Xinxiang Richful Lube Additive Co.Ltd(300910)
Internal control self evaluation report
Xinxiang Richful Lube Additive Co.Ltd(300910) all shareholders:
In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines jointly issued by the Ministry of finance, the CSRC and other departments and other internal control supervision requirements (hereinafter referred to as the enterprise internal control 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 rationality, integrity and effectiveness of the establishment of internal control by December 31, 2021 (the benchmark date of internal control evaluation report), and identified the defects existing in the design and operation of internal control. The self-evaluation of the company’s internal control related to the company’s financial statements as of December 31, 2021 is reported as follows:
1、 Important statement
Internal control is a process implemented by the board of directors, the board of supervisors, managers and all employees to achieve control objectives. It is the responsibility of the board of directors of the company to design, implement and maintain effective internal control, evaluate its effectiveness and truthfully disclose the internal control evaluation report under the supervision of the corporate governance and 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 liabilities for the authenticity, accuracy and completeness of the contents of the report.
The objective of establishing and implementing internal control is to reasonably ensure the legal compliance of enterprise operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the realization of enterprise 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 or procedures, there is a certain risk to speculate the effectiveness of internal control in the future according to the internal control evaluation results.
2、 Organization of internal control evaluation
The internal control evaluation is led by the board of directors of the company and its audit committee, forming an evaluation team led by the audit department and participated by multiple departments to evaluate the main risk areas and units included in the evaluation scope.
（1） Evaluation procedure: establish an evaluation team and formulate an evaluation plan; On site inspection; The evaluation team studies and identifies the defects of internal control; Discuss and review the rectification plan; Report to the board of directors for deliberation and approval in accordance with the specified authorities and procedures.
（2） Evaluation method: an evaluation team is formed to comprehensively collect the evidence of the company’s internal control design and effective operation by using various methods such as individual interview, questionnaire, special discussion, walk through test, statistical sampling and comparative analysis, and study and identify the defects of internal control design and operation.
3、 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. The main units included in the evaluation scope include Xinxiang Richful Lube Additive Co.Ltd(300910) and its subsidiaries Shenyang haorunda Additive Co., Ltd., Cangzhou Runfu Additive Co., Ltd., XuanRun (Shanghai) Chemical Technology Co., Ltd., Henan Runfu Enterprise Management Consulting Co., Ltd., and richful lube additive (Singapore) Pte.Ltd. The total assets of the units included in the consolidation scope account for 100.00% of the total assets in the company’s consolidated financial statements, and the total operating revenue accounts for 100.00% of the operating revenue in the company’s consolidated financial statements.
The main businesses and matters included in the evaluation scope include: governance structure, internal organizational structure, development strategy, corporate culture, information disclosure management, information and communication, internal supervision, human resources, financial reporting, capital operation management, asset management, procurement and payment business, production process and cost control, sales and collection business, engineering management, research and development, foreign investment management, related party transaction management External guarantee management, control of subsidiaries, etc.
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.
（1） Governance structure
In accordance with the company law, the securities law, the articles of association and other laws and relevant provisions, the company has established a standardized corporate governance structure and rules of procedure, defined the responsibilities and authorities in decision-making, implementation and supervision, and formed a scientific and effective division of responsibilities and check and balance mechanism.
1. The general meeting of shareholders is the highest authority of the company. It has formulated the rules of procedure of the general meeting of shareholders, which clearly stipulates the nature and functions of the general meeting of shareholders and the working procedures such as convening and notification, proposal, voting and resolution of the general meeting of shareholders. The formulation and effective implementation of the rules ensure that the general meeting of shareholders exercises the decision-making power on major matters according to law, which is conducive to protecting the legitimate rights and interests of shareholders.
2. The board of directors is the company’s permanent decision-making body, which is responsible to the general meeting of shareholders, deliberates and makes decisions on major decision-making issues in the company’s business activities, or submits them to the general meeting of shareholders for deliberation. The directors are elected by the general meeting of shareholders and the chairman is elected by the board of directors. The board of directors of the company is composed of 9 directors, with 1 Chairman, including 3 independent directors. The company has formulated the rules of procedure of the board of directors, the working system of independent directors and the working system of special committees of the board of directors, which stipulates the convening, notification, chairing, deliberation authority, meeting procedures, records and resolutions of the board of directors, as well as the working procedures of independent directors and the composition and responsibilities of each special committee. The formulation and effective implementation of these systems can ensure that the board of directors, independent directors and special committees can effectively perform their duties and provide guarantee for scientific decision-making.
3. the board of supervisors is the company’s supervisory body, responsible for supervising the behavior of the company’s directors and managers and the company’s finance. The board of supervisors of the company is composed of three supervisors, one of whom is the employee representative. The company has formulated the rules of procedure of the board of supervisors, which clearly stipulates the proposal, convening, notice and resolution of the board of supervisors. The formulation and effective implementation of the rules will help give full play to the supervisory role of the board of supervisors and protect the interests of shareholders, the company and the legitimate interests of employees from infringement. 4. The general manager shall be fully responsible for the daily operation and management activities of the company and organize the implementation of the resolutions of the board of directors. The company has formulated the general manager’s working rules, which stipulates the responsibilities of the general manager, the general manager’s office meeting and production scheduling meeting, the general manager’s reporting system, supervision system and other contents. The formulation and effective implementation of these systems ensure the effective implementation of various decisions of the board of directors, and improve the operation and management level and risk prevention ability of the company.
（2） Internal organizational structure
The internal organizations set up by the company include: oil business department, overseas business department, industrial oil business department, marine oil business department, coating business department, special chemicals business department, marketing department, technology department, quality inspection department, lubricating oil additive research institute, operation Department, equipment department, engineering equipment department, procurement Department, enterprise management department, securities affairs department, human resources department, finance department, safety and environmental protection supervision department, administration department and audit supervision department. By reasonably dividing the responsibilities of each department and post, and implementing the principle of separation of incompatible positions, a mechanism of clear division of labor, mutual cooperation and mutual checks and balances is formed between each department, which ensures the orderly and healthy operation of the company’s production and operation activities and the realization of control objectives.
（3） Development strategy
The strategy committee under the board of directors of the company studies and puts forward suggestions on the long-term development strategic plan of the company according to the working system of special committees of the board of directors; Study and put forward suggestions on major investment and financing schemes that must be approved by the board of directors according to the articles of Association; Study and put forward suggestions on major capital operation and asset management projects that must be approved by the board of directors according to the articles of Association; Study and put forward suggestions on other major issues affecting the development of the company; Check the implementation of the above matters; Other matters authorized by the board of directors.
The meeting of the strategy committee was convened by the chairman. Through careful research, it put forward suggestions on business development to the board of directors of the company, which improved the efficiency and quality of major investment decisions, strengthened the scientificity of decisions, and increased the main business strength and core competitiveness of the company. Ensure the overall, long-term and feasibility of the development strategic plan.
（4） Corporate culture
The company regards “becoming the world’s important lubricant additive supplier” as the vision, and takes “providing lubricating essence, helping environment friendly, focusing on customer challenges and realizing customer value” as the mission of the enterprise, and “taking innovation, responsibility, cooperation and value” as the core values of enterprises. The company adheres to the people-oriented concept, creates a cultural atmosphere of mutual trust and mutual respect for the growth and progress of employees, provides more opportunities and space for employees’ career planning, strives to realize the value of employees and the value of the enterprise at the same time, and employees and the company grow together and promote each other.
（5） Information disclosure management
In accordance with the company law, securities law, measures for the administration of information disclosure of listed companies, Shenzhen Stock Exchange GEM Listing Rules and other laws, regulations and normative documents, the company has formulated the information disclosure management system and the working system of independent directors, which respectively regulate the management, scope, content, procedures, methods and media of information disclosure, the maintenance and management of relations with investors and confidentiality requirements, It ensures the authenticity, accuracy, integrity and timeliness of the information disclosure, and there shall be no false records, misleading statements or major omissions.
（6） Information and communication
The company has established the information management system and the information system management system to clarify the procedures for the collection, processing and transmission of information related to internal control, ensure the timely communication of information and promote the effective operation of internal control.
1. Information collection channels are unblocked. The company can obtain internal information through financial and accounting materials, operation and management materials, research reports, special information, office network and other channels; External information can also be obtained through industry associations, social intermediaries, business units, market research, letters and visits, online media and relevant regulatory authorities.
2. Timely information transmission procedures. The company can timely communicate and feed back information related to internal control among internal management levels, responsible units and business links, as well as between the enterprise and external investors, creditors, customers, suppliers, intermediaries and regulatory authorities. Problems found in the process of information communication can be reported and solved in time. Important information can be transmitted to the board of directors, the board of supervisors and the management in time.
3. Safe operation of information system. The company has established control systems for information system development and maintenance, access and change, data input and output, document storage and custody, network security and other aspects to ensure the safe and stable operation of the information system. 4. The anti fraud mechanism is transparent. The company has established an anti fraud mechanism to clarify the key areas and key links of anti fraud work and the responsibilities and authorities of relevant institutions in anti fraud work, and standardize the reporting, investigation, handling, reporting and remedial procedures of fraud cases. We have established a reporting and complaint system and a whistleblower protection system, set up a reporting special line, and clarify the reporting and complaint handling procedures, handling time limit and completion requirements, so as to ensure that reporting and complaints become an important way for enterprises to effectively grasp information. The reporting and complaint system and whistleblower protection system have been timely communicated to all employees.
（7） Establishment of internal audit institutions
The audit committee of the board of directors of the company has an audit and supervision department, equipped with 4 internal auditors, and has the professional ability to carry out audit work independently. The audit and supervision department shall supervise and inspect the effectiveness of internal control in combination with internal audit supervision. The audit and supervision department shall report the internal control defects found in the supervision and inspection in accordance with the internal audit procedures of the enterprise; Have the right to report directly to the board of directors, its audit committee and the board of supervisors on the major defects of internal control found in the supervision and inspection.
The company has established the internal audit work system to clarify the responsibilities and authorities of internal audit institutions and other internal institutions in internal supervision, and standardize the procedures, methods and requirements of internal supervision, as well as the scope and frequency of daily supervision and special supervision. For internal control defects found in the process of supervision, timely analyze the nature and causes of defects, put forward rectification plans, and timely report to the board of directors, the board of supervisors or the management in an appropriate form.
The company has established a clean government management system, and the audit and supervision department has a reporting mailbox and a reporting hotline to receive all kinds of reports, complaints and appeals inside and outside the company. The company requires all on-the-job employees to establish integrity management records, regularly carry out integrity publicity and education for all employees, and constantly improve employees’ awareness of integrity and self-discipline. The company requires external business to create an open and transparent competitive environment for suppliers, and requires employees and suppliers to abide by integrity and self-discipline in business dealings. The company adheres to legal and compliant operation and vigorously investigates and deals with improper exchanges and commercial bribery between employees and partners.
（8） Human resources policy
The company has formulated human resources policies conducive to the sustainable development of the enterprise, including: employment, training, dismissal and resignation of employees; Salary, assessment, promotion, reward and punishment of employees; Restrictive regulations on the departure of employees who master state secrets or important business secrets, etc.
At the same time, the company attaches great importance to the quality of employees and takes professional ethics and professional competence as important standards for selecting and employing employees. At present, the company has 747 employees, including 10 with senior titles, 26 with intermediate titles and 68 with primary titles; Among them, there are 2 doctors, 38 postgraduates, 131 undergraduates and 336 college and technical secondary school students. The company also carries out various forms of follow-up training and education for different posts according to the needs of actual work, so that employees can be competent for their jobs.
（9） Financial Report
The company has established a relatively perfect financial accounting system in accordance with the accounting law, accounting standards for business enterprises, tax law and other relevant laws and regulations. The company has set up an independent accounting organization, set up more reasonable posts in financial management and accounting, formulated corresponding job instructions, and equipped with sufficient full-time personnel to ensure the smooth progress of financial work. The division of labor of accounting personnel is clear, and the post responsibility system is implemented. Each post can play a role of mutual restraint, and the approval, execution and recording functions are separated.
（10） Capital operation management
1. Comprehensive budget management
The company has formulated the comprehensive budget management system and relevant management processes, defined the responsibilities and approval authority of each post, standardized the work processes such as budget preparation and review, budget execution analysis and report, budget assessment, etc., so as to promote the company to realize the enterprise development strategy and give full play to the role of comprehensive budget management.
2. Monetary fund management
In order to strengthen the internal control of monetary funds, standardize the behavior of monetary funds, ensure the safety and integrity of monetary funds, improve capital efficiency and prevent errors and fraud in the process of monetary fund management. We have formulated fund management system, expense reimbursement management system and comprehensive budget management system.
The company strictly follows the fund management system and expense reimbursement system
