Loctek Ergonomic Technology Corp(300729)
Self evaluation report on internal control in 2021
Loctek Ergonomic Technology Corp(300729) all shareholders:
In accordance with the provisions of the company law, the securities law, 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, 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
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 evaluation report. The board of Directors believes that the company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise’s 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
（1） 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 leading companies. The total assets of the units included in the evaluation scope account for 100% of the total assets in the company’s consolidated financial statements, and the total operating revenue accounts for 100% of the total operating revenue in the company’s consolidated financial statements.
1. Main operations and matters included in the scope of evaluation
The main businesses and matters included in the evaluation scope include: organizational structure, development strategy, corporate culture, social responsibility, human resources, external guarantee, external investment, contract management, information disclosure, procurement business, internal control related to the company’s sales and collection cycle, accounting system, etc. The details are as follows:
(1) Organizational structure
In accordance with the requirements of the company law, the securities law, the guidelines for the articles of association of listed companies and other relevant laws and regulations, the company has gradually established and improved the governance structure composed of the general meeting of shareholders, the board of directors, the board of supervisors, independent directors and senior management. The company has formulated the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors and the rules of procedure of the board of supervisors that meet the normative requirements of the governance of listed companies, and formed the management measures for related party transactions, the management system for the use of raised funds, the information disclosure management system, the management system for foreign investment, the management system for foreign guarantee, the management system for investor relations and other systems, It has also established a strategy committee, an audit committee, a nomination committee, a remuneration and assessment committee and other subordinate committees of the board of directors.
The company’s organizational structure has a clear division of responsibilities, mutual cooperation, sound and clear, the check and balance mechanism operates effectively, and the decision-making procedures and rules of procedure are transparent, clear and effective.
The internal organizational structure of the company is as follows:
(2) Development strategy
The company’s main business focuses on healthy and smart office and smart home products with linear drive as the core. Combined with the degree of industry, the company should especially strengthen the introduction of senior talents, add fresh blood to the company’s scientific research, effectively develop and utilize human resources as the first resource, and vigorously create a corporate cultural atmosphere of respecting knowledge, respecting talents and reusing talents. Establish a scientific and strict selection system for professional and technical talents, so that the company can form a reasonable talent echelon and create a good development platform for it.
In addition, according to the different characteristics of the company’s development in different periods and the different environment, the management of the company carries out sufficient and reasonable development planning, implements it in an orderly manner, and leads the company to maintain high-speed and sustainable development. (3) Corporate culture
The company advocates the corporate culture of “struggle and innovation”, pays attention to social responsibility and safe production, pays attention to the personal interests of employees and helps them realize their own value. The company has passed BSCI (business social standard certification). The company attaches importance to employee training, establishes a learning garden on the company’s internal platform, and reserves a large number of videos and materials for employees to learn; And buy a large number of books for employees to further study. According to the actual needs and applications of managers, the company provides learning opportunities for relevant training and further study every year, so as to improve the management level of middle and senior managers.
(4) Social responsibility
Adhering to the concept of “education oriented”, the company has successively established scholarships in Ningbo University, Ningbo Institute of technology of Zhejiang University, Ningbo Institute of engineering, Ningbo Nottingham University and other schools in the past 16 years, and established a 10 million yuan innovation and entrepreneurship Award Fund in Ningbo University in December 2021. The company will continue to adhere to the concept of “education oriented” and contribute to more education.
The company established 30 million yuan Leshan charity fund in 2021, hoping to help Yinzhou district develop with high quality, build a demonstration pilot area of common prosperity, and be a caring enterprise. At the same time, it hopes that all music and song employees can understand and agree with the company’s value orientation, be ethical and caring people, actively participate in voluntary services and public welfare activities, and establish a good image of music and Song people in the society.
(5) Human resources
The company always adheres to the employment principle of “people-oriented, respecting innovation, attaching importance to morality and talents, and selecting the best in competition”. In line with the purpose of “vigorously attracting high-end talents and continuously enhancing innovation ability”, the company regards talents as the first resource of the enterprise and takes “cultivating, retaining, introducing and making good use of talents” as the guarantee. The company has made clear provisions on the recruitment, employment, training and resignation of employees, and takes the professional ability and professional ethics of employees as an important standard for recruitment; The legal labor insurance contract and pension insurance system shall be signed with the employees according to law, and the legal pension insurance system shall be implemented for the employees’ rights and interests; At the same time, the company attaches importance to the cultivation of employees’ quality and regularly organizes relevant training. In addition, the company has developed a systematic human resource management system. The company attaches importance to the role of performance appraisal, establishes a perfect performance appraisal system, stimulates the vitality of employees, and lays the foundation for the realization of the company’s business strategy.
(6) External guarantee
The financial department of the company is the functional management department of the company’s guarantee behavior, and the board of directors and the general meeting of shareholders are the decision-making bodies of the guarantee behavior. As of December 31, 2021, the company has formulated the company’s external guarantee management system.
The company has established a post responsibility system for guarantee business to ensure the separation and restriction of various posts in the evaluation and approval of guarantee business, the approval and implementation of guarantee business, the implementation and verification of guarantee business, the custody of guarantee property and business records. The general meeting of shareholders of the company is the highest decision-making body of the company’s external guarantee. The board of directors of the company shall exercise the decision-making power of external guarantee in accordance with the provisions of the articles of association on the approval authority of the board of directors for external guarantee. If the approval authority of the board of directors specified in the articles of association is exceeded, the board of directors shall put forward a plan and submit it to the general meeting of shareholders for approval. The board of directors shall organize, manage and implement the external guarantee matters approved by the general meeting of shareholders. When the board of directors deliberates and approves the external guarantee, it must be approved by more than two-thirds of the directors attending the meeting of the board of directors. The following external guarantees of the company shall be reviewed and approved by the general meeting of shareholders: 1) any guarantee provided after the total amount of external guarantees of the company and its holding subsidiaries exceeds 50% of the company’s latest audited net assets;
2) The guarantee amount exceeds 30% of the latest audited total assets of the company within 12 consecutive months;
3) Within 12 consecutive months, the guarantee amount exceeds 50% of the latest audited net assets of the company and the absolute amount exceeds 30 million yuan;
4) The guarantee provided for the guarantee object whose asset liability ratio exceeds 70%;
5) The amount of a single guarantee exceeds 10% of the company’s latest audited net assets;
6) Guarantee provided to shareholders, actual controllers and their related parties.
When the general meeting of shareholders deliberates the guarantee proposal provided for shareholders, actual controllers and their related parties, the shareholders or shareholders controlled by the actual controllers shall not participate in the voting, which shall be adopted by more than half of the voting rights held by other shareholders attending the general meeting of shareholders.
(7) Foreign investment
The company’s investment decision-making power belongs to the general manager, the board of directors or the general meeting of shareholders, and each makes decisions on the company’s foreign investment according to law within its authority. As of December 31, 2021, the company has formulated the foreign investment management system. According to the different amount of foreign investment, the company’s power organs at different levels make decisions to control the investment risk. If the company’s foreign investment meets one of the following standards, it shall be deliberated and approved by the board of directors and disclosed in time:
1) The total assets involved in the transaction account for more than 10% of the company’s total assets audited in the latest period. If the total assets involved in the transaction have both book value and assessed value, the higher one shall be taken as the calculation data;
2) The relevant operating income of the transaction object (such as equity) in the latest fiscal year accounts for more than 10% of the audited operating income of the company in the latest fiscal year, and the absolute amount exceeds 5 million yuan;
3) The net profit related to the transaction object (such as equity) in the latest fiscal year accounts for more than 10% of the audited net profit of the company in the latest fiscal year, and the absolute amount exceeds 1 million yuan;
4) The transaction amount (including debts and expenses) of the transaction accounts for more than 10% of the company’s latest audited net assets, and the absolute amount exceeds 5 million yuan;
5) The profit generated from the transaction accounts for more than 10% of the audited net profit of the company in the latest fiscal year, and the absolute amount exceeds 1 million yuan;
If the company’s foreign investment meets one of the following standards, it shall be submitted to the general meeting of shareholders for deliberation after being deliberated and approved by the board of directors, and shall be disclosed in time:
1) The total assets involved in the transaction account for more than 50% of the company’s total assets audited in the latest period. If the total assets involved in the transaction have both book value and assessed value, the higher one shall be taken as the calculation data;
2) The relevant operating income of the transaction object (such as equity) in the latest fiscal year accounts for more than 50% of the audited operating income of the company in the latest fiscal year, and the absolute amount exceeds 30 million yuan;
3) The related net profit of the transaction object (such as equity) in the latest fiscal year accounts for more than 50% of the audited net profit of the company in the latest fiscal year, and the absolute amount exceeds 3 million yuan;
4) The transaction amount (including debts and expenses) of the transaction accounts for more than 50% of the company’s latest audited net assets, and the absolute amount exceeds 30 million yuan;
5) The audited net profit of the company is more than RMB 30 million, accounting for more than 500000% of the net profit of the latest accounting year;
(8) Contract management
The company attaches importance to risk management. Before formal signing, all contracts must be submitted to the legal department for review. After the legal department passes the review, they can be formally signed after being divided according to the approval authority and approved by the competent leaders of relevant departments. The business department related to signing the contract shall know and master the performance of the contract at any time, deal with and report problems in time. The performance of major contracts shall be tracked one by one by the specialist of the legal department and reported to the management of the company in time.
(9) Information disclosure
The information disclosure of the company is under the unified leadership and management of the board of directors. As of December 31, 2021, the company has formulated the management measures for company information disclosure. The company has clarified the disclosure scope and content of other important information except the information required to be disclosed by national laws and regulations and regulatory authorities, so as to ensure the disclosure of all important information on the basis of cost-benefit principle; Determine the procedures and requirements for internal information collection and analysis and the correctness audit of information provided externally, and provide information to the outside world in time. All internal information of the company that fails to perform the above procedures shall not be separately disclosed or disclosed to specific objects, so as to ensure the fairness of information disclosure.
(10) Procurement business
In order to make the procurement business standardized, process oriented and efficient, the company has established an efficient and transparent procurement management system. The company has formulated a relatively strict supplier management system. There are generally several alternative suppliers for similar raw materials. In addition, in the process of raw material procurement, the company usually determines qualified suppliers through inquiry, price comparison and negotiation, so as to ensure the procurement quality and reduce the procurement price. In the process of procurement business, the company concentrates the professional strength of each department to support and supervise the selection, assessment and implementation of suppliers, so as to effectively prevent procurement risks. During the reporting period, no major defects or important defects were found.
(11) Internal control related to the company’s sales and collection cycle
For sales and collection related businesses, the company has formulated relevant rules and regulations such as sales and collection system, order operation procedure, provisions on strengthening the safety of foreign exchange collection and bill of lading management, bill management measures, and established a relatively sound internal control system in accordance with the basic norms of enterprise internal control issued by the Ministry of Finance and other five ministries and commissions, The Finance Department of the company shall recognize the revenue according to different sales revenue recognition conditions in accordance with the relevant provisions of the accounting standards for business enterprises. During the reporting period, the company’s internal control system related to sales and collection cycle was sound, the system design was reasonable and effectively implemented.
(12) Accounting system
In strict accordance with the company law, accounting law, accounting standards for business enterprises and other laws and regulations, the company has established a perfect financial management control system and relevant operating procedures, and effectively controlled all key links such as procurement, production, sales and financial management, including financial reimbursement management standards, monetary fund management standards, accounts receivable management standards, fixed assets management standards and other systems, Ensure the accuracy of accounting confirmation, accounting, recording and other links
