Zhejiang Founder Motor Co.Ltd(002196)
Self evaluation report on internal control in 2021
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 standard system”), combined with the internal control system and evaluation methods of Zhejiang Founder Motor Co.Ltd(002196) (hereinafter referred to as the “company”), 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、 Scope of internal control evaluation
According to the relevant systems and rules of procedure of the company’s internal control, the internal control evaluation is led by the board of directors and implemented by the audit committee and the audit department under its leadership. 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: Zhejiang Founder Motor Co.Ltd(002196) (Vietnam) Co., Ltd., Fangde motor (Vietnam) Technology Co., Ltd., Shenzhen gaokerun Electronics Co., Ltd., Song County Huarui Mining Co., Ltd., Zhejiang Fangzheng (Hubei) Auto Parts Co., Ltd., Shanghai Haineng Auto Electronics Co., Ltd., Zhejiang Founder Motor Co.Ltd(002196) Shanghai Branch, Lishui Fangde import and export trade Co., Ltd Yicheng Fangde Electronic Technology Co., Ltd., Lishui Fangde Zhiqu Applied Technology Research Institute Co., Ltd., starship Industry Development Co., Ltd. and lvmai city Europe Co., Ltd. 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.
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 specific conditions of the company included in the evaluation scope are as follows:
1. Internal control environment
(1) Governance structure
In accordance with the requirements of the company law, the securities law, the articles of association and other laws and regulations, the company has established a “three meetings” corporate governance structure of the general meeting of shareholders, the board of directors and the board of supervisors. The three meetings perform their respective duties and operate in a standardized manner. The company has a board of directors, which is responsible for the general meeting of shareholders. The board of Directors consists of 9 directors, including 1 Chairman, 1 vice chairman and 3 independent directors. The board of supervisors consists of three supervisors, one of whom is held by the employee representative of the company, and one chairman of the board of supervisors. Under the board of directors, there are four special committees: Strategy Committee, audit committee, nomination committee and salary and assessment committee, all of which are mainly composed of independent directors. The working rules of the Committee have been formulated to ensure that the professional committee can effectively perform its duties and provide help for the scientific decision-making of the board of directors.
(2) Organizational structure
According to the development situation and future development objectives, and in combination with the actual situation of the enterprise, the company has business unit, marketing department, administration department, human resources department, procurement department, technology center, quality assurance department, finance department, asset management department and other departments. Each department of the company has clear responsibilities and mutual restraint. In recent years, in order to further improve the internal management level of the company, according to the development situation and future development objectives of the company, with the help and guidance of consultants and industry experts, and drawing on the best practical experience of the industry, we have steadily promoted the organizational reform and made great efforts to improve the soft power of the company’s management.
(3) Internal audit organization
The audit committee under the board of directors of the company is responsible for the communication, supervision and verification of internal and external audits of the company in accordance with the internal audit work system and internal control system. The audit committee is composed of three directors, including two independent directors. In strict accordance with the functions and powers conferred by the articles of association and the regulations on the work of the audit committee, and in accordance with the relevant notice requirements of the CSRC and Shenzhen Stock Exchange, the audit committee actively carried out audit related work and performed due diligence. The audit department under the audit committee is the internal audit institution of the company. Under the guidance of the audit committee of the board of directors, the audit department independently carries out audit work, reports to the audit committee, and inspects and supervises the authenticity and integrity of the company’s financial information and the establishment and implementation of internal control system. The head of the Audit Department of the company shall be nominated by the audit committee and appointed by the board of directors; The audit department is equipped with three full-time auditors to engage in internal audit. Audit the company’s internal performance, cost control and management of the raised funds in 2021; Audit the company’s major announcements and important matters in a timely manner, so as to find internal control defects, risks and hidden dangers in a timely manner and put forward improvement or treatment suggestions; At the same time, problems are found through internal audit to prevent risks. Through the audit of internal financial data and workflow, the internal operation is standardized, the quality of financial information disclosure is improved, and the legitimacy and standardization of the company’s daily production and operation are ensured.
(4) Human resources policy
The company implements unified management on the introduction, development, training, promotion, post transfer, salary and labor discipline management of human resources. According to the labor law and relevant laws and regulations, the company implements the full staff labor contract system. Through a series of human resource management systems such as employee manual, human resource management system, performance appraisal management measures, training management implementation rules and recruitment management implementation rules, the company defines the post conditions, personnel competency, evaluation standards and training measures, An effective performance appraisal and incentive mechanism has been formed.
(5) Financial management system
In accordance with the accounting law, accounting standards, enterprise accounting system, general principles of finance, norms for basic accounting work and other laws and regulations, the company has formulated the compilation of accounting internal control systems, including financial management system, accounting management system, audit system, fund management system, expense reimbursement management system, fixed assets management system A complete set of management systems such as R & D expense management system have established a perfect company accounting system, financial management system, accounting operation process and accounting post manual, as well as strict cost control system, performance assessment system, financial revenue and expenditure approval system, expense reimbursement management methods and other control systems, which have improved the level of financial management and the quality of accounting information and strengthened the financial management of assets, Effectively prevent and resolve financial risks.
(6) Corporate culture
The company has been adhering to the business philosophy of “building a business with integrity and pursuing excellence”, and constantly pursues the harmonious development of the company, employees and society. Actively advocate the spirit of honesty and trustworthiness, dedication, innovation and teamwork, establish modern management concept and strengthen risk awareness through staff post skill training, internal publicity window and other forms. Directors, supervisors, managers and other senior managers have played a leading role in the construction of corporate culture. The company’s employees abide by the code of conduct and earnestly perform their post responsibilities.
2. Risk assessment
According to the strategic objectives and development ideas, combined with the characteristics of the industry, the company has established a systematic and effective risk assessment system: determine the comprehensive risk management objectives, comprehensively and systematically collect relevant information, accurately identify internal and external risks, conduct risk assessment in time, and achieve controllable risk.
At the same time, the company has established an emergency response mechanism, formulated an emergency plan, defined the monitoring, reporting and handling procedures and time limit of various major emergencies, and established an supervision system and accountability system.
3. Internal control activities
(1) Company management level
In accordance with the company law, securities law and other relevant laws and regulations, as well as the provisions of the articles of association, the company has formulated the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors, the rules of procedure of the board of supervisors, the working rules of the general manager, the working rules of independent directors, the financial management system, the management measures for connected transactions, the management system for information disclosure and the management measures for raised funds Internal audit system, management measures for shareholding changes of directors, supervisors and senior executives, internal reporting system for major events, investor relations management system, management system for external information users, registration and filing system for insiders, accountability system for major errors in annual report information disclosure and other major rules and regulations, so as to ensure the standardized operation of the company and promote the healthy development of the company.
In order to ensure the continuous and stable growth of the company, the board of directors of the company attaches importance to the construction of a standardized corporate governance structure and internal control system, and formulates or revises a series of relevant rules and regulations around the improvement of corporate governance and internal control. The company conscientiously implemented the requirements of the basic norms of enterprise internal control issued by the five ministries and commissions and the guidelines on internal control of listed companies issued by Shenzhen Stock Exchange, strengthened internal management, supervision and inspection, rectified the weak links of internal control system, and effectively improved the risk prevention ability; Strictly implement the management system of holding subsidiaries and strengthen the company’s management of holding subsidiaries; Further improve the company’s internal control construction, standardize the annual report information disclosure procedures, effectively improve the quality of information disclosure, and strengthen the monitoring of the company’s board of directors on the preparation of financial reports.
(2) Independent director level
The company has formulated the working system for independent directors, in which the provisions on the qualifications and terms of reference of independent directors meet the relevant requirements of the CSRC. Independent directors carry out their work in strict accordance with the articles of association and the working system of independent directors. Their duties are based on independent judgment and are not affected by the main shareholders and actual controllers of listed companies. The independent directors put forward many constructive opinions on the company’s strategy, improving the company’s internal control and decision-making mechanism, and played a role of supervision and consultation on the company’s major production and operation decisions, foreign investment, nomination, salary and assessment of senior executives, internal audit and so on. The independent directors of the company have the necessary knowledge base to perform their duties, comply with the relevant provisions of the CSRC, can perform the duties of independent directors in the decision-making of the board of directors, carefully review the company’s annual report, audit report, the board of directors and other relevant documents, including expressing independent opinions on major related party transactions and external guarantees, the company’s development strategy and decision-making mechanism, the appointment and dismissal of senior managers and other matters, Play the role of independent directors.
(3) Daily operation management
Based on the basic system, the company has formulated a series of systems covering the daily production management process to ensure that all work has rules to follow and form a standardized management system. The main control measures taken by the company include: 1) separation control of incompatible positions
The company identifies and sorts out incompatible positions, and ensures the separation of business approval from business implementation and business implementation from relevant information records through the provisions of system, organizational structure and job responsibilities. The company identifies incompatible positions in various links of business implementation, such as sales policy formulation and sales, sales and collection, purchase inquiry and purchase implementation, and clearly ensures the separation of incompatible positions through process regulations and position settings and position responsibilities.
2) Authorization approval control
The company has a perfect authorization and approval control system. The articles of association, financial management regulations, independent director system and measures for the management of raised funds stipulate the approval authority of the board of shareholders, the board of directors, independent directors, the board of supervisors and the general manager on business policies and investment plans, major asset purchases, use of raised funds, related party transactions, financial budget and final accounts, profit distribution, employment of accounting firms and other important matters of the company; The detailed rules for the implementation of financial examination and approval stipulates the examination and approval authority of various matters in daily operation and management. The company has special departments and posts to ensure that the business can be handled only after authorized examination and approval.
3) Accounting system control
The company implements the enterprise accounting system. In the company’s financial management system, the company’s basic accounting work, the internal management system of accounting computerization, accounting vouchers, accounting books and the processing procedures of financial accounting reports are specified in detail. The company’s accounting affairs are implemented in accordance with relevant regulations to ensure the authenticity and integrity of accounting materials.
4) Property protection control
The financial management system of the company stipulates the requirements for daily management and regular inventory of physical assets such as inventories, fixed assets and projects under construction, and establishes management systems and relevant management procedures for major assets of the company such as monetary funds, accounts receivable, inventories and fixed assets. Through the implementation of the above systems, it is ensured that all assets of the company have determined management departments and perfect records The company’s assets are reasonably guaranteed to be safe through regular inventory and check, check with the corresponding units, correspondence and other account verification measures.
5) Budget control
The company implements comprehensive budget management. The annual budget and monthly breakdown of the company are approved and issued for implementation according to the articles of association and financial management system. The company reviews the budget implementation every month and manages the deviation of budget implementation according to the review.
6) Operation analysis control
The company has special departments and posts to collect, count and analyze the production, purchase and sale, investment, finance and other information generated in the company’s operation. The company makes a more comprehensive analysis of the company’s operation every quarter, comprehensively analyzes the relevant reasons for the problems found and the deviation of operation execution, and puts forward solutions or improvement measures. The company also regularly and irregularly holds special meetings such as production and marketing coordination, major project tracking and reporting, and timely solves the problems existing in the operation process.
7) Performance appraisal control
The company has formulated the performance appraisal rules and post appraisal methods. According to the above methods, the company regularly evaluates and evaluates the performance of all employees to help employees improve their performance, and takes the appraisal results as the basis for determining employees’ salary, job promotion, evaluation, demotion, job transfer, dismissal, etc.
4. Key control activities
(1) Internal control of related party transactions
With reference to the stock listing rules and other relevant provisions, the company determines the list of related parties of the company and updates it in time to ensure that the list of related parties is true, accurate and complete. When the company and its subordinate holding subsidiaries have trading activities, the relevant responsible persons carefully check the list of related parties to carefully judge whether it constitutes a related party transaction. If it constitutes a connected transaction, it will perform the approval and reporting obligations within its respective authorities.
In order to improve the corporate governance structure and standardize related party transactions, so as to fully ensure the fairness and rationality of the company’s business activities and safeguard the interests of the company and shareholders, the company has formulated the related party transaction management system, which clearly stipulates the related parties, related relationships, related party transaction prices, approval authority of related party transactions, avoidance and decision-making procedures of related party transactions, special restrictions on controlling shareholders, information disclosure and legal liabilities of related party transactions, It ensures that the related party transactions concluded between the company and related parties comply with the principles of fairness, openness and impartiality.
When the company considers the related party transactions that need the prior approval of the independent directors, the relevant personnel shall submit the relevant materials to the independent directors for prior approval through the Secretary of the board of directors at the first time. The company is holding a meeting of the board of directors to review the related matters
