Company code: Huafa Industrial Co.Ltd.Zhuhai(600325) company abbreviation: Huafa Industrial Co.Ltd.Zhuhai(600325)
Huafa Industrial Co.Ltd.Zhuhai(600325)
Internal control evaluation report in 2021
Huafa Industrial Co.Ltd.Zhuhai(600325) 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 base date of internal control evaluation report to the date of issuance of 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. 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, subordinate functional companies, companies in the commercial operation sector and real estate development project companies in major regions. 2. Proportion of units included in the scope of evaluation:
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 99.71
The total operating income of the units included in the evaluation scope accounts for 99.12% 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:
Organizational structure, development strategy, human resources, social responsibility, corporate culture, capital activities, procurement business, asset management, investment management, sales business, engineering projects, guarantee business, financial report, comprehensive budget, contract management, internal information transmission and disclosure, information system, related party transactions, etc. 4. High risk areas of focus mainly include:
Fund activities, procurement business, sales business, engineering projects, etc. 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
None (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 the company's internal control system and evaluation methods.
1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ no
According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, and in combination with the company's scale, industry characteristics, risk preference, risk tolerance and other factors, the board of directors of the company distinguished internal control over financial reports from internal control over non-financial reports, studied and determined the specific identification standards of internal control defects applicable to the company, which were consistent with those in 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
≥ consolidated financial statement operating income ≥ consolidated financial statement operating income ＜ 1% of the total amount of misstatement in consolidated financial statements, 0.5% of the total amount, and 0.5% of the total amount of consolidated financial statements
1% of total operating income in the statement
explain:
If an internal control defect, alone or together with other defects, has a reasonable possibility to prevent, detect and correct the misstatement in the financial report that does not reach or exceed the importance level, but should still attract the attention of the board of directors and the management office, the defect should be recognized as an important defect. Internal control defects that do not constitute major defects and important defects shall be recognized as general defects.
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
1. Fraud by directors, supervisors and senior managers; 2. Correction of published financial reports; 3. There is a major misstatement in the current financial report of the company, and the error is not found in the operation of the company's internal control; 4. The supervision of the company's audit committee, the board of supervisors and the internal audit office on internal control is invalid.
1. Failure to establish anti fraud procedures and control measures; 2. There is an important misstatement in the current financial report of the company, and the important defect control department of the company fails to find the error in the operation process; 3. Major misstatements in the financial reports announced by the company in previous years need to be adjusted retroactively.
General defects and other internal control defects that do not constitute major defects and important defect standards.
explain:
None 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
≥ total assets in consolidated financial statements ≥ total assets in consolidated financial statements ＜ 1 ‰ of 5 ‰ direct property loss of total assets in consolidated financial statements ＜ 1 ‰ of consolidated financial statements
5 ‰ of total assets
explain:
nothing
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Qualitative standard of defect nature
1. Unscientific decision-making procedures of the company, such as major decision-making mistakes, resulting in unsuccessful M & A; 2. Violating national laws and regulations, such as environmental pollution, and causing heavy losses to the company; 3. The loss of management or technical personnel, resulting in significant adverse effects on the company's production and operation due to major defects; 4. The major defects or a combination of major defects shown in the internal control evaluation results have not been rectified; 5. Lack of institutional control or systematic failure of important business.
Important defects 1. Control defects lead to major safety and quality subject liability accidents of the company, and cause great losses to the company
Loss; 2. The loss of management or technical personnel has a great adverse impact on the production and operation of the company; 3. Important defects in internal control evaluation have not been rectified.
General defects and other internal control defects that do not constitute major defects and important defect standards.
explain:
None (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
None 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, does the company have 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
During the reporting period, the company had general defects in the internal control of non-financial reports. As the company's internal control has a dual supervision mechanism of self-evaluation and internal audit, corrective measures will be taken once the defects are found and confirmed to make the risk controllable, which will not have a substantive impact on the operation of the company's internal control system. 2.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in 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, does the company find any important defects in the internal control of non-financial reporting 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
In 2021, the overall implementation of the company's internal control was good. In 2022, the company will continue to strengthen the evaluation of internal control, deepen the construction of risk-oriented internal control system, further improve the internal control system, standardize the implementation of internal control system, vigorously promote the supervision and inspection of internal control, and promote the healthy and sustainable development of the company. 3. Description of other major events
□ applicable √ not applicable
Chairman of the board of directors (authorized by the board of directors): Li Guangning Huafa Industrial Co.Ltd.Zhuhai(600325) April 8, 2022
