Citic Securities Company Limited(600030)
About Welle Environmental Group Co.Ltd(300190)
Verification opinions on self-evaluation report of internal control in 2021
Citic Securities Company Limited(600030) (hereinafter referred to as " Citic Securities Company Limited(600030) " and "sponsor") as the sponsor of Welle Environmental Group Co.Ltd(300190) (hereinafter referred to as " Welle Environmental Group Co.Ltd(300190) " or "company") to publicly issue convertible corporate bonds in 2020, In accordance with the measures for the administration of securities issuance and listing recommendation business, Shenzhen Stock Exchange GEM Listing Rules, Shenzhen Stock Exchange self regulatory guidelines for listed companies No. 2 - standardized operation of GEM listed companies and other relevant provisions, the Welle Environmental Group Co.Ltd(300190) board of directors issued the Welle Environmental Group Co.Ltd(300190) 2021 annual internal control evaluation report. The verification results and opinions are as follows:
1、 Internal control evaluation
(I) evaluation scope of internal control
1. Main units included in the scope of evaluation
The company determines the main subsidiaries, businesses and matters that are included in the evaluation scope and the high-risk enterprises in accordance with the risk oriented principle
Risk areas. The main units included in the evaluation scope include the parent company and all subsidiaries within the scope of consolidated statements. 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.
2. Main operations and matters included in the scope of evaluation
The main businesses and matters included in the evaluation scope include: corporate governance structure, organizational structure, human resources policies, corporate culture construction, fund management, financial management, internal control over subsidiary companies, internal control over connected transactions, internal control over major investments, internal control over information disclosure, etc.
(1) Corporate governance
In order to further clarify the responsibilities, authorities and operation procedures of the general meeting of shareholders, the board of directors, the board of supervisors and the general manager of the company, and standardize the corporate governance structure of the company, the company has established and improved the working system of the general meeting of shareholders, the board of directors, the board of supervisors, independent directors and the Secretary of the board of directors in strict accordance with the company law, the guidelines for the governance of listed companies and other laws and regulations and the articles of association, Rules of procedure have been formulated. At the same time, according to the revision of the company law, listing rules and other laws and regulations, the company timely revised the above systems of the company, continuously improved the internal control and management mechanism of the company, and promoted the sustainable and steady development of the company.
The board of directors is responsible for the daily operation and management of the company, while the board of shareholders and the board of supervisors supervise the daily operation and management of the board of directors and the decision-making of major matters of the company.
(2) Organizational structure of the company
In accordance with the requirements of the company law, the securities law, the guidelines for the governance of listed companies and other laws and regulations, the company has established a perfect organizational structure and set up decision-making supervision institutions such as the general meeting of shareholders, the board of directors and the board of supervisors.
In the organizational structure of the company, the general meeting of shareholders is the highest authority of the company, which exercises the voting rights on major matters such as the company's business policy, investment, profit distribution, election and replacement of directors and supervisors, amendment of the articles of association and so on. The board of directors of the company consists of 9 directors, including 3 independent directors. Authorized by the general meeting of shareholders, the board of directors is fully responsible for the operation and management of the company and is responsible to the general meeting of shareholders. Under the board of directors, there are four special committees of the board of directors, including strategy committee, salary and assessment committee, nomination committee and audit committee, and formulate corresponding implementation rules of the special committee. The board of supervisors of the company is composed of three supervisors, including one employee supervisor. The board of supervisors is the supervisory organ of the company, which is responsible for and reports to the general meeting of shareholders. It is mainly responsible for supervising whether directors and senior managers violate laws and regulations and infringe on the interests of the company and shareholders when performing their duties, and supervising and inspecting the operation of the company.
According to its own production and operation characteristics and requirements, the company has established functional departments matching the management framework and system structure, clearly defined the main responsibilities of each department, and played a vital role in the company's business expansion, increasing benefits and ensuring safety. During the reporting period, the company established the group management center, and divided the water environment division and solid waste treatment division according to the business segment. The group management center has various functional departments such as the president's office, the audit department, the procurement management department, the financial management department, the chief engineer's Office, the industrial research center and the administrative management department. The group headquarters strengthened the management of the group's divisions and subsidiaries from the aspects of human resources, finance, market and procurement Control and coordination, fully mobilize the enthusiasm of group members, give full play to their business autonomy, and strengthen the strategic management and professional management and control ability of the headquarters. (3) Internal audit
The board of directors shall check the legitimacy of the internal audit system and the economic control system of the subsidiaries, and make a reasonable evaluation of the legitimacy of the internal audit system and operation of the subsidiaries under the supervision of the audit committee of the internal audit department.
(4) Human resources policy
As a technologically advantageous enterprise, the company has always paid attention to human resources work and the introduction and training of talents. The company has formulated and implemented relatively perfect human resources management policies, formulated and improved management systems such as personnel management system, performance appraisal management system and staff training manual, which are responsible for the recruitment, training and guidance, salary assessment, promotion, reward and punishment of employees The procedures of dismissal and resignation are specified in detail and reasonably. At the same time, the company actively provides employees with a diversified development platform to maximize the common growth of employees and enterprises.
(5) Enterprise culture construction
Based on its own characteristics and the vision of "building a beautiful home with green waters and mountains", the company takes "customer-oriented, honest and rigorous, continuous innovation, openness and win-win" as the core values of the company and "organic waste recycling expert" as the development orientation of the company, strives to expand the related fields of urban and rural organic waste recycling, and provides customers with environmental protection technology solutions, entrusted operation services Comprehensive and integrated professional services such as after-sales and value-added services strive to build the company into a well-known brand in China's environmental protection industry.
(6) Fund management
The company regards fund management, especially the management of raised funds, as the most important part of the company's internal control. The company has formulated the management system for the use of raised funds and other relevant systems, and established a perfect use approval and management system. The company also does a good job in fund management in strict accordance with relevant management systems. All monetary capital flows must be handled in accordance with the specified process and authorized approval, so as to ensure the safe, reasonable and efficient use of the company's funds.
(7) Financial management
The company has formulated the financial management system to monitor the use of funds and the operation of assets in various business departments of the company, so as to ensure the safety of the company's property. The financial management system regulates the company's financial behavior from the aspects of financial work management, asset management, liability management, shareholders' equity management, income and profit management, cost management, fund management and so on.
(8) Asset management
According to its actual situation, the asset management company combs the business processes such as asset acquisition, acceptance, use, preservation and disposal, defines the responsibilities, authorities and post separation requirements of all links of asset management business, and improves the specific rules and regulations such as asset acceptance, use and maintenance. Strengthen the protection of the rights and interests of intangible assets, and formulate the cost accounting, amortization and other methods of intangible assets in line with relevant standards to ensure the authenticity and reliability of the financial information of intangible assets.
(9) Internal control of subsidiaries
The company has formulated and implemented the management system of subsidiary companies, standardized the management process of subsidiary companies, and defined the responsibilities of management personnel of subsidiary companies. At the same time, each subsidiary company has formulated and implemented a perfect internal control management system in accordance with the standards of listed companies and compared with the company's existing internal control management system, which is jointly supervised and implemented by the person in charge of the subsidiary company and the company's management. The company strengthened the management and control of each subsidiary company from the financial, procurement, human resources and other sectors, sent management personnel to it, and strive to control the human and financial resources of the group members and know the risks, so as to urge the operation of the subsidiary companies to comply with the laws and regulations. (10) Internal control over related party transactions
The company has formulated the management system of connected transactions in combination with the articles of association and other relevant systems, strictly standardized the approval procedures of connected transactions, limited the approval authority of the general meeting of shareholders and the board of directors on connected transactions, and strengthened the supervision of independent directors and the board of supervisors on the approval and implementation of connected persons, connected relationships and connected transactions.
At the same time, the company also formulated the system of regulating capital exchanges with related parties, established a long-term mechanism to prevent controlling shareholders and related parties from occupying the company's funds, and further improved the company's internal control.
(11) Guarantee business
The company has formulated and implemented the external guarantee management system, defined the review procedures of external guarantees, stipulated the approval authority and approval process of the general meeting of shareholders and the board of directors on external guarantees, standardized the management and information disclosure of external guarantees, promoted the benefits and controlled the risks of the company and its subsidiaries in the process of organizing resources, assets, investment and other business operations, and ensured the safety and profitability of capital operation, To improve the profitability and anti risk ability of the company. During the reporting period, the company's guarantees were for holding or participating subsidiaries, and there were no other external guarantees.
(12) Internal control of major investment
In order to promote the benefits and control the risks of the company and its subsidiaries in the process of organizing resources, assets, investment and other operations, and ensure the safety and profitability of capital operation, the company has formulated the management system for foreign investment in accordance with relevant laws and regulations, which has made detailed provisions on the approval authority, organization and decision-making mechanism of the company's foreign investment. The company has passed the general meeting of shareholders, the board of directors The investment decision-making committee and other relevant institutions shall comprehensively evaluate the risk, income, cost and other important factors, further strengthen the company's foreign investment management, ensure the preservation and appreciation of the company's foreign investment, and maintain the overall image of the company and the interests of investors. During the reporting period, the company made no major investment.
(13) Internal control of information disclosure
In accordance with laws, regulations, departmental rules, listing rules, measures and notices issued by Shenzhen Stock Exchange and other relevant provisions, the company has formulated information disclosure management system, insider information management system, external information submission and use management system and other information disclosure related systems, strengthened the management of the company's information disclosure and identified the persons responsible for information disclosure, Standardize the company's information disclosure, ensure the company's true, accurate and complete disclosure of information, and safeguard the legitimate rights and interests of the company's shareholders, especially the public shareholders.
(14) Information and communication
The company has established a good information and communication system. The company has formulated a series of rules and regulations to ensure the transparency of internal and external information and ensure the timeliness, authenticity and accuracy of information disclosure.
In terms of external information disclosure, the company has formulated information disclosure management system, insider information management system, external information submission and use management system and other information disclosure related systems to further standardize the information disclosure work and ensure the authenticity, accuracy and integrity of all the information disclosed by the company. In terms of internal communication, the company has established an information management system focusing on office automation, which has realized the company's online document approval, administrative management, document management, collaborative office and information resource sharing, improved the efficiency of internal information transmission, established effective communication channels for internal employees and improved the work efficiency of the whole company.
(15) Social responsibility
In accordance with national laws and regulations and in combination with the characteristics of the industry, the company actively performs social responsibilities and obligations in the daily business process, fully integrates them into the company's strategy and daily business activities, and actively promotes the company's social responsibility work. The company takes meeting customer demands as one of the important indicators of the company's assessment, and continuously improves the company's social image. The company has established and improved the human resource management and labor employment system to promote employment and protect the legitimate rights and interests of employees. At the same time, the company and its subsidiaries comply with the requirements of national and local laws, regulations and normative documents on labor employment and social security, and pay employees' pension, unemployment, medical treatment, maternity and industrial injury and other social insurance for their employees according to law to protect the legitimate rights and interests of employees.
(II) basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and the provisions of various internal control management systems of the company.
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. The identification standards of internal control defects determined by the company are as follows:
1. 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:
Based on the data of the consolidated financial statements in 2021, the quantitative standard for determining the importance of misstatement in the consolidated financial statements of the company is: when the amount of misstatement is greater than or equal to 5% of the total operating revenue, or the amount of misstatement is greater than or equal to 2% of the total assets, it is recognized as a major defect; When the amount of misstatement is less than or equal to 5% of the total operating revenue but greater than or equal to 3% of the total operating revenue, or less than or equal to 2% of the total assets but greater than or equal to 1% of the total assets, it is recognized as an important defect; When the amount of misstatement is less than 3% of the operating revenue or less than or equal to 1% of the total assets, it is recognized as a general defect.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
(1) Major defect: refers to the combination of one or more control defects, which may cause the enterprise to seriously deviate from the control objectives. It is identified as a major defect if it has the following characteristics:
① The management has fraud and violation of regulations;
② There is a major error in the current financial report, but the error is not found in the operation of internal control;
③ The audit committee and Audit Department of the company have ineffective supervision on the internal control of financial reports.
(2) Defects with the following characteristics are recognized as important defects:
① Failure to establish anti fraud procedures and control measures;
② There is one or more defects and there is no reasonable guarantee that the prepared financial statements will achieve the objective of truthfulness and accuracy;
③ Accounting policies are not selected and applied in accordance with GAAP.
(3) Other internal control defects that do not constitute major defects or important defects are recognized as general defects.
2. Recognition of defects in internal control over non-financial reporting
