Suzhou Veichi Electric Co.Ltd(688698)
Internal control evaluation report in 2021
Suzhou Veichi Electric Co.Ltd(688698) 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 significant 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
The company determines the main units, businesses and matters as well as high-risk areas included in the evaluation scope according to the risk oriented principle. 1. The main units included in the evaluation scope include Suzhou Veichi Electric Co.Ltd(688698) and all its holding subsidiaries 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
3. The main operations and matters included in the scope of evaluation include:
Organizational structure, human resources, social responsibility, corporate culture, risk assessment, fund management, procurement and payment, asset management, production and quality management, sales and collection, research and development, foreign investment, related party transactions, guarantee business, financial report, budget management, contract management, storage and use of raised funds, information disclosure, information and communication, internal audit and supervision, etc. 4. High risk areas of focus mainly include:
Fund management, asset management, procurement and payment, sales and collection, comprehensive budget, research and development, financial reporting, 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
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 enterprise internal control standard system and the company’s relevant internal control management system. 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
Operating income 1% 0.5-1% 0.5%
Total assets 1% 0.5-1% 0.5%
Description: None
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 A. fraud of directors, supervisors and senior managers of the company;
B. The certified public accountant finds that there is a material misstatement in the current financial report, and the internal control operation fails to find the misstatement; C. The supervision of the audit committee and the internal audit department on the company’s external financial report and internal control of financial report is invalid.
Significant deficiencies A. failure to select and apply accounting policies in accordance with GAAP;
B. Failure to establish anti fraud procedures and control measures;
C. No corresponding control mechanism has been established or implemented for the financial treatment of unconventional or special transactions, and there is no corresponding compensatory control;
D. There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the true and complete goal.
General defects and other internal control defects that do not constitute major defects or 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
Operating income 1% 0.5-1% 0.5%
Total assets 1% 0.5-1% 0.5%
Description: None
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 a. the company’s business activities seriously violate national laws, administrative regulations and normative documents;
B. Unscientific decision-making procedure leads to major decision-making mistakes;
C. The important business involving the production and operation of the company lacks system control or the system fails;
D. The results of internal control evaluation, especially major defects or important defects, have not been rectified;
E. Serious loss of management personnel or key technical personnel;
Major defects a. the company’s business activities violate national laws, administrative regulations and normative documents;
B. Unscientific decision-making procedure leads to general decision-making mistakes;
C. Major business defects of the company;
General defects and other internal control defects that do not constitute major defects or important defects.
Note: none (III) 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
None 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, whether the company has 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
None 2.4 After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in 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
During the reporting period, the company organized and carried out internal control evaluation around various elements of internal control according to the enterprise internal control standard system and other internal control supervision requirements, combined with the relevant internal control management system of the company. At the same time, the company also hired Daxin Certified Public Accountants (special general partnership) to conduct an independent audit on the implementation of the company’s internal control. The existing internal control system of the company can basically meet the management requirements of the company. Systematic internal control and necessary internal supervision mechanism have been established from the company level to all business levels, which can provide reasonable guarantee for the legality and compliance of the company’s operation and management, the authenticity and fairness of asset safety, financial reports and relevant information.
In the next year, the company will continue to improve the internal control system, continuously optimize the internal control design, give full play to the efficiency and effect of the internal control system, effectively prevent management and operation risks, and promote the realization, sustainable and healthy development of the company’s strategy. 3. Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Hu Zhiyong Suzhou Veichi Electric Co.Ltd(688698) April 15, 2022
