Haining China Leather Market Co.Ltd(002344)
Self evaluation report on internal control in 2021
Haining China Leather Market Co.Ltd(002344) 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 internal control system and evaluation methods of the company (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、 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
(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 units included in the evaluation scope mainly include the company and all holding subsidiaries. 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 main businesses and matters included in the scope of evaluation include internal control elements such as control environment, risk assessment process, information system and communication, control activities and supervision of control, specifically including the communication and implementation of integrity and moral values, the emphasis on competence, the participation procedures of the management, the concept and business style of the management, organizational structure, the allocation of authority and responsibility, human resources policies and practices Monetary capital, financing, procurement and payment, physical assets, costs, sales and collection, fixed assets, investment links, external guarantee, related party transactions, use and management of raised funds, information disclosure, etc; The high-risk areas focused on mainly include operational risk, environmental risk, financial risk, etc. The details are as follows:
1. Control environment
(1) Communication and implementation of integrity and moral values
Integrity and moral values are an important part of the control environment and affect the design and operation of important business processes of the company. The company has always attached importance to the creation and maintenance of this atmosphere, established a series of internal norms such as employee code of conduct, corporate culture system, general financial rules, internal audit system and information disclosure system, and effectively implemented these multi-channel and all-round through strict punishment system and the practice of senior managers.
(2) Emphasis on Competence
The management of the company attaches great importance to the setting of the use ability level required for specific jobs, as well as the requirements for the knowledge and ability necessary to achieve this level. At present, the company has 1151 employees, including 10 with senior titles, 47 with intermediate titles and 134 with primary titles; Among them, 303 are undergraduates and above, and 848 are junior college students and below. The company also carries out various forms of post training and education for different posts according to the needs of actual work, so that employees can be competent for their current jobs.
(3) Participation procedures of governance
The responsibilities of the management have been clearly stipulated in the articles of association and policies of the company. Through its own activities and with the support of the audit committee, the governance layer supervises the company's accounting policies and internal and external audit work and results. The responsibilities of the governance layer also include supervising whether the policies and procedures designed to review the effectiveness of internal control are reasonable and effective.
(4) Management philosophy and business style
The management of the company is responsible for the operation of the enterprise and the formulation, implementation and supervision of business strategies and procedures. The board of directors, audit committee or similar institutions shall effectively supervise them. The management attached great importance to internal control, including information technology control, information management personnel and financial and accounting personnel, and timely and properly handled the reports on internal control weaknesses and violations received. Adhering to the business theory of creating brand market, humanistic market and harmonious market, the company has the business style of being a first-class employee, building a first-class market and creating first-class performance, and operates honestly and legally.
(5) Organizational structure
In order to effectively plan, coordinate and control business activities, the company has reasonably determined the form and nature of organizational units, implemented the principle of separation of incompatible positions, scientifically divided the responsibilities and authorities within each organizational unit, and formed a mutual check and balance mechanism. At the same time, we will earnestly achieve "five independence" from the controlling shareholder of the company. The company has designated special personnel to be specifically responsible for internal audit and ensure the implementation of relevant accounting control systems.
(6) Distribution of authority and responsibility
The company adopts the method of assigning control responsibilities to individuals and departments, establishes a set of authorization mechanism for performing specific functions (including transaction authorization), and ensures that everyone clearly understands the reporting relationship and responsibilities. In order to effectively control the authorized use and supervise the company's activities, the company has gradually 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 accounting standards.
(7) Human resources policy and Practice
The company has established and implemented more scientific personnel management systems such as employment, training, job rotation, assessment, reward and punishment, promotion and elimination, and hired enough personnel to complete the assigned tasks.
The company has formulated corresponding job responsibility instructions for each job according to its importance.
2. Risk assessment process
The company has formulated the strategic goal of "consolidating and upgrading the main leather industry, superimposing the development of the fashion industry, and promoting Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration", supplemented by the development policy of "internal growth and extension", "innovation and expansion", "leisure and efficiency reduction" and the plan at the business process level, so as to clearly convey the business objectives of the enterprise to every employee. The company has established an effective risk assessment process, and established development and Strategy Committee, audit committee and other departments to identify and respond to changes that may have a significant and general impact on the company, including business risk, environmental risk, financial risk and so on.
3. Information system and communication
The company has established a powerful information system to provide timely and effective performance reports to the management. The information system personnel (including financial personnel) are scrupulous and diligent, and can effectively perform their assigned responsibilities. The management of the company also provides appropriate human and financial resources to ensure the normal and effective operation of the whole information system.
In 2021, the company used the nail system to realize mobile office at the mobile end, established effective communication channels and mechanisms, and strengthened the timely transmission of the company's basic business information. The company ensured the timely and effective transmission of the company's system update, major business information and corporate culture information through the internal newspaper, internal network and e-mail system, so as to help improve the company's management efficiency. The adequacy of internal communication enables employees to effectively perform their duties, communicate effectively with customers, partners, regulators and other outsiders, and enable the management to take timely and appropriate further actions in the face of various changes.
4. Control activities
(1) Monetary capital: the company has established strict authorization and approval procedures for the revenue and expenditure and custody of monetary capital. Incompatible positions for handling monetary capital business have been separated, and there is a mutual restriction relationship between relevant institutions and personnel. The company has defined the scope of use of cash and the provisions that should be observed when handling cash revenue and expenditure business in accordance with the Interim Regulations on cash management of the State Council. The settlement procedures for bank deposits have been formulated in accordance with the payment and settlement measures of the people's Bank of China and relevant regulations. The company stipulates that subordinate enterprises are strictly prohibited from futures trading, lending excess funds to units without authorization, raising funds from employees, and setting up private bank accounts. The company has no major inappropriateness affecting the safety of monetary funds.
(2) Financing: the company has formed a management system for financing business, which can reasonably determine the financing scale and financing structure, select appropriate financing methods, and strictly control financial risks to reduce capital costs. The funds raised by the company did not deviate seriously from the original plan.
(3) Procurement and payment: the company has reasonably planned and established the organization and post of procurement and payment business. The purchase requisition, approval, procurement and acceptance procedures of engineering materials and equipment are clarified. The payment of accounts payable and prepayments can only be handled after the relevant procedures are complete. In terms of authority, within the authorization scope of the headquarters of the company, subordinate enterprises can independently handle procurement and payment business. The company has no major loopholes in the control of procurement and payment.
(4) Physical assets: the company has established a post responsibility system for physical assets management, which can control the key links such as acceptance and warehousing, receiving and issuing, storage and disposal of physical assets, and has taken measures such as division of responsibilities, regular physical inventory, property records, account verification and property insurance, which can effectively prevent the theft, theft, damage and major loss of various physical assets.
(5) Cost: the company has established a cost control system and a comprehensive budget system, which can do a good job in the basic work of cost management and budget, and clarify the expenditure standard of expenses. And be able to compare the actual performance and planned objectives in time, and apply the comparison results to the actual work for control and adjustment.
(6) Sales and collection: the company has formulated a relatively feasible sales policy, which has clearly stipulated the pricing principle, credit standards and conditions, collection method, responsibilities and authorities of institutions and personnel involved in sales business and other relevant contents. The sale of goods and provision of labor services between enterprises within the scope of the joint stock company shall be settled according to the unified internal settlement price. The implementation of the responsibility system for dunning the payment and collection of the rent and house purchase money has a strong management. The company and its subordinate enterprises will implement the collection responsibility to the market management department and the sales department, and list the collection rate of the rent and house purchase money as one of the main assessment indicators. In terms of authority, within the authorization scope of the headquarters of the company, subordinate enterprises can independently handle the business of selling goods, providing labor services, renting shops and supporting properties, and payment settlement.
(7) Fixed assets: the company has established more scientific fixed assets management procedures and engineering project decision-making procedures. Fixed assets shall be subject to the method of "unified management, unified dispatching, hierarchical use and hierarchical accounting". The payment of fixed assets and engineering projects can only be paid after the relevant assets have been implemented and the procedures are complete.
(8) Investment link: in order to strictly control the investment risk, the company has established a more scientific decision-making procedure for foreign investment and implemented the responsibility system for major investment decisions. The corresponding authority for foreign investment is concentrated in the company's headquarters (using the mechanism that different investment amounts are decided by different levels of power institutions of the company). All subsidiaries are not allowed to invest abroad without authorization. The company has not seriously deviated from the company's investment policies and procedures.
(9) External guarantee: the company can strictly control the guarantee behavior, establish the guarantee decision-making degree and responsibility system, clearly stipulate the guarantee principles, guarantee standards and conditions, guarantee liability and other relevant contents, strictly manage the conclusion of the guarantee contract, and timely understand and master the operation and financial status of the guaranteed, so as to prevent potential risks and avoid and reduce possible losses.
(10) Related party transactions: the company has formulated the fair decision-making system for related party transactions, which makes clear provisions on related parties, related party 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, so as to ensure that the related party transactions concluded between the company and related parties comply with the principles of fairness, openness and impartiality.
(11) Management of the use of raised funds: the company's internal control over the use of raised funds follows the principles of standardization, safety, efficiency and transparency, abides by commitments and pays attention to the use efficiency. The company has formulated the management system of raised funds, which clearly stipulates the storage, approval, use, change and supervision of raised funds. The company shall store and manage the raised funds in a special account, sign a special account management agreement for the raised funds with the deposit bank, formulate strict approval procedures and management processes for the use of the raised funds, ensure that the raised funds are used according to the purposes of the funds listed in the prospectus, invest the raised funds in the investment projects according to the project budget, and track the project progress and the use of the raised funds. The internal audit department of the company closely tracks and supervises the use of the raised funds and reports to the board of directors every quarter. The company actively cooperates with the sponsor's supervision, informs the sponsor of the use of the raised funds, and authorizes the sponsor representative to inquire about the withdrawal of the raised funds at relevant banks and provide other necessary cooperation and information.
(12) Information disclosure: in strict accordance with securities laws and regulations, the company has formulated information disclosure system, investor relations management system, insider information insider registration system, internal reporting system of major information, etc. The chairman is the first person responsible for the company's information disclosure; The Secretary of the board of directors is the main person responsible for information disclosure and is responsible for managing the company's information disclosure and investor relations management. The company's investment and securities department is the daily work department of the company's information disclosure affairs. Under the direct leadership of the Secretary of the board of directors, it is responsible for the company's information disclosure affairs. The company shall perform the obligation of information disclosure in strict accordance with the provisions of information disclosure, disclose relevant information truthfully, accurately, timely and completely, treat all shareholders fairly, and ensure that all shareholders of the company can have equal rights
