Company code: Haitian Water Group Co.Ltd(603759) company abbreviation: Haitian Water Group Co.Ltd(603759) Haitian Water Group Co.Ltd(603759)
Internal control evaluation report in 2021
Haitian Water Group Co.Ltd(603759) all shareholders:
According to 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 internal control system and evaluation methods of Haitian Water Group Co.Ltd(603759) (hereinafter referred to as the "company"), 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 the 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
The board of directors considered that the company's internal control system was not effective in accordance with the provisions of the company's internal financial reporting standards, and that there were significant defects in the company's internal control system on the date of internal financial reporting. 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 benchmark date of internal control evaluation report to the date of issuance of internal control evaluation report □ applicable √ not applicable
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 all subsidiaries included in the consolidated statements of the company in 2021. 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 100
The total operating income of the units included in the evaluation scope accounts for 100% 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, capital activities, investment activities, procurement business, production activities, sales business, seal management, engineering projects, external guarantee, financial report, related party transactions, comprehensive budget, information communication and disclosure and other related businesses. 4. High risk areas of focus mainly include:
Investment activities, capital activities, production activities, seal management, 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
According to the enterprise internal control standard system and other internal control supervision requirements, combined with the company's internal control manual, the company organizes and carries out internal control evaluation on the basis of daily and special supervision of internal control. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
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 for major defects, important defects and general defects of the enterprise internal control standard system, combined with the factors such as the company's size, industry characteristics, risk preference and risk tolerance, and studied and determined the specific identification standards of internal control defects applicable to the company, which are consistent with the 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
Potential misstatement of total profit ≥ 5% of total profit 3% ≤ misstatement ＜ profit misstatement ＜ 3% of total profit
5% of the total amount reported
Potential misstatement of total assets ≥ 1% of total assets 0.5% of total assets ≤ misstatement ＜ asset misstatement ＜ 0.5% of total assets
1% of total reported output
explain:
nothing
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
Major defects ① fraud by directors, supervisors and senior managers of the company and causing heavy losses and adverse effects to the company;
② Ineffective oversight of the internal audit body and the internal audit committee;
③ The external audit found that there were significant misstatements in the current financial report, and the company failed to find them first;
④ Major defects that have been found and reported to the management have not been corrected within a reasonable time;
⑤ Invalid control environment.
Significant defects ① failure to select and apply accounting policies in accordance with generally accepted accounting standards;
② Failure to establish important check and balance systems and control measures to prevent fraud;
③ There are single or multiple defects in the process of financial reporting, which affect the authenticity and accuracy of the financial report, although it does not meet the identification standard of major defects.
General defects other internal control defects in financial reporting except the above major defects and important defects.
Note: none 3 Standard for identifying defects in internal control over 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
Loss amount loss amount ≥ 1% of total assets 0.5% of total assets ≤ loss amount loss amount 0.5% of total assets 1% 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
Major defects ① lack of decision-making procedures or unscientific decision-making procedures and lack of systems lead to major mistakes;
② Lack of institutional control or systematic failure of important business, and lack of effective compensatory control;
③ Serious loss of middle and senior managers;
④ Major or important defects cannot be rectified;
⑤ Other situations that have a significant negative impact on the company.
Important defects ① general mistakes caused by decision-making procedures;
② Defects in important business systems or systems;
③ Serious loss of business personnel in key positions;
④ The decision-making procedure is effective but not perfect;
⑤ Other situations that have a great negative impact on the company.
General defects other internal control defects of non-financial reporting except the above major defects and important defects.
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 any major defects in internal control over financial reporting during the reporting period
□ yes √ no 1.2 Important defects
Whether the company has any 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
nothing
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 company established internal control over the businesses and matters included in the evaluation scope, with reasonable operation risk control, true and reliable information disclosure and financial report, which achieved the purpose of the company's internal control. In 2022, the company will continue to improve and revise the internal control system, further standardize the implementation of the internal control system, strengthen 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 (authorized by the board of directors): Fei Gongquan Haitian Water Group Co.Ltd(603759) April 11, 2022
