Sinomach Precision Industry Co.Ltd(002046)
Self evaluation report on internal control in 2021
Sinomach Precision Industry Co.Ltd(002046) all shareholders:
According to the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements, combined with Sinomach Precision Industry Co.Ltd(002046) internal control manual and evaluation manual, we conduct self-evaluation on the effectiveness of internal control design and operation of Sinomach Precision Industry Co.Ltd(002046) as of December 31, 2021 (benchmark date of internal control evaluation report). The evaluation report is approved and published by the board of directors.
1、 Important statement
According to the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements, it is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control, ensure its effectiveness, and truthfully disclose the internal control evaluation report. 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 corresponding responsibilities 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 the company’s 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 Sinomach Precision Industry Co.Ltd(002046) financial report internal control defect evaluation, there are no major and important defects in financial report internal control on the benchmark date of the evaluation report, and Sinomach Precision Industry Co.Ltd(002046) has maintained effective internal control over financial report in all major aspects in accordance with the requirements of the enterprise internal control standard system and relevant regulations.
According to the identification standard of Sinomach Precision Industry Co.Ltd(002046) non-financial Report internal control defect evaluation, no major and important defects of non-financial Report internal control and general defects of non-financial Report internal control were found on the benchmark date of 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) internal control scope
Sinomach Precision Industry Co.Ltd(002046) according to the principle of risk orientation, determine the main units, businesses and matters included in the evaluation scope and high-risk areas. The main units included in the evaluation scope include: Sinomach Precision Industry Co.Ltd(002046) all departments of the headquarters and all subsidiaries; The main businesses and matters included in the evaluation scope include: organizational structure, development strategy, investment control, human resources, capital activities, procurement business, asset management, business outsourcing, financial reporting, contract management, information system and subsidiary control.
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. Company level
1.1 internal environment
Sinomach Precision Industry Co.Ltd(002046) based on the basic concept of standardized operation, actively strive to create a good control environment. A good internal control environment is the basis for the implementation of effective internal control Sinomach Precision Industry Co.Ltd(002046) internal control environment is mainly reflected in the following six aspects:
(1) Corporate culture
Sinomach Precision Industry Co.Ltd(002046) has always attached importance to the creation and maintenance of the atmosphere of integrity and moral values, carried out the publicity, implementation and education of spiritual culture, system culture, behavior culture and enterprise culture, established a series of internal norms such as employee code of conduct and employee manual, and created and maintained integrity and moral values through severe punishment system and the practice of senior managers, Set up a double protection mechanism to prevent employee integrity risks, pool wisdom and pay attention to cultural innovation.
(2) Emphasis on Competence
Pay great attention to the required level of knowledge and skills of the personnel in the management in recent years, and pay great attention to the required level of knowledge and skills of the personnel Sinomach Precision Industry Co.Ltd(002046) also according to the needs of actual work, various forms of training and education are carried out for different posts, and skill competitions are carried out to make employees competent for their current jobs.
(3) Participation of governance
Sinomach Precision Industry Co.Ltd(002046) the responsibilities of the management have been clearly defined in the articles of association and policies. Through its own activities and with the support of the audit and risk management committee, the governance layer supervises the company’s accounting policies, internal and external audit work and results. The responsibilities of the governance layer also include supervising whether the design and implementation of policies and procedures used to review the effectiveness of internal control are reasonable and effective.
(4) Management philosophy and company vision
In an effective control environment, the management’s business philosophy can create a positive atmosphere and promote the effective operation of business processes and internal control Sinomach Precision Industry Co.Ltd(002046) the management has always been in line with the core values of “working together, innovation and win-win”, and the enterprise mission of “Seiko Zhiyuan, sharp tools and good deeds”, so as to make the company become a world-class precision manufacturing service provider as soon as possible.
(5) Distribution of authority and responsibility
Sinomach Precision Industry Co.Ltd(002046) to effectively control the use of authorization and supervise the company’s activities, the company has established a budget control system, which can modify the control policies of the accounting system in a timely manner according to the changes of the situation. The financial department reasonably ensures that business activities are carried out in accordance with appropriate authorization through various measures; Reasonably ensure that transactions and events can be recorded in appropriate accounts in a timely manner with the correct amount in the appropriate accounting period, so that the preparation of financial statements meets the relevant requirements of the accounting standards for business enterprises.
(6) Social responsibility
Sinomach Precision Industry Co.Ltd(002046) has always attached importance to the performance of social responsibility, firmly established the concept of performing social responsibility based on the people-oriented management concept, and attached importance to safe production, environmental protection and resource conservation; Strict quality management to continuously improve customer satisfaction and loyalty; Pay attention to the career development planning and guidance of employees. We have established and implemented a more scientific personnel management system for employment, training, job rotation, assessment, reward and punishment, recruited fresh graduates and social on-the-job personnel every year, promoted employment, improved the social insurance system, protected the legitimate rights and interests of employees, advocated charity and other social public welfare activities, and paid attention to the maintenance of public relations.
1.2 risk assessment
In order to ensure Sinomach Precision Industry Co.Ltd(002046) sustainable and healthy development, the company attaches importance to the monitoring and evaluation of strategic risk, financial risk, operational risk and other risks at the company level and business process level, strengthens the risk awareness of employees, forms a risk management culture, gradually improves the construction of comprehensive risk management system, designates departments for centralized management, actively identifies major risks, formulates risk emergency plans for risk response, Prepare and report risk monitoring regularly to form internal control based on risk orientation.
Sinomach Precision Industry Co.Ltd(002046) information center is responsible for centralized management of information construction and information system management, and the information construction is in good condition; The office of the board of directors is responsible for external information disclosure and communication with investors, and the management of investor relations is carried out in a standardized manner; Establish a smooth internal communication mechanism, provide financial, safety, quality and other management information to the management timely and effectively every month for decision-making, and manage the information in a confidential manner to prevent disclosure; For suspicious inappropriate matters and behaviors, open an anonymous mailbox to facilitate direct and effective communication between employees and senior managers.
Information management is specialized, systematic and standardized, providing a good platform for the transmission and communication of internal and external information. Sinomach Precision Industry Co.Ltd(002046) has established effective communication channels and mechanisms for suspicious inappropriate matters and behaviors, so that the management can effectively communicate with employees’ responsibilities and control responsibilities. The adequacy of internal communication enables employees to effectively perform their duties, communicate effectively with customers, suppliers, regulators and other outsiders, and enable the management to take timely and appropriate further actions in the face of various changes. 1.4 supervision of control
Sinomach Precision Industry Co.Ltd(002046) regularly evaluate various internal controls. On the one hand, establish various mechanisms to enable relevant personnel to obtain evidence of the effective operation of internal controls to a considerable extent when performing their normal duties; On the other hand, confirm the internal information or point out the existing problems through external communication. The governance and management attach great importance to the reports and suggestions of relevant departments and regulators of internal control, and take various measures to timely correct the design defects and deviations in the operation of internal control.
2. Business level
According to the classification requirements of the basic norms of enterprise internal control, the internal control guidelines of listed companies and the group’s internal control guidelines, the internal environment, risk assessment, control activities, information communication, internal supervision and other elements shall be fully considered in the construction of the company’s internal control system. The control activities include the company’s financial management, fixed assets management, investment and financing management, material procurement, contract management, information disclosure and so on. The company has formulated and improved financial accounting management system, procurement control system, fixed assets management system, investment control system, quality inspection control system, science and technology development management system, operation control system, internal audit system, contract management measures, legal work system, administrative management system, information operation system and other operation control systems.
Through the self-assessment of the effectiveness of the design and implementation of the internal control system, the main internal control systems and their implementation are described as follows:
(1) About the general meeting of shareholders and shareholders
Sinomach Precision Industry Co.Ltd(002046) strictly comply with the requirements of the articles of association and the rules of procedure of the general meeting of shareholders, standardize the convening, convening and voting procedures of the general meeting of shareholders, so that the company can treat all shareholders equally and protect the interests of shareholders, especially minority shareholders. The controlling shareholders of the company have standardized behavior, exercise their rights and undertake corresponding obligations according to law. The company has independent business and independent operation ability. It is independent of the controlling shareholders in business, personnel, assets, institutions and finance. The board of directors, board of supervisors and internal institutions of the company operate independently.
(2) About the board of directors and directors
The board of directors shall hold meetings in strict accordance with the company law and the articles of association, implement the resolutions of the general meeting of shareholders, exercise its functions and powers according to law, and be responsible for the general meeting of shareholders. The company elects directors in strict accordance with the selection and appointment procedures stipulated in the articles of association and the working system of independent directors; The company has three independent directors, accounting for more than one-third of all directors; The number and composition of the board of directors of the company meet the requirements of laws and regulations. All directors of the company can exercise their rights diligently and protect the interests of the company and shareholders.
(3) About the board of supervisors and supervisors
Sinomach Precision Industry Co.Ltd(002046) establish the board of supervisors according to law, and the board of supervisors becomes the supervision organization of the company. The company elects supervisors in strict accordance with the selection and employment procedures stipulated in the articles of association. The number and personnel composition of the board of supervisors meet the requirements of laws and regulations. The company’s supervisors can conscientiously perform their duties, supervise the legality and compliance of the company’s finance and the performance of duties by directors, managers and other senior managers in the spirit of being responsible to shareholders, and safeguard the legitimate rights and interests of the company and shareholders.
(4) Information disclosure and transparency
According to the provisions of the company’s information disclosure management system, the company appoints the Secretary of the board of directors to be responsible for daily information disclosure and receiving shareholders’ visits and consultations. The company can disclose relevant information in a true, accurate, complete and timely manner in strict accordance with the provisions of relevant laws and regulations, and ensure that all shareholders of the company can have equal access to information.
(5) Comprehensive budget management system
In order to improve the level of refined management and prepare a scientific and reasonable budget, the company has formulated the comprehensive budget management measures, which stipulates the organizational structure and work responsibilities of the budget, the contents and procedures of budget preparation, budget adjustment, budget implementation and assessment. The financial department has set up a special budget management post to take charge of budget management, strengthened budget preparation, implementation and assessment, and achieved certain results. The daily operation of the company is mainly carried out around the budget centered management system to ensure the realization of the company’s business objectives.
(6) Internal control and management of monetary funds
The company formulates the internal control system of monetary funds, standardizes the company’s fund management, ensures the safety of funds and reduces the use cost of funds. The income and expenditure of monetary funds shall obtain reasonable and legal vouchers and be recorded in the account in time. The company’s income and expenditure of monetary funds shall be carried out in strict accordance with the budget plan. Strict authorization and approval procedures have been established for the payment of monetary funds to ensure the safety of monetary funds. A special memo book is used for the registration and management of bills to prevent the loss and misappropriation of bills, and strengthen the management of bank reserved seals.
The internal control system of monetary funds defines the post responsibilities of cashier, monetary fund accountant and monetary fund supervisor, and adheres to the separation of incompatible posts. The cashier shall count the cash before the end of each day’s work, prepare the “inventory table of cash on hand” and check it with the balance in the cash journal. The part exceeding the cash on hand limit shall be deposited in the bank. The monetary capital accountant shall regularly check the bank account, prepare the bank deposit balance adjustment table, and check the book adjustment balance with the balance of the bank deposit statement. Be able to follow the requirements of the above relevant systems and procedures in daily implementation.
(7) Management and control of general expenses
For the management and control of general expenses, the company has formulated the measures for the management of expense reimbursement and loan (Trial), which regulates the reimbursement process, approval authority and budget control of expenses during the period. The annual total amount control is adopted for the expense budget, which is included in the company’s comprehensive budget management; Monthly or quarterly cost analysis shall be used to prompt the cost control of relevant departments and units, so as to enable them to take effective measures to control costs in time. Separate the posts of expense budget preparation, approval and reimbursement, and set up a special post for expense reimbursement to review the rationality of expenses, the legitimacy of bills and the soundness of reimbursement procedures, so as to prevent the risk of expense overrun and violation. Multiple policies are adopted simultaneously, the internal control measures of general expenses are sound, and there are no internal control defects. (8) Procurement and payment internal control management
The company has established an internal control system for procurement and payment to standardize the company’s procurement and payment related businesses. According to the principle of price comparison procurement, the company selects units with excellent quality, price and credit as qualified suppliers of purchased materials. For monthly procurement, the material use department shall submit the material demand plan to the procurement department according to the monthly production plan, and the procurement department shall prepare the procurement plan according to the inventory situation, submit it to the relevant departments of the company for review, and implement the procurement after being approved by the leader in charge. After the arrival of materials, the material administrator shall count and accept them. After the materials are received in the warehouse, the financial department shall pay the purchase price with the payment approval form. Through the implementation of the internal control system of procurement and payment, the company ensures the normal operation of production and risk prevention.
(9) Internal control management of sales and collection
The company has established an internal control system for sales and collection to standardize the company’s sales business. The sales department, financial department and logistics department are respectively responsible for the contract signing, collection, delivery and other important links in the company’s sales business. All departments contain and supervise each other to ensure the separation of incompatible positions in the sales link. Each department of the company performs its own duties and standardized operation according to the sales management process, and there are no loopholes in the internal control of sales and collection.
(10) Internal control management of physical assets
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