Sinochem International Corporation(600500) (holding) Co., Ltd
Internal control evaluation report in 2021
All shareholders of Sinochem International Corporation(600500) (holding) Co., Ltd.:
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: high performance and intermediate business units, including Yangnong group and its subsidiaries, Sinochem high fiber, Ningxia Sinochem, Hebei new materials, Sinochem FUHENG, Sinochem Fuding, Sinochem Xinbao, Ningbo runwo, etc; Additive business unit, including Sinochem and its subsidiaries, fubia; Medical and health business unit, including Sinochem health and its subsidiaries; Lightweight marketing business unit, including Sinochem plastics and its subsidiaries; Business unit of lightweight materials, including elix company, Jiangsu Lianyungang Port Co.Ltd(601008) polymers, Yangzhou engineering plastics, etc; Industrial resources business unit; New energy business unit; Natural rubber business unit. 2. Proportion of units included in the scope of evaluation:
Proportion of indicators (%)
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
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, accounting for 3.5% The main operations and matters included in the scope of evaluation include:
Corporate level control (9): corporate governance, management structure, development strategy, human resources, administrative management, information communication, corporate culture, risk management and internal supervision.
Business process level control (18): budget management, fund management, financial reporting, accounting, financial derivatives management, asset management, related party transactions, financial management, procurement management, sales management, engineering management, production and operation management, quality management, safety and environmental protection, investment M & A, guarantee business, legal affairs, research and development.
General control of information system (1): information system. 4. High risk areas of focus mainly include:
M & A integration, international operation, safety and environmental protection, engineering management, scientific and technological research and development, strategy implementation, marketing, derivatives business, etc.
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
None (II) Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation in accordance with the enterprise internal control standard system, enterprise internal control evaluation guidelines, Sinochem International Corporation(600500) internal control guidelines and Sinochem International Corporation(600500) internal control evaluation management measures. 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 1. Potential misstatement of total pre tax profit 1. 2.5% of total pre tax profit ≤ 1. Potential misstatement ＜ pre tax profit statement ≥ 5% of total pre tax profit and potential misstatement ＜ 2.5% of total pre tax profit
5% of the amount
Total operating revenue 2. Potential misstatement of operating revenue ≥ 2. Potential misstatement of total operating revenue 0.5% 0.25% of total operating revenue ≤ potential misstatement 0.25% of total operating revenue
0.5% of total revenue
Total assets 3. Potential misstatement of total assets ≥ 3. Potential misstatement of total assets ≤ 3. Potential misstatement ＜ 0.5% of total assets ＜ 0.25% of total assets
0.5%
explain:
If the potential misstatement caused by internal control defects is related to profit and loss, the pre tax profit shall be taken as the measurement index in case of profit and the operating income shall be taken as the measurement index in case of loss; If the potential misstatement caused by internal control defects is related to assets and liabilities, the total assets shall be taken as the measurement index.
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, fraud of directors, supervisors and senior managers;
The enterprise corrects the published financial report;
The certified public accountant finds that there is a material misstatement in the current financial report, but the internal control fails to find the misstatement in the operation process;
The supervision of enterprise audit committee and internal audit institution on internal control is invalid.
Significant defects: failure to select and apply accounting policies in accordance with GAAP;
Failure to establish anti fraud procedures and control measures;
No corresponding control mechanism has been established or implemented for the accounting treatment of unconventional or special transactions, and there is no corresponding compensatory control;
There are one or more defects in the control of the financial reporting process at the end of the period, and the authenticity, accuracy and integrity of the preparation cannot be reasonably guaranteed.
General defects are other control defects except major defects and important defects.
Note: none 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 1. Potential misstatement of total pre tax profit 1. 2.5% of total pre tax profit ≤ 1. Potential misstatement ＜ pre tax profit statement ≥ 5% of total pre tax profit and potential misstatement ＜ 2.5% of total pre tax profit
5% of the amount
Total operating revenue 2. Potential misstatement of operating revenue ≥ 2. Potential misstatement of total operating revenue 0.5% 0.25% of total operating revenue ≤ potential misstatement 0.25% of total operating revenue
0.5% of total revenue
Total assets 3. Potential misstatement of total assets ≥ 3. Potential misstatement of total assets ≤ 3. Potential misstatement ＜ 0.5% of total assets ＜ 0.25% of total assets
0.5%
explain:
If the potential misstatement caused by internal control defects is related to profit and loss, the pre tax profit shall be taken as the measurement index in case of profit and the operating income shall be taken as the measurement index in case of loss; If the potential misstatement caused by internal control defects is related to assets and liabilities, the total assets shall be taken as the measurement index.
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: lack of democratic decision-making procedures;
Violation of national laws and regulations, causing serious impact;
Frequent negative news in the media;
Major defects in internal control evaluation have not been rectified;
Lack of institutional control or systematic failure of important business;
Be punished by the CSRC or warned by the stock exchange.
Important defects: democratic decision-making procedures exist but are not perfect;
Violation of internal rules and regulations of the enterprise, resulting in great negative impact;
Negative news in the media has a great impact;
Important defects in internal control evaluation have not been rectified;
There are important defects in important business systems or systems.
General defects are other control defects except major defects and important defects.
Description: None
（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
For the general defects of internal control over financial reporting found during the reporting period, a special report has been made to the board of directors. The company attaches great importance to it, instructs relevant units and responsible persons to rectify and implement within a time limit, and ensures that the rectification is in place through continuous tracking. The company's internal control has a dual supervision mechanism of self-evaluation and internal audit, and the risk of internal control defects is controllable. 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 □
