Jiangsu Nanfang Bearing Co.Ltd(002553)
Self evaluation report on internal control in 2021
Jiangsu Nanfang Bearing Co.Ltd(002553) all shareholders:
According to the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements (hereinafter referred to as the enterprise internal control standard system), combined with the company’s (hereinafter referred to as the company’s) 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 on December 31, 2021 (the benchmark date of the internal control evaluation report).
1、 Important statement of the board of directors
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 report. The board of directors of the company believes that the company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise 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 businesses and matters included in the evaluation scope include: company management, sales business, guarantee management, procurement business, budget management, financial report management, production management, inventory management, investment management, construction in progress project management, fixed assets management, capital operation management, human resources management, etc; The high-risk areas of focus mainly include market competition risk, raw material fluctuation risk, demand decline risk and sales management risk.
The main units included in the evaluation scope include: Jiangsu Nanfang Bearing Co.Ltd(002553) headquarters, Jiangsu Nanfang Zhizao e-commerce Co., Ltd., Jiangsu Nanfang automobile compressor Bearing Co., Ltd., Nanfang bearing (Germany) GmbH and Shanghai Zhencheng Microelectronics Technology Co., Ltd. the total assets of the units included in the evaluation scope account for 100% of the total assets of the company’s consolidated financial statements, and the total operating revenue accounts for 100% of the total operating revenue of the company’s consolidated financial statements.
The main operations and matters included in the scope of evaluation include:
1. Corporate governance structure
The company has established a relatively complete and effective corporate governance structure composed of the general meeting of shareholders, the board of directors, the board of supervisors and the management in accordance with the company law, the securities law, the guidelines for the governance of listed companies and other laws and regulations and the articles of association.
The board of directors of the company shall be responsible for the general meeting of shareholders, implement the resolutions of the general meeting of shareholders, exercise the business decisions of the enterprise according to law, and be responsible for the establishment, improvement and effective implementation of internal control. The board of directors of the company is responsible for the establishment and supervision of the company’s internal control system, establishing internal control policies and plans, and supervising the implementation of internal control. Under the board of directors, there are four special committees: Strategy Committee, nomination committee, audit committee and salary and assessment committee. The rules of procedure of each special committee have been formulated to ensure the effective performance of duties of the special committee and improve the operation efficiency of the board of directors.
The board of supervisors shall be responsible for the general meeting of shareholders, supervise and inspect the performance of duties and financial status of the company’s directors and senior executives according to law, review the company’s periodic reports prepared by the board of directors and put forward written review opinions, and report to the general meeting of shareholders in time, so as to effectively protect the legitimate rights and interests of the company and the majority of shareholders.
The management is specifically responsible for implementing the resolutions of the general meeting of shareholders and the board of directors, presiding over the daily production, operation and management of the company and ensuring the normal operation of the company.
2. Internal organizational structure
According to relevant regulations, internal control requirements and its own business characteristics, the company has reasonably set up internal management functional departments and formulated corresponding post responsibilities. Each functional department has a clear division of labor, clear rights and responsibilities, mutual cooperation, mutual restraint and mutual supervision, forming an integrated control system, standardizing the internal operation mechanism of the company, and laying a solid foundation for the long-term and healthy development of the company.
3. Human resources
Adhering to the employment concept of “excellent talents are assets and mediocre employees are liabilities”, the company has planned to reasonably allocate human resources in combination with the actual situation of the company, established a flexible employment mechanism and assessment and incentive measures matching the development objectives of the company, gave full play to the enthusiasm and subjective initiative of employees, and closely focused on the company’s “contributing to the international community and realizing a better life through innovative technologies and products!” In order to enhance the company’s core competitiveness and ensure that human resources can support the realization of the company’s development strategy.
4. Corporate culture
The company takes “committed to green, safe and high-quality products and solutions” as its mission, adheres to the purpose of “achieving employees, giving back to the society and contributing the greatest customer value”, advocates the value of “being responsible for yourself, the enterprise and the society”, pays attention to cultivating employees’ sense of responsibility and teamwork spirit, and constantly enhances the cohesion and centripetal force of the company.
5. Sales and collection
The company has formulated a relatively feasible sales policy, which has made clear provisions on pricing principles, credit standards and conditions, collection methods and responsibilities and authorities of sales personnel. The sales of goods and the provision of labor services shall be carried out in strict accordance with the requirements of the contract terms, the collection responsibility system shall be implemented, the management of reconciliation recovery shall be strong, and the collection rate of sales payment shall be listed as one of the main assessment indicators.
6. Procurement and payment
The company has reasonably planned and set up departments and posts for procurement and payment business. The purchase requisition, approval, purchase and acceptance procedures of inventory are clarified. The payment of payables and prepayments can only be handled after the relevant procedures are complete. Establish inquiry, price comparison, pricing and contract countersignature system, handle procurement and payment business externally, and separate incompatible positions. The company has no major loopholes in the control of procurement and payment.
7. Cash receipt and payment
The company has established strict authorization and approval procedures for the revenue and expenditure and custody of monetary funds. Incompatible positions for handling monetary funds business have been separated, and there are mutual constraints between relevant institutions and personnel. The company has defined the scope of use of cash and the provisions that should be observed when handling cash revenue and expenditure business in accordance with the Interim Regulations on cash management of the State Council.
8. Asset management
The company has established a post responsibility system for physical asset management, which can control the key links such as acceptance and warehousing, receiving and issuing, storage and disposal of physical assets, and has taken measures such as division of responsibilities, regular physical inventory, property records, account verification and property insurance, which can effectively prevent the theft, theft, damage and major loss of various physical assets.
9. Financial Report
According to the company law, accounting law, accounting standards for business enterprises and other relevant national laws and regulations, the company has established an independent accounting system in line with the actual situation of the company, defined the contents of the basic work of accounting, standardized the business processes such as the preparation and review of financial reports, and effectively ensured the authenticity, effectiveness, integrity and legitimacy of the company’s financial reports. During the reporting period, the company hired an accounting firm with relevant qualifications to audit the company’s annual financial report and issue an unqualified audit report.
10. Foreign investment
The articles of association and relevant internal control systems of the company have clear provisions on the approval authority, decision-making procedures and information disclosure of foreign investment. During the reporting period, the company’s foreign investment has fulfilled the necessary approval procedures and information disclosure obligations in accordance with relevant regulations.
11. External guarantee
During the reporting period, the external guarantee matters of the company have fulfilled the necessary approval procedures and disclosure obligations in strict accordance with the articles of association and the external guarantee management system. By the end of the reporting period, the company had no external guarantee business.
12. Related party transactions
In accordance with the relevant provisions of the stock listing rules of Shenzhen Stock Exchange and the articles of association of the company, the company has formulated the related party transaction decision-making system, which clearly stipulates the approval authority and decision-making procedures of related party transactions, and standardizes the transaction behavior with related parties.
During the reporting period, the amount of related party transactions of the company was small, and the corresponding examination and approval procedures were performed in accordance with relevant regulations. The pricing of related party transactions was determined according to the market fair price, and there was no harm to the interests of the company and other non related party shareholders, especially small and medium-sized shareholders.
13. Raised funds
In accordance with the relevant provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange and relevant laws and regulations, the company formulated the management system of raised funds, which was reviewed and revised at the 10th meeting of the second board of directors on April 18, 2012. The management system of raised funds has made clear provisions on the investment direction of raised funds, the examination and approval of the use of raised funds, the storage of unused raised funds, as well as the report and supervision of the change of raised funds and the investigation of responsibilities, so as to ensure the safety and legal use of raised funds.
During the reporting period, the investment direction of raised funds, the approval of the use of raised funds, the deposit of unused raised funds, and there was no illegal use of raised funds.
14. Holding subsidiary
In order to standardize the internal operation mechanism of the company and strengthen the management and control of holding subsidiaries, the company has formulated the subsidiary management system, which promotes the legal operation and standardized operation of subsidiaries by appointing directors, supervisors and financial managers to strengthen the management of subsidiaries. During the reporting period, the company strictly managed the company’s holding subsidiaries in accordance with relevant regulations. After investigation, no violation of the subsidiary management system and relevant rules and regulations of the company was found.
15. Information disclosure
The company has established and improved the internal control system related to the company’s information disclosure in accordance with the company law, the securities law, the stock listing rules of Shenzhen Stock Exchange, the guidelines for fair information disclosure of small and medium-sized enterprise listed companies of Shenzhen Stock Exchange and other relevant provisions. Clarify the principles, contents, standards and procedures of information disclosure; The division of authority and responsibility of information disclosure ensures that the company performs its information disclosure obligations in a timely and accurate manner, provides a guarantee for investors to timely understand the company’s information and prevent investment risks, and effectively protects the legitimate rights and interests of shareholders. During the reporting period, the company completed the information disclosure timely and accurately in strict accordance with relevant laws, regulations and rules, and found no violation of relevant regulations.
16. Internal audit
The independent audit committee of the board of directors and the independent audit committee shall not interfere with the work of the board of directors and the independent audit committee, and shall be directly responsible for the work of the board of directors and the independent audit committee. Inspect and supervise the authenticity and integrity of the company’s financial information, the establishment and implementation of internal control system and major events, timely report the internal control defects and problems found in the audit process to the audit committee of the board of directors, and continuously track the rectification. The Audit Department of the company is equipped with full-time auditors, and the person in charge of the audit is directly appointed by the board of directors. During the reporting period, the Audit Department of the company conscientiously performed its audit and supervision responsibilities, and supervised and inspected the soundness, rationality and effectiveness of the company’s internal control system through the combination of continuous supervision and inspection and special supervision and inspection, so as to effectively prevent enterprise business risks and financial risks.
The above units, businesses and matters included in the evaluation scope and high-risk areas cover all major aspects of the company’s operation and management, and there are no major omissions.
(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.
The high-risk areas that the company focuses on mainly include: strategic management risk, safety and environmental protection risk, production management risk, investment risk, asset risk, cash flow risk, procurement and sales risk, human resources risk and major decision-making risk. 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. The identification standards of internal control defects determined by the company are as follows:
1. Identification criteria for defects in internal control over financial reporting:
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 total profit and total assets as the measurement indicators.
The losses that may be caused or caused by internal control defects are related to the income statement and are measured by the total profit. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than 3.0% of the total profit, it is recognized as a general defect; If it exceeds 3.0% but less than 5.0% of the total profit, it is an important defect; If it exceeds 5.0% of the total profit, it is recognized as a major defect.
Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset index. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than 3.0% of the total assets, it is recognized as a general defect; If it exceeds 3.0% but less than 5.0% of the total assets, it is recognized as an important defect; If it exceeds 5.0% of the total assets, it is recognized as a major defect.
