Sichuan Kelun Pharmaceutical Co.Ltd(002422)
Self evaluation report on internal control in 2021
Sichuan Kelun Pharmaceutical Co.Ltd(002422) all shareholders:
In accordance with the provisions of the basic norms of enterprise internal control and other internal control regulatory requirements (hereinafter referred to as the "enterprise internal control normative system"), combined with the internal control system and evaluation methods of the company (hereinafter referred to as the "company"), on the basis of daily and special supervision of internal control, we conducted a self-evaluation on 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 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, 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 standard of major defects in the company's internal control over financial reporting, the company did not find any 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 standard of major defects in the company's internal control over non-financial reports, the company found no major defects in the 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、 Overview of internal control
(I) internal control organization structure of the company
The company has formed a perfect and detailed internal control organizational structure in accordance with the provisions of the company law, the securities law, the basic norms of enterprise internal control and other internal control regulatory requirements, so as to ensure the standardized and effective operation of the general meeting of shareholders, the board of directors, the board of supervisors and the management, and safeguard the interests of the majority of investors. The organizational structure of the company's internal control has not changed in 2021. The organizational structure of the company's internal control is:
1. General meeting of shareholders
The general meeting of shareholders is the highest authority of the company. It deliberates on the company's annual financial budget and final account plan, major investment, major guarantee matters, equity incentive plan and other major matters stipulated in the company law and the articles of association. The general meeting of shareholders has a board of directors and a board of supervisors, which are responsible to the general meeting of shareholders.
2. Board of directors
The board of directors is the decision-making body of the company, responsible for the general meeting of shareholders, implementing the resolutions of the general meeting of shareholders and reporting to the general meeting of shareholders. The board of directors of the company sets up the office of the board of directors. In order to promote the board of directors and its committees to effectively perform their duties and fully express professional opinions, the board of directors has established four special committees: Strategy Committee, nomination committee, remuneration and assessment committee and audit committee. The Audit Committee of the board of directors has an internal audit department. The company has formulated the working system of independent directors, rules of procedure of the board of directors, working system of the Secretary of the board of directors, detailed rules for the implementation of the strategy committee of the board of directors, detailed rules for the implementation of the remuneration and assessment committee of the board of directors, detailed rules for the implementation of the audit committee of the board of directors, detailed rules for the implementation of the nomination committee of the board of directors and other systems.
3. Board of supervisors
The board of supervisors is the supervisory body of the company. In accordance with the company law, the articles of association and the rules of procedure of the board of supervisors, the board of supervisors supervises the operation and management activities of the company, the board of directors and senior management on behalf of all shareholders. The board of supervisors is responsible to the general meeting of shareholders.
4. Management
The management of the company shall be responsible for the specific operation and management of the company, organize the implementation of the resolutions of the general meeting of shareholders and the board of directors, report to the board of directors, and be responsible for the specific formulation and effective implementation of the internal control system. The company has 16 directly subordinate functional departments, namely marketing center, raw material sales department, quality supervision center, production technology department, engineering equipment department, logistics supervision department, environmental health and safety (EHS) supervision department, supply department, finance department, internal control and compliance department, legal affairs department, business development department, information department, office, planning department and human resources department.
(II) construction of the company's internal control system
According to the company law, securities law, basic norms of enterprise internal control and other internal control regulatory requirements, combined with the company's own operating characteristics, the company has established a set of internal control systems covering operation management, financial management, information disclosure, etc. these systems constitute the company's internal control system, basically covering all operating links of the company and have strong guidance.
The internal audit department of the company is responsible for regularly guiding and inspecting the implementation of internal control of the company and its subsidiaries (branches). In order to strengthen the implementation and improvement of various internal control systems of the company and promote the continuous and in-depth promotion of the company's internal control work, the company has set up an internal control and compliance department to be fully responsible for the daily internal control construction of the company. The company has formulated the implementation plan of internal control management, internal management regulations of internal control management organization and assessment methods of internal control team, established the organizational structure of daily management of internal control, and defined the responsibilities of personnel at all levels of the company in internal control management. Subsidiaries (branches) set up internal control working groups and internal control trainers to work with the company's internal control compliance department. The company improves the internal control construction ability of internal control working groups of subsidiaries (branches) through video and on-site training.
The company continued to strengthen the construction of internal control and regularly revised and improved the internal control manual, which covers the main aspects of the company's operation and management, such as procurement, sales, R & D, production, finance, investment and information disclosure, and is divided into 14 processes to ensure that all work has rules to follow.
(III) establishment, staffing and internal control of the company's internal audit organization
1. According to the relevant requirements of the listed company, the company has established an independent internal audit institution, equipped with a person in charge, and employed full-time auditors as the daily work organization of the audit committee of the board of directors to complete the work specified in the company's internal audit system and arranged by the audit committee.
2. The head of the company's internal audit department shall be nominated by the audit committee of the board of directors and appointed by the board of directors. In combination with the actual situation of the company, the internal audit department is equipped with personnel who are familiar with the company's business and have professional accounting knowledge to ensure the effective operation of the internal audit function.
3. Under the leadership of the audit committee of the board of directors, the Audit Department of the company is responsible for auditing and inspecting the company's business activities, financial reports, major projects, the implementation of internal control system and other matters, and issuing internal audit opinions on the company's performance express, so as to effectively monitor the overall operation risk of the company.
4、 Key control activities
The company's internal control system includes the use of raised funds, related party transactions, external guarantees, major investments, external financial assistance, financial reports, information disclosure and other aspects, covering all aspects of daily operation and management. In addition to the detailed internal control system for various businesses, there are clear authorization and approval procedures for the processing of their businesses.
During the reporting period, the company conducted a key self inspection on the internal control of its holding subsidiaries, the use of raised funds, related party transactions, external guarantees, major investments and information disclosure.
(I) internal control over holding subsidiaries
The company has formulated the major event reporting system, which requires all holding subsidiaries to report major business events, major financial events and other information that may have a great impact on the company to the person in charge of the company in time. In order to strengthen the management of the holding subsidiary, the company has effectively managed the holding subsidiary from the aspects of corporate governance, daily operation and financial management by appointing or recommending directors, supervisors and main senior managers to the holding subsidiary, as well as the functional departments of the headquarters to provide professional guidance and supervision to the counterpart departments of the holding subsidiary.
The company has formulated the management system of holding subsidiaries, which defines the governance structure, personnel management requirements, operation and investment decision-making management requirements, financial management requirements, internal audit supervision requirements, information disclosure affairs management and reporting requirements, performance appraisal, incentive and restraint requirements and file management requirements of holding subsidiaries, so as to strengthen the management control of holding subsidiaries and standardize the internal operation mechanism, Effectively control business risks and protect the legitimate rights and interests of investors.
(II) internal control over the use of raised funds
The company has formulated the management system for the use of raised funds, which clearly stipulates the storage, use, project change, report and supervision of raised funds.
During the reporting period, the company did not violate the relevant provisions of the management system for the use of raised funds.
(III) internal control of related party transactions
The company has formulated the related party transaction system, which stipulates the related party transaction behavior of the company from the aspects of transaction principles, related parties and related relationships, management of Related Party Declaration and list, pricing principles of related party transactions, decision-making procedures of related party transactions, information disclosure of related party transactions, verification and accountability of related party transaction management, etc.
In order to improve the control of related party transactions, in addition to regularly checking related parties, continuously updating the list of related parties, and identifying possible related party relationships through "background investigation of large amount merchants", the company continued to strengthen the monitoring of related party transactions, increased the evaluation or audit requirements for large amount related party transactions, and strengthened the financial department, internal audit department The office of the board of directors conducts regular communication on related party transactions.
During the reporting period, the company's internal audit department, as the independent verification department of the company's related party transactions, inspected the identification of the company's related parties and the management of related party transactions on a quarterly basis. In 2021, the company did not find any violation of the relevant provisions of the related party transaction system.
(IV) internal control of external guarantee
The company has formulated the external guarantee management system, which specifies the procedures, objects and risks of the company's external guarantee in detail.
During the reporting period, the company's internal audit department inspected the management of the company's external guarantee every quarter and found no exceptions in violation of the above management system.
(V) internal control of major investment
The company has formulated the foreign investment management system to standardize the company's foreign investment behavior, prevent foreign investment risks, ensure the safety of foreign investment and improve the efficiency of foreign investment.
The company has formulated the financial product management system, which has more detailed provisions on the basic principles, approval authority and implementation procedures, risk control and information disclosure of financial business.
During the reporting period, all major investments of the company fulfilled the relevant approval procedures, complied with the articles of association and other relevant provisions, and fulfilled the obligation of information disclosure in accordance with the provisions.
(VI) internal control of information disclosure
The company has formulated the information disclosure management system, the accountability system for major errors in annual report information disclosure, the insider registration management system, the external information submission and use management system, the major event reporting system and the internal accountability measures for securities violations to ensure the compliance of the company's information disclosure.
During the reporting period, the company strictly implemented the above systems and reporting procedures, and strengthened the study of the company's directors, supervisors, senior managers and relevant personnel on the information disclosure rules including periodic reports.
5、 Internal control evaluation
(I) evaluation basis of internal control
The company organizes and carries out internal control evaluation in accordance with the requirements of relevant laws, regulations, rules and regulations such as the enterprise internal control standard system, and in combination with the provisions of relevant systems and processes of the company.
(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 total assets of the unit included in the evaluation scope of internal control account for 90.06% of the total assets of the company's consolidated financial statements, and the total operating revenue accounts for 92.09% of the total operating revenue of the company's consolidated financial statements; The main businesses and matters included in the evaluation scope include: company level control, procurement management, sales management, production and cost accounting, product R & D management, engineering project management, inventory management, fixed assets management, intangible assets management, financial report management, fund management, budget management, investment business management and information system management.
The high-risk areas of focus mainly include monetary capital, procurement, sales, engineering projects, fixed assets, inventories, information disclosure, related party transactions, external guarantees, use of raised funds, major investment, anti fraud and other business processes and matters.
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.
(II) identification standard of internal control defects
The company organizes and carries out internal control evaluation in accordance with the requirements of relevant laws, regulations, rules and regulations such as the enterprise internal control standard system, and in combination with the provisions of relevant systems and processes of the company.
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 of major defects, important defects and general defects in the enterprise internal control standard system and evaluation guidelines, combined with the factors such as the company's size, industry characteristics, risk preference and risk tolerance, studied and determined the specific identification standards of internal control defects applicable to the company, which were consistent with those in previous years. The evaluation criteria for internal control defects in financial reports and non-financial reports determined by the company are as follows:
1. Identification standard of internal control defects in financial reporting
(1) The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
The quantitative standard takes the operating income and total assets as the measurement indicators. If the misstatement items that may or have been caused by internal control defects are related to the income statement, it shall be measured with the operating revenue as the indicator. The defect, alone or in combination with other defects, may cause or have caused the amount of misstatement in the financial report to be less than 0.5% of the operating revenue, which is recognized as a general defect; Greater than or equal to 0.5% but less than 1% of the operating revenue, it is recognized as an important defect; Greater than or equal to 1% of operating income
