Hc Semitek Corporation(300323) : internal control evaluation report in 2021

Hc Semitek Corporation(300323)

Internal control evaluation report in 2021

Hc Semitek Corporation(300323) 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).

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

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.

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 units included in the evaluation scope include: Hc Semitek Corporation(300323) , Hc Semitek Corporation(300323) (Suzhou) Co., Ltd. Hc Semitek Corporation(300323) (Zhejiang) Co., Ltd. and Yunnan Lanjing Technology Co., Ltd. the total assets of the units included in the evaluation scope account for 99.88% 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 businesses and matters included in the evaluation scope include: company level internal control environment, sales and collection, procurement and payment, inventory management, human resource management, fund management, fixed assets management, financial reporting process and other business process level contents; The high-risk areas of focus mainly include the financial risks caused by bad debt loss of accounts receivable, inventory falling price loss risk, fixed assets impairment loss risk and so on.

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.

The main items included in the scope of evaluation include:

1. Organizational structure

The rules of procedure of the board of directors and the company's general meeting, the rules of procedure of the board of directors and the rules of procedure of the company's general meeting, the rules of procedure of the company's general meeting, the rules of procedure of the company's general meeting, the rules of procedure of the company's general meeting, the rules of procedure of the company's general meeting and the rules of procedure of the company's management have been established and improved in accordance with the requirements of the law of the people's Republic of China on the management of the company, the rules of procedure of the. The organizational structure of the company in 2021 is as follows:

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 is the company's decision-making body, which is responsible to the general meeting of shareholders and exercises the company's business decision-making power according to law.

The board of directors of the company has four special committees: Strategy Committee, remuneration and assessment committee, audit committee and Nomination Committee. The members of each special committee have independent directors. In addition, the company also has an audit department, which is responsible for the internal audit of the enterprise and is responsible to the audit committee.

The board of supervisors is the internal supervision organization of the company and is responsible to the general meeting of shareholders. In order to protect the interests of shareholders, especially small and medium-sized shareholders, the board of supervisors earnestly performs its duties, supervises the performance of the company's finance and directors and senior managers, and faithfully, diligently and conscientiously protects the legitimate rights and interests of the company and shareholders.

The management shall be responsible to the board of directors, implement the resolutions of the general meeting of shareholders and the board of directors, and preside over the daily production, operation and management of the company. The company has established an organization suitable for the business model, clearly divided the responsibilities of the internal organization, formulated a complete working system, and formed a set of sound and effective management system.

2. Development strategy

The strategy committee under the board of directors of the company is responsible for formulating the development strategy of the company and guiding the long-term and steady development of the company. In order to ensure the effective operation of the strategy committee, the company has formulated the working rules of the strategy committee of the board of directors.

The strategy committee of the board of directors holds regular or irregular meetings to review the major strategic plans and measures for the development of the company, and determine and adjust the development objectives of the company in due time. According to the strategic plan determined by the board of directors, the company's management team formulates the corresponding implementation path and specific objectives, and then decomposes them level by level to each subsidiary, business division and functional department. The decomposed objectives are included in the performance assessment of each organization of the company.

3. Human resources

Fully aware of the importance of human resources to the company's development, the company has formulated a series of human resources policies conducive to sustainable development. Combined with its actual situation, the company has established a set of human resources management system, including a series of management systems such as employee recruitment and employment management, employee training, salary management, employee welfare guarantee, performance appraisal, talent training and promotion, so that the company can operate effectively in talent introduction, employee training, employee assessment, job promotion, career development planning and employee relationship management.

4. Social responsibility

In accordance with the provisions of relevant national laws and regulations and in combination with the actual situation of the company, the company has formulated a relatively perfect management system and standard system in terms of safety production, quality, environment, occupational health and safety management, implemented the safety production responsibility system while strict quality control and inspection, and paid attention to environmental protection, energy conservation and consumption reduction while pursuing economic benefits.

5. Corporate culture

The company has established the core values of "action, professionalism, cooperation and innovation", encouraged to keep pace with the times, be enterprising and pursue excellence, implemented modern management and strengthened risk awareness. Through the construction of corporate culture, the company has established common values, code of conduct and service concept, strengthened team execution and cohesion, and improved the operation efficiency of the company.

6. Financial activities

The company has clear provisions on fund management in the fund settlement management system. At the same time, in order to standardize the storage, use and management of the company's raised funds, ensure the safety of the raised funds, and maximize the protection of the legitimate rights and interests of investors, especially small and medium-sized investors, the company has also specially formulated the measures for the management of raised funds, which has made clear provisions on the special account storage of raised funds, the approval procedures and management supervision of the use of raised funds, and has been in strict accordance with relevant laws, regulations Implementation of normative documents and various systems of the company.

7. Procurement business

In order to ensure the normal production of the company, improve the purchase quality and reduce the purchase cost, the company has formulated a series of control measures, including purchase contract management, inquiry management, acceptance management, reconciliation management and settlement management, and scientifically set the rights and responsibilities of each post, so as to effectively separate the incompatible posts such as purchase, acceptance and payment, and restrict and supervise each other.

8. Asset management

The company has formulated a perfect inventory management system, which clearly regulates the acceptance, warehousing, outbound and storage of inventory, separates the responsibilities of incompatible posts, and regularly organizes personnel to take inventory to ensure the consistency of accounts, accounts and statements. At the same time, the inventory falling price shall be evaluated regularly and the falling price reserves shall be accrued; For sluggish materials, different disposal plans shall be formulated according to the specific status of inventory and production and operation needs.

The company has formulated the purchase process of fixed assets. The purchase of fixed assets shall be applied by the demand department or purchased according to the investment plan approved by the company. The purchase and purchase shall be approved level by level according to the system. The company regularly takes inventory of fixed assets, analyzes the causes of inventory differences, and carries out accounting treatment to ensure the consistency between accounts and facts.

9. Sales business

The company has established a sales and collection control system and formulated a series of control measures for possible risks in the process of sales and collection, including credit management, contract management, price verification management, delivery management, reconciliation management, accounts receivable management, settlement management, etc. at the same time, the rights and responsibilities of each department and post are clarified to ensure that incompatible posts such as sales, delivery and collection can be effectively restricted and supervised.

10. Research and development

The company encourages independent innovation, attaches importance to new product development, specially sets up R & D department and laboratory, strictly follows the process of new product development control procedure in the design process, ensures that the whole new product development process has rules to follow, standardizes, safely and effectively ensures the quality of various R & D achievements of the company and effectively improves the competitiveness of products.

11. Project

The company establishes standardized decision-making procedures for engineering projects, defines the responsibilities and authorities of relevant institutions and personnel, establishes the responsibility system for investment decision-making of engineering projects, strengthens the accounting control of budget, bidding, quality management and other links of engineering projects, and prevents decision-making errors and fraud in the process of project contracting, contracting, construction, acceptance and so on.

12. Financial Report

In order to standardize the company's accounting and information disclosure, improve the quality of accounting information and ensure the authenticity and integrity of financial reports, the company has formulated the financial management system in accordance with the requirements of the company law, the accounting law, the accounting standards for business enterprises and other laws and regulations and relevant supplementary provisions. The company carries out accounting and prepares financial reports in accordance with the financial management system, which effectively ensures the authenticity and integrity of financial information Completeness and accuracy.

13. Contract management

In order to standardize contract management, prevent and control contract risks and effectively safeguard the legitimate rights and interests of the company, the company has established and strictly implemented the contract archives management system, so that a sound management system has been formed for the conclusion, review, countersignature and execution of the contract. The company regularly checks the execution of the contract and seal management, so as to effectively prevent the risks of contract business.

14. Related party transactions

The company has formulated the related party transaction decision-making system, which clearly stipulates the related parties, related relationships, related party transaction principles, related party transaction decision-making procedures, related party transaction information disclosure, legal liability, etc. The related party transactions between the company and related parties comply with the principles of fairness, openness and impartiality. The pricing of related party transactions is fair, which effectively ensures the legitimate rights and interests of all shareholders of the company, especially small and medium-sized shareholders.

15. Internal information transmission

The company has formulated the internal reporting system of major information, the information disclosure system, the insider registration management system, the accountability system for major errors in annual report information disclosure and other systems, established a relatively complete information communication system, defined the procedures and scope of information processing and transmission, and ensured the accuracy and timeliness of internal information communication. At the same time, clarify the responsibility of information disclosure to the person, clarify the internal confidentiality measures before information disclosure, and ensure that the company's information disclosure meets the requirements of relevant laws and regulations.

16. Information system management

In order to promote the effective implementation of internal control, improve the modern management level of the enterprise and reduce human manipulation factors, the company has established an effective information and communication mechanism. The company has set up an information center, equipped with professionals for information system management, and established ERP system, MES system and OA collaborative office system. Each system operates normally and the process is standardized. The company has formulated various internal management systems such as internal communication control procedure to ensure smooth information and timely transmission of major information to decision-making bodies such as management, board of directors and board of supervisors, so as to ensure that all decisions are scientific and timely.

（2） Basis of internal control evaluation and identification standard of internal control defects

The company organizes and carries out internal control evaluation according to the provisions of the enterprise internal control standard system and its supporting guidelines.

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:

Financial quantitative standards are directly linked to the importance level of financial statements. The estimated defects directly affect the amount of misstatement that may be caused by accounting subjects. The impact degree of defects is determined according to the following judgment standards, and then the defect grade is determined after considering other factors. The materiality level is generally calculated through the data in the financial statements. The benchmark can select total assets, net assets, operating income, total profit, net profit, etc. according to these five indicators, the importance level can be tested.

The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:

Category major defect important defect general defect

The proportion of misstatement involving profits in operating revenue is more than 1%, between 0.5% ~ 1% and less than 0.5%

The proportion of misstatement involving assets and liabilities in total assets is greater than 0.5%, between 0.25% ~ 0.5% and less than 0.25%

The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:

The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are mainly determined according to the nature, scope and characteristics of the potential negative impact of defects.

When any of the following circumstances occurs to the company, it indicates that the internal control may have a serious impact or deviation on the realization of the company's objectives, which shall be recognized as a major defect, as follows:

① Violation of national laws, regulations or normative documents;

② Directors, supervisors, general manager and senior managers