Jinfa Labi Maternity & Baby Articles Co.Ltd(002762)
Self evaluation report on internal control in 2021
Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) 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 conducted a self-evaluation on the effectiveness of the company's internal control on December 31, 2021.
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. On the th, the company found no major defects in the internal control over non-financial reporting.
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 units, businesses and matters included in the evaluation scope and high-risk areas. The main units included in the evaluation scope include the parent company and holding subsidiaries. The total assets of the units included in the evaluation scope account for 100% of the total assets of the company's consolidated financial statements, and the total profits account for 100% of the total profits of the company's consolidated financial statements. The main operations and matters included in the scope of evaluation include:
The internal control processes at the level of corporate governance and control include: organizational structure, development strategy, human resources, social responsibility and corporate culture.
The internal control processes of the company's business control level include: financial report, capital activities, procurement business, asset management, sales business and engineering projects.
The high-risk areas of focus mainly include the credit risk of key accounts receivable, the risk of price fluctuation of raw materials, the risk of inventory falling price, etc.
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.
(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 internal audit management system formulated by the company.
According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, and in combination with factors such as the company's size, industry characteristics, risk preference and risk tolerance, the board of directors of the company distinguished internal control over financial reports from internal control over non-financial reports, and studied and determined the specific identification standards of internal control defects applicable to the company this year. The identification standards of internal control defects determined by the company are as follows:
1. Identification criteria for defects in internal control over financial reporting
The recognition standard of internal control defect of financial report directly depends on the importance of financial report misstatement that may be caused by the existence of internal control defect.
According to the importance of financial report misstatement that may be caused by defects, the company adopts a combination of quantitative and qualitative methods to divide defects into major defects, important defects and general defects.
(1) Quantitative standard:
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
General defects, important defects and major defects of the project
Potential misstatement impact of total profit 2% of total profit ≤ misstatement impact ≥ 2% of total profit 5% of total profit
Potential misstatement impact of total assets 0.2% of total assets ≤ misstatement shadow misstatement impact ≥ 0.2% of total assets 0.5% of total assets
If any standard of the above evaluation items is met, it will be judged as the defect of the corresponding standard.
(2) Qualitative criteria:
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
A. Those with one of the following characteristics are recognized as major defects:
(A) Fraud by directors, supervisors and senior managers;
(B) The external audit found that there was a material misstatement in the current financial report, but the internal control failed to find the misstatement in the operation process;
(C) The audit committee and internal audit institution of the company have no effect on the supervision of internal control;
(D) One or more internal control defects lead to systematic and regional failure of internal control, which may lead to serious deviation from the control objectives of the company.
B. Those with one of the following characteristics are identified as important defects:
(A) Failure to select and apply accounting policies in accordance with GAAP;
(B) The company lacks anti fraud procedures and control measures;
(C) For the accounting treatment of important unconventional or special transactions, no corresponding control mechanism is established or not implemented and there is no corresponding compensatory control;
(D) There are one or more defects in the control of the financial report at the end of the period, and there is no reasonable guarantee that the prepared financial statements meet the requirements of authenticity and accuracy.
C. General defects: other internal control defects that do not constitute major defects or important defects.
2. Identification standard of internal control defects in non-financial reporting
Internal control over non-financial reporting refers to the internal control over other objectives other than financial reporting objectives. These objectives generally include reasonable guarantee of asset safety, legal and compliance of operation, improvement of operation efficiency and effect, and promotion of the realization of strategic objectives.
The identification of the company's internal control defects in non-financial reporting is mainly based on the severity of the business nature, the nature of direct or potential negative impact, the scope of impact and other factors. According to the importance of non-financial report misstatement that may be caused by defects, the company adopts a combination of qualitative and quantitative methods to divide defects into major defects, important defects and general defects.
(1) Quantitative standard:
The quantitative standard for the evaluation of internal control defects in non-financial reports shall be implemented with reference to the quantitative standard for the evaluation of internal control defects in financial reports.
(2) Qualitative criteria:
The identification of non-financial report defects is mainly based on the impact of defects on the effectiveness of business processes and the possibility of occurrence.
A. If the possibility of defects is small, it will reduce the work efficiency or effect, or increase the uncertainty of the effect, or make it deviate from the expected goal, which is a general defect;
B. If the possibility of defects is high, it will significantly reduce the work efficiency or effect, or significantly increase the uncertainty of the effect, or make it significantly deviate from the expected goal as an important defect;
C. If the possibility of defects is high, it will seriously reduce the work efficiency or effect, or seriously increase the uncertainty of the effect, or make it seriously deviate from the expected goal, which is a major defect.
(III) identification and rectification of internal control defects
1. identification and rectification of internal control defects in financial reports
According to the above identification standards of internal control defects in financial reporting, the company has no major defects and important defects in internal control of financial reporting during the reporting period.
2. Identification and rectification of internal control defects in non-financial reports
According to the above identification standards of internal control defects in non-financial reports, no major defects and important defects in the company's internal control over non-financial reports were found during the reporting period.
4、 Description of other major matters related to internal control
The company has no explanation of other major matters related to internal control.
Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) board of directors April 14, 2022
