and implementation of internal control, scientifically defining the division of responsibilities of the board of directors, the board of supervisors and the management in the establishment and implementation of internal control, and forming a hierarchical internal control organization guarantee system of the company; The board of directors of the company regularly summarizes the internal control report, urges the rectification of internal control, and revises the internal control system to promote and promote the internal control of the company. Effectively ensure the implementation and implementation of the company’s internal control system. 3. Development strategy
The strategy committee under the board of directors of the company is responsible for studying and making suggestions on the company’s long-term development strategy and major decisions. The company defines the development direction on the basis of full investigation and research, scientific analysis and prediction and extensive solicitation of opinions, and formulates the annual work plan accordingly to decompose and implement the objectives; At the same time, during the implementation of the development strategy, timely and dynamically adjust the development strategy according to the market situation to continuously enhance the sustainable development ability of the company.
4. Human resources
In order to standardize the salary management of the company, the measures for hierarchical and classified management of subsidiary companies and the measures for performance appraisal have been issued, and the performance appraisal scheme has been optimized to stimulate the vitality and creativity of all employees. Implement the reform of the three systems of labor and personnel distribution in state-owned enterprises, and realize the dynamic management mechanism of “cadres can go up and down, personnel can go in and out, and salary can rise and fall”. Through external industry benchmarking and internal balance analysis, optimize the salary standards and structure of the company and its subsidiaries, improve the pertinence, adaptability, fairness and incentive of the salary system, and comprehensively enhance the competitiveness of the company’s salary.
Further increase the salary preference of production front-line personnel and management backbone, optimize and adjust the seniority salary and skill salary scheme, fully mobilize the enthusiasm and creativity of employees, and continuously improve the satisfaction and loyalty of employees.
5. Social responsibility
The company emphasizes and actively performs its social responsibilities and obligations. According to relevant national regulations and industrial standards, the company formulates relevant management systems in terms of social responsibilities such as safety production, product quality, environmental protection and employee rights and interests protection, so as to realize the healthy and harmonious development of the company and employees, the company and society, and the company and the environment. The company mainly promotes and standardizes the company’s social responsibility from the aspects of safe production, product quality, environmental protection, resource conservation, employment promotion, targeted poverty alleviation and employee protection; The company earnestly implements the national macroeconomic policies and consciously maintains the market economic order; The company actively participates in social public welfare undertakings and contributes to the construction of a harmonious society. 6. Corporate culture
The company always adheres to the corporate culture concept of abiding by integrity and innovation, advocating strictness and honesty, opening and sharing and green development, and has always attached importance to the realization of the social value of the enterprise. While pursuing economic benefits and protecting the interests of shareholders, the company treats and protects other stakeholders in good faith. In order to guide and standardize the behavior of employees, the company has formulated the code of conduct for employees, made efforts to cultivate employees’ positive values and sense of social responsibility, and advocated the spirit of honesty and trustworthiness, pragmatic innovation, love and dedication, unity and cooperation.
7. Financial activities
According to the accounting law, accounting standards, enterprise accounting system and other laws and regulations, the financial department of the company has formulated financial management systems such as fund management system, payment and reimbursement approval process and expense management, strengthened fund budget management, strengthened the main responsibility of management of subsidiaries, fully mobilized their management initiative and initiative, and improved the efficiency and effect of fund management. Specify and standardize the approval authority and approval procedures of internal fund payment, and specify the links such as fund payment application, approval authority, review and payment. During the reporting period, the company’s capital operation strictly complied with relevant systems and regulations, and there were no violations.
8. Procurement business
In terms of daily procurement, the company strengthens the access selection of suppliers, and strictly controls the risk of planning, price, contract, delivery, acceptance, settlement and other links, so as to ensure that the material procurement meets the needs of the company and reasonably control the cost. In terms of supplier access, the gateway is moved forward, strict investigation and evaluation are carried out, suppliers with clear price and consistent price and goods are selected, and the direct supply rate is continuously improved; In terms of purchase price management, standardize the pricing method, increase direct supply and long-term cooperation, pilot online bidding procurement, and strictly control the purchase price; Strengthen multi-party linkage, tackle the key problem of “eating coarse grain”, promote the use of cost-effective raw materials and reduce production costs; In terms of supplier management, establish a supplier management database, strengthen the application of supplier evaluation, and include unqualified suppliers in the blacklist for timely elimination. During the reporting period, the company found no major loopholes in procurement business.
9. Asset management
The company has formulated clear management measures and operation procedures for the purchase, acceptance, maintenance, allocation, inventory, scrapping and disposal of fixed assets; The management methods and operation processes are also defined for the acceptance, warehousing, storage, material picking and warehouse out, inventory and other aspects of inventory; At the same time, the company regularly organizes asset inventory to ensure that the accounts are consistent with the facts.
10. Sales business
The company adheres to the business philosophy of “customer first and integrity-based”, establishes and continuously improves the sales business process, and standardizes the key links such as sales plan formulation, sales price determination, order review, delivery settlement, customer management and sales accounting control. According to the company’s strategy, predict the market, formulate the sales volume of head customers and the adjustment and improvement goal of market structure, grasp the market situation, control the signing rhythm and accurately target sales; Promote the exploration of online sales and intensive market inventory management according to the principle of channel sinking and market segmentation; Standardize the approval authority and process control of key links such as sales price determination, customer management, contract management, plan management and loan recovery, and pay attention to customer management and customer quality. During the reporting period, the company found no major loopholes in sales business.
11. Project
According to relevant national laws and regulations, the company has revised and improved the relevant management system of engineering projects suitable for the company’s business characteristics and management requirements. The company standardizes the work flow and control measures of project initiation, procedure handling, bidding procurement, progress control, cost control, completion acceptance and other links, defines the responsibilities and approval authority of relevant departments, and separates incompatible positions such as budget preparation and review, project implementation, supervision and price payment, completion final accounts and audit, so as to strengthen the monitoring of the whole process of project construction and ensure the project quality Progress and funds are under control. Promote the construction project to achieve the three objectives of “quality, speed and benefit”.
12. Foreign investment
In the articles of association, the company has defined the approval authority of the general meeting of shareholders and the board of directors for major investments, and formulated corresponding discussion procedures. For the major investment projects of the company, after the joint review of relevant professional departments of the company, the pre decision-making procedure of the Party committee of the company shall be implemented, and the decision-making shall be fully studied and judged by the board of directors. If the investment amount of the project exceeds the authorization of the board of directors of the company, it can be implemented only after being submitted to the general meeting of shareholders for deliberation and approval.
13. Related party transactions
In accordance with the relevant provisions of the stock listing rules and the articles of association of Shenzhen Stock Exchange, the company has formulated the related party transaction decision-making system, which defines the content, pricing principles, decision-making procedures and approval authority of related party transactions, so as to ensure that the related party transaction contracts concluded between the company and related parties comply with the principles of fairness, openness and impartiality, Ensure that the related party transactions of the company do not harm the interests of the company and all shareholders. During the reporting period, the company strictly abided by the established connected transaction system and found no violations.
14. Guarantee business
In accordance with the civil code, the company law, the articles of association, the rules of procedure of the board of directors and other relevant provisions, the company has formulated the external guarantee management system, which has made detailed provisions on the guarantee principle, guarantee object, approval process and daily risk management, and made it clear that the external guarantee shall be uniformly managed by the company. Without the approval of the board of directors, the company shall not provide external guarantee or mutual guarantee.
15. Internal audit
The company has set up an audit department to establish internal audit management procedures in accordance with the provisions of the National Audit Office on internal audit and the auditing standards of the Ministry of central China, standardize the company’s audit work, adhere to serving the overall situation, focus on the annual objectives around the center, coordinate audit resources, always adhere to the guidance of problems, objectives and benefits, deeply carry out research-based audit and carry out detailed and normalized “economic physical examination”; Focus on the main responsibility and main business, highlight the key review, focus on problem reform, focus on long-term construction, and actively play the role of strengthening the foundation, correcting and preventing disadvantages, ensuring implementation and power supervision. If the audit department finds defects in internal control during the review process, it will report to the board of directors and the audit committee in time. The effective implementation of the company’s internal audit related work has further improved the company’s internal control and governance structure, and promoted and ensured the effective operation of internal control.
16. Financial reporting
The company formulates accounting methods and corresponding management systems in accordance with the company law of the people’s Republic of China, accounting law of the people’s Republic of China, accounting standards for business enterprises, basic norms of enterprise internal control and other laws and regulations; Uniformly implement computerized accounting, and assign special personnel to carry out daily maintenance and safety guarantee of financial software; All accounting records are complete, true, timely and sufficient to fully reflect the achievement of various performance objectives; Clarify the management procedures of accounting vouchers, accounting books and financial reports, provide the company with true, accurate, timely and complete accounting information, and ensure the accuracy and reliability of financial reports. At the same time, the company strictly implements the accounting laws and regulations and the national unified accounting standards system, strengthens the management of the whole process of financial report preparation, external provision, analysis and utilization, and defines the relevant work processes and requirements
