Eternal Asia Supply Chain Management Ltd(002183)
Self evaluation report on internal control in 2021
Eternal Asia Supply Chain Management Ltd(002183) 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 Eternal Asia Supply Chain Management Ltd(002183) (hereinafter referred to as the “company”) internal control system and evaluation methods, on the basis of daily and special supervision of internal control, We evaluated the effectiveness of the company’s internal control from January 1, 2021 to December 31, 2021.
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, 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.
1. The main units included in the evaluation scope include the company, wholly-owned subsidiaries and holding subsidiaries. The total assets of the unit 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.
2. The main businesses included in the evaluation scope include: brand operation, distribution + marketing.
The main businesses and matters included in the scope of evaluation are as follows:
(1) Control environment
The quality of the control environment directly determines whether the company’s control systems can be effectively implemented. The company’s control environment not only reflects the scientificity of the governance structure and the checks and balances of the functional institutions, but also fully reflects the attitude of the board of directors and management towards the company’s control. The company actively creates a good culture and control environment in order to provide a broader space for the development of the enterprise. It is mainly reflected in the following aspects:
① Organizational structure
The company has established a standardized governance structure and rules of procedure, divided clear responsibilities and authorities in decision-making, implementation and supervision, formed a scientific and effective division of responsibilities and check and balance mechanism, and established a clear organizational structure and division of responsibilities in internal control. The general meeting of shareholders, the board of directors, the board of supervisors and the management of the company, as the power organ, supervision organ and executive organ of the company, exercise their functions and powers in accordance with the principles of mutual independence, mutual checks and balances and clear rights and responsibilities.
The general meeting of shareholders is the highest authority of the company, which decides the company’s business policy and investment plan, considers the company’s annual financial settlement plan, profit distribution plan and other major matters, and ensures that all shareholders, especially small and medium-sized shareholders, enjoy equal status and can fully exercise their corresponding rights.
The board of directors of the company consists of 7 directors, including 4 independent directors. The board of directors decides the company’s business plan and investment plan, implements the resolutions of the general meeting of shareholders, and is responsible for the establishment, improvement and effective implementation of the internal control system. The board of directors of the company has four special committees: Strategy Committee, audit committee, nomination committee and Remuneration Committee, all of which are responsible to the board of directors.
The board of supervisors is responsible to all shareholders and is the supervisory body of the company. Be responsible for supervising the performance of duties by the directors, management and other senior managers of the company according to law and the financial situation of the company; Supervise the behavior and effect of the board of directors in establishing and implementing internal control; Be responsible for supervising the establishment, improvement and effective implementation of the company’s internal control system.
During the reporting period, the management is responsible for implementing the resolutions of the general meeting of shareholders and the board of directors. The general manager of the company comprehensively presides over the daily production, operation and management of the company, supervises the work of various functional departments and evaluates the work effectiveness of various departments. The company has defined the responsibilities of senior managers, established an organization suitable for the business model, scientifically divided the rights and responsibilities of functional departments, and formed a mutual check and balance mechanism.
② Development strategy
The company is committed to building an inclusive and symbiotic supply chain business ecosystem and becoming an integrated operation service provider based on logistics, with supply chain service platform as the carrier and industrial operation and brand operation as the core. Create a new model driven by integration, technology and marketing, build a new driving force for industrial transformation and upgrading, promote, guide, assist and empower more Chinese enterprises to become global integrated enterprises, comprehensively improve the global competitiveness of integrated enterprises, and further promote social development and economic growth.
③ Corporate culture
The company’s culture of embracing all rivers is not only the culture that we adhered to in the past and now, but also the culture that the business ecosystem can operate healthily. The company attaches great importance to the construction of corporate culture. Through years of cultural accumulation, the company has built a complete corporate culture system covering corporate vision, corporate core values, corporate mission and so on. The company takes “integration, sharing and innovation” as its business philosophy, adheres to the values of dedication, innovation and value, actively carries out various forms of corporate culture learning and publicity activities, promotes the construction of all staff culture, implements paramilitary management, temper the team’s perseverance and the spirit of hard work, build a Eternal Asia Supply Chain Management Ltd(002183) Iron Army with iron faith, iron faith and iron discipline, obey the command, win the war and have a good style.
④ Human resources
The company strictly abides by the labor law of the people’s Republic of China, the labor contract law of the people’s Republic of China and relevant laws and regulations, implements the full staff labor contract system, and formulates a systematic human resource management system in terms of employee recruitment, training, assessment, promotion, salary, reward and punishment in combination with the company’s development strategy and actual situation. The company attaches importance to human resources development, establishes a long-term mechanism for employee training, and creates a cultural atmosphere of respecting knowledge, talents and caring for employees’ career development.
With the continuous expansion of the company’s business scope and scale, timely strengthen the construction of reserve talent team, promote the continuous renewal of knowledge and skills of all employees, ensure that the development of talent team can fully meet the needs of the company’s development, and constantly improve the introduction, development, use and exit mechanism of the company’s human resources.
⑤ Social responsibility
The company adheres to the consistent fine style and actively undertakes corporate social responsibility. In terms of ensuring the interests of shareholders, especially small and medium-sized shareholders, the company has continuously improved its governance structure in accordance with the company law of the people’s Republic of China (hereinafter referred to as the “company law”), the securities law of the people’s Republic of China (hereinafter referred to as the “Securities Law”), the guidelines for the governance of listed companies and other laws, regulations and normative documents, and established a corporate governance system based on the articles of association The full set of internal control system covering all levels of the company’s operation has formed a scientific and reasonable division of responsibilities and a working mechanism of mutual checks and balances, ensured the standardized operation and effective operation of the general meeting of shareholders, the board of directors, the board of supervisors, the management and other institutions, and effectively protected the rights and interests of all shareholders.
⑥ Internal audit
The Audit Department of the company is equipped with 6 full-time auditors to inspect and supervise the authenticity and integrity of the financial information of the company’s internal institutions, subsidiaries, branches and other enterprises over which the company has actual control, as well as the establishment and implementation of internal control system. The audit department and internal auditors shall exercise their functions and powers independently and shall not be interfered by other departments or individuals. The head of the audit department is appointed by the board of directors and equipped with full-time auditors to conduct internal audit on the operation and management, financial status and internal control implementation of the company and its subsidiaries, and make a reasonable evaluation on the authenticity, rationality and legitimacy of its economic benefits. Regularly carry out financial statement audit every quarter to reasonably ensure the legitimacy, compliance, authenticity and integrity of the relevant information disclosed in the company’s quarterly and annual financial statements and notes.
(2) Risk assessment
The company has established a systematic and effective risk assessment system according to the strategic objectives and development strategies and combined with the characteristics of the industry. In order to promote the sustainable and healthy development of the company, determine the risk management objectives, comprehensively and systematically collect relevant information, timely identify and systematically analyze the risks related to the realization of internal control objectives in business activities, such as business risks, financial risks, market risks, policy and regulatory risks and moral risks that may occur in each link, and reasonably determine the risk response strategies. In the process of establishing and improving the internal control system, the company adheres to the risk oriented principle, timely rectifies the problems found, optimizes the company’s internal control and improves the company’s internal control management. The management believes that doing a good job in the construction of internal control is not to deal with the inspection of the regulatory authorities, but the internal need to prevent business risks and improve the level of operation and management. It is the inevitable choice for the company to improve internal control and promote standardization, and it also meets the actual needs of the company.
(3) Internal control activities
In order to ensure the realization of various internal control objectives, the company has established relevant control activities, mainly including transaction authorization control, responsibility division control, voucher and record control, asset contact and record use control, investment and financing risk control, electronic information system control, etc.
① Transaction authorization control
According to the size of the transaction amount and the nature of the transaction, the company gives different approval authorities to the responsible personnel in accordance with the provisions of the articles of association and relevant management systems. The department level by level authorization approval system shall be adopted for frequent sales business, procurement business, expense reimbursement of normal business, purchase of fixed assets, financing within the scope of authorization, etc; For non recurring business transactions, such as foreign investment, equity transfer, related party transactions and other major transactions, the transaction amount according to the transaction amount shall be approved by the general meeting of shareholders, the board of directors and the president of the company.
② Responsibility division control
Based on the principle of “incompatible duties cannot be performed by the same person”, the company reasonably sets up the division of functions, scientifically divides the responsibilities and authorities, and separates the approval from incompatible duties such as business handling, business handling and accounting records, accounting records and property custody, business handling and business audit, authorization approval and supervision and inspection through the approval of rights and responsibilities and hierarchical responsibility, so as to form a mutual check and balance mechanism with the division of functions and the consistency of rights and responsibilities.
③ Voucher and record control
All vouchers are signed or sealed, and their integrity and non repeatability are confirmed through the system or manual pre numbering mechanism. Important documents and important blank vouchers shall be kept by special personnel, and a registration book shall be set up to be recorded by special personnel. All transactions shall be reviewed, approved, recorded and settled through the internal division of labor of the accountant, and vouchers shall be prepared in time to record the transactions. After registration, the vouchers shall be filed in order.
④ Asset exposure and record use control
The company has formulated asset management measures for monetary capital, inventory, equipment, fixed assets and other assets to strictly restrict the direct contact of unauthorized personnel with mobile assets, while fixed assets can only be used and managed by operators and managers. All assets are checked regularly and irregularly, property records, account verification, property insurance and other measures to ensure the safety and integrity of various properties.
⑤ Investment risk control
Formulate relatively complete risk control and management regulations, and basically achieve pre assessment, in-process supervision and post assessment on the determination of the company’s financial structure, the arrangement of financing structure, the estimation of financing cost and the repayment plan of financing; Feasibility study shall be conducted for various debt investment and equity investment, the approval authority shall be determined according to the project and amount, and the response plan shall be formulated for the possible negative factors in the investment process; Financial risk early warning system and economic contract management system have been formulated to strengthen the evaluation and control of credit risk and contract risk.
⑥ Electronic information system control
The company has formulated a relatively strict electronic information system control system, and has done more work in the development and maintenance of electronic information system, data input and output, document storage and custody, etc. All modules of the system are interrelated and checked to ensure the integrity of bookkeeping, review, posting, settlement, report generation and account book records, and the authenticity and accuracy of data.
(4) Information and communication
The company has established effective communication channels and mechanisms to enable the management to timely obtain the performance of employees’ responsibilities, and maintain timely and effective communication with customers, suppliers, regulatory authorities and other external units, so that the management can take appropriate further actions in time in the face of various changes.
In the process of daily operation, regular and irregular information communication mechanisms such as business and management letters and special reports have been established to facilitate comprehensive and timely understanding of various business information of the company, and management decisions through various regular meetings, office meetings and other ways to ensure the effective operation of the company. In terms of external information communication, according to the requirements of the regulatory authorities, the company timely and accurately disclosed major information on the company’s production and operation in the designated media and the company’s website, which provided a guarantee for investors to timely understand the dynamics of the company’s production and operation.
The information disclosure management system, insider information registration management system, major information internal reporting system and other relevant systems formulated by the company carry out the whole process and effective control over the company’s information disclosure principles, subjects and responsibilities of information disclosure, contents and standards of information disclosure, management of information disclosure affairs, information transmission approval and disclosure procedures, and strictly control the transmission of internal information, Improve the quality of information disclosure and strengthen the accountability for major errors in information disclosure. During the reporting period, the company fulfilled the obligation of information disclosure of listed companies, ensured the authenticity, timeliness, accuracy and integrity of information disclosure, and had sufficient and effective internal control over information disclosure; The company does not have any insider’s behavior of using insider information to buy and sell the company’s shares before the disclosure of major sensitive information affecting the company’s share price. The company does not violate the internal control system and information disclosure management system.
(5) Internal supervision
The company’s supervision of control is divided into daily supervision and special supervision. The company conducts routine and continuous supervision and inspection on the establishment and implementation of internal control in daily business activities; Special supervision is carried out in the board of directors, audit committee and
