Company code: Hainan Jinpan Smart Technology Co.Ltd(688676) company abbreviation: Hainan Jinpan Smart Technology Co.Ltd(688676)
Hainan Jinpan Smart Technology Co.Ltd(688676)
Internal control evaluation report in 2021
Hainan Jinpan Smart Technology Co.Ltd(688676) 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 company’s (hereinafter referred to as the company’s) internal control system and evaluation methods, and 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 internal control evaluation report). I 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. II Internal control evaluation conclusion 1 On the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting
□ yes √ no
2. Evaluation conclusion of internal control over financial reporting
√ valid □ invalid
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. 3. Whether major defects in internal control over non-financial reporting are found
□ yes √ no
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.
4. Factors affecting the evaluation conclusion of internal control effectiveness from the benchmark date of internal control evaluation report to the date of issuance of internal control evaluation report □ applicable √ not applicable
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. 5. Whether the internal control audit opinion is consistent with the company’s evaluation conclusion on the effectiveness of internal control over financial reporting
√ yes □ No 6 Whether the disclosure of major defects in internal control of non-financial reports in the internal control audit report is consistent with the disclosure of the company’s internal control evaluation report √ yes □ no III Internal control evaluation (I) 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. 1. The main units included in the evaluation scope include Hainan Jinpan Smart Technology Co.Ltd(688676) and all holding subsidiaries. 2. Proportion of units included in the scope of evaluation:
Proportion of indicators (%)
The ratio of the total assets of the units included in the evaluation scope to the total assets of the company’s consolidated financial statements 100
The total operating income of the units included in the evaluation scope accounts for 100% of the total operating income in the company’s consolidated financial statements
3. The main operations and matters included in the scope of evaluation include:
Corporate governance, organizational structure, development strategy, corporate culture, information disclosure, information system and internal audit at the company level; Business level human resources, financial reporting, sales business, procurement business, fund management, asset management, contract management, guarantee business, research and development, related party transactions, control of subsidiaries, etc. 4. High risk areas of focus mainly include:
Financial report, sales business, procurement business, fund management and asset management. 5. 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. Is there any major omission □ yes √ No 6 Is there a statutory exemption
□ yes √ No 7 Other explanatory matters
nothing
（2） Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation according to the procedures specified in the enterprise internal control standard system and the company’s internal control evaluation method. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ no
The board of directors of the company distinguished the internal control of financial report from the internal control of non-financial report according to the identification requirements for major defects, important defects and general defects of the enterprise internal control standard system, combined with the factors such as the company’s size, industry characteristics, risk preference and risk tolerance, and studied and determined the specific identification standards of internal control defects applicable to the company, which are consistent with the previous years. 2. Identification standard of internal control defects in financial reporting
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
Total profit misstatement amount ≥ 5% of total profit, 3% of total profit ≤ misstatement amount misstatement amount 3% of total profit, 5% of total profit
Note: the company adopts the quantitative standard for determining the internal control defect of the financial report by the impact of the internal control defect on the total profit. If the internal control defect may cause the amount of misstatement in the financial statements to be greater than or equal to 5% of the total profit, the defect is considered as a major defect; If it is less than 5% and greater than or equal to 3%, the defect is considered as an important defect; If less than 3%, the defect is considered as a general defect.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Qualitative standard of defect nature
Major defects 1. The company’s internal control environment is invalid;
2. Fraud by directors, supervisors and senior managers;
3. The external audit found that there were significant misstatements in the current financial statements, but the company’s internal control failed to find them in the operation process;
4. The supervision of the audit committee and the audit department on the company’s financial report and internal control is invalid.
Significant defects 1. There are identified significant misstatements in the current financial report, the control activities fail to identify the misstatements, or it is necessary to correct the published financial report;
2. Although it does not reach or exceed the importance level, but from the nature, it should still attract the attention of the board of directors and management.
General defects other defects in internal control over financial reporting other than those specified above shall be recognized as general defects.
Note: by analyzing the severity of the business nature involved in the defect, the nature and scope of direct or potential negative impact and other factors, the company identifies major defects, important defects and general defects in the internal control of financial reporting. 3. Identification standard of internal control defects in non-financial reporting
The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
Total profit direct property loss ≥ total profit total profit 1% ≤ direct property loss direct property loss total profit 3% loss total profit 3% 1%
Note: the company adopts the quantitative standard for determining the internal control defect of non-financial report based on the impact of internal control defect on the total profit. If the amount of direct property loss caused by internal control defect is greater than or equal to 3% of the total profit, the defect is considered as a major defect; If it is less than 3% and greater than or equal to 1%, the defect is considered as an important defect; If less than 1%, the defect is considered as a general defect.
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Qualitative standard of defect nature
Major defects 1. Lack of democratic decision-making procedures, such as decision-making on major issues, decision-making on the appointment and dismissal of personnel at important posts, decision-making on major project investment and decision-making procedures on the use of large amount of funds (three important and one large);
2. Unscientific decision-making procedures, such as major decision-making mistakes, causing heavy losses to the company;
3. Serious violation of national laws and regulations;
4. Massive loss of key management personnel or important talents;
5. Frequent negative news in the media;
6. Major defects in internal control evaluation have not been rectified;
7. The lack of system control or systematic failure of important business has caused great losses to the company.
Important defects 1. The company has important property losses due to management errors, and the control activities fail to prevent such errors;
2. Although the property loss does not reach or exceed the importance level, from the nature, it should still attract the attention of the board of directors and management.
General defects other defects in internal control over non-financial reporting other than those specified above shall be recognized as general defects.
Note: by analyzing the severity of the business nature involved in the defect, the nature and scope of direct or potential negative impact and other factors, the company identifies major defects, important defects and general defects in the internal control of financial reporting. （3） Identification and rectification of internal control defects 1 Identification and rectification of internal control defects in financial reporting 1.1 Major defects
Whether the company has major defects in internal control over financial reporting during the reporting period □ yes √ no 1.2 Important defects
Whether the company has significant defects in internal control over financial reporting during the reporting period □ yes √ no 1.3 General defect
During the reporting period, the company had no general defects in internal control over financial reporting. 1.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting that have not been rectified □ yes √ no 1.5 After the above rectification, on the benchmark date of the internal control evaluation report, does the company have any important defects in the internal control of financial reporting that have not been rectified □ yes √ No 2 Identification and rectification of internal control defects in non-financial reporting 2.1 Major defects
Whether the company found any major defects in internal control over non-financial reporting during the reporting period □ yes √ no
2.2. Important defects
Whether the company found any significant defects in internal control over non-financial reporting during the reporting period □ yes √ no 2.3 General defect
During the reporting period, the company had no general defects in internal control over non-financial reporting. 2.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in the non-financial reporting internal control that have not been rectified □ yes √ no 2.5 After the above rectification, on the benchmark date of the internal control evaluation report, whether the company finds any important defects in non-financial reporting internal control that have not been rectified □ yes √ no IV Description of other major matters related to internal control 1 Rectification of internal control defects in the previous year □ applicable √ not applicable 2 Operation of internal control in this year and improvement direction in the next year
√ applicable □ not applicable
In 2021, the company established a relatively perfect corporate governance structure, the existing internal control system is relatively sound, in line with relevant national laws and regulations, played a good management and control role in all key links of the company’s operation and management, related party transactions, external guarantee, major investment, etc., and can provide guarantee for the normal operation of the company’s businesses and the control of business risks. Therefore, The company’s internal control is effective.
Due to the inherent limitations of internal control, the effectiveness of internal control may change with the change of internal control environment and the needs of the company’s development. Therefore, the company will timely supplement and improve the internal control system in 2022 and make it effectively implemented, so as to provide a reasonable guarantee for the authenticity and integrity of financial reports and the realization of the company’s strategy and business objectives. 3. Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Li Zhiyuan Hainan Jinpan Smart Technology Co.Ltd(688676)
