Internal control evaluation report in 2021
All shareholders of Gansu Hainan Yatai Industrial Developent Co.Ltd(000691) Development 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).
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 disclosure, 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, the company has 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.
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.
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
According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas. The main units included in the evaluation scope include the company and its wholly-owned subsidiary Gansu Yamei Trading Co., Ltd. and its holding subsidiary Cangzhou Lingang Yanuo Chemical Co., Ltd.
The main businesses and matters included in the evaluation scope include: organizational structure, development strategy, corporate culture, capital activities, procurement business, asset management, sales business, guarantee business, financial report, comprehensive budget, information disclosure, related party transactions, fund-raising, internal information transmission and internal supervision. The high-risk areas of focus mainly include capital activities, procurement business, sales business, asset management, related party transactions and information disclosure. The main contents are as follows:
1. Organizational structure
The company has established a standardized enterprise management system and corporate governance structure in strict accordance with the company law, securities law and relevant laws and regulations of China Securities Regulatory Commission and Shenzhen Stock Exchange. The company has formulated the articles of association, the rules of procedure of the three meetings and the special committees and other rules and regulations, formed a sound and complete system of rules and regulations, defined the responsibilities and authorities of the general meeting of shareholders, the board of directors, the board of supervisors and the management, formed a corporate governance structure that performs its own duties, assumes its own responsibilities, coordinates the operation and effective checks and balances, ensured the legal compliance, authenticity and effectiveness of the company’s business behavior, and promoted the business development of the company, Safeguarding the interests of investors and companies.
The general meeting of shareholders is the highest authority of the company, which decides the company’s business policy and investment plan according to law, elects and replaces directors and supervisors, deliberates and approves the reports of the board of directors and the board of supervisors, deliberates and approves the annual financial settlement plan, the purchase and sale of major assets and other matters.
The board of directors shall be responsible for the general meeting of shareholders, convene the general meeting of shareholders and report its work to the general meeting of shareholders, implement the resolutions of the general meeting of shareholders, formulate the company’s business plan and investment plan, formulate the company’s annual financial budget and final settlement plan, formulate the company’s profit distribution plan and loss recovery plan, and formulate the company’s plan for increasing or reducing registered capital, issuing bonds or listing other securities; Formulate the company’s major acquisition and repurchase of the company’s shares, decide on the company’s foreign investment, acquisition and sale of assets, asset mortgage, external guarantee and other matters within the scope authorized by the general meeting of shareholders, and formulate the company’s basic management system.
The board of directors of the company has four special committees: Audit Committee, strategy committee, nomination committee and salary and assessment committee. The audit committee is mainly responsible for the communication, supervision and verification of internal and external audit of the company; The strategy committee is mainly responsible for putting forward opinions on the company’s development planning and investment decisions; The nomination committee is mainly responsible for selecting and making suggestions on the candidates of directors and managers of the company according to the selection criteria and procedures; The remuneration and assessment committee is mainly responsible for formulating and assessing the assessment standards of the company’s directors and managers, and formulating and reviewing the remuneration policies and plans of the company’s directors and managers. Each committee has a clear division of responsibilities and the overall operation is good.
Review the company’s periodic reports prepared by the board of directors and put forward written review opinions, propose to convene an extraordinary general meeting of shareholders and put forward proposals to the general meeting of shareholders.
The management is responsible for organizing and implementing the resolutions of the general meeting of shareholders and the board of directors, and presiding over the production, operation and management of the enterprise. 2. Development strategy
The company has established a strategy formulation process in line with internal control norms and formulated corresponding systems. The preparation of relevant systems of the company complies with internal control norms and is effectively implemented. It ensures that the analysis, formulation, implementation and adjustment of the strategic plan are properly approved to meet the legal compliance of the company’s strategic formulation, promote the development of the company, meet the needs of the market and be effectively implemented.
3. Corporate culture
The company shapes the core values of the enterprise, focuses on excavating its own culture, firmly grasps the direction of advanced culture, and guides the actual actions of the enterprise according to the core values. The company fully embodies the people-oriented management concept, builds a good development platform for all employees, and cultivates employees’ positive values and sense of social responsibility. The company uses weekly meetings, morning meetings, special meetings, safety meetings and other forms to organize employees to carry out training, communication, exchange and learning, further unify the upper and lower ideas, promote the growth of the organization, and strive to make all employees understand the content of corporate culture construction in their active participation. Through the construction of corporate culture, the company has established common values, code of conduct and service concept, enhanced the execution and cohesion of the team, and improved the operation efficiency of the company.
4. Financial activities
The company has established and improved the company’s financial accounting system and fund management system, standardized business operations such as fund activities, fund-raising, investment and fund operation, optimized the fund-raising structure, and controlled and reduced fund risks. It has formulated strict fund authorization, approval, verification and other relevant management systems, defined the responsibilities and authorities of various links such as financing, investment and operation and the separation requirements of various post responsibilities, and strictly standardized fund plan management, cash management, bank deposit management, loan and bill management, expense reimbursement management, so as to ensure the safe and effective operation of the company’s funds.
5. Procurement business
According to the needs of the company’s business development, the company has established a strict procurement management system, strengthened the control of procurement links, standardized the procurement and other business operations required for daily operation, carried out risk control step by step for purchase requisition, approval, qualified supplier screening, purchase, acceptance, payment and procurement contract conclusion, reasonably controlled the procurement cost, reduced the inventory backlog, and ensured that the material procurement not only meets the company’s business needs, but also does not cause waste.
6. Asset management
The company has established an asset management system to clarify the management requirements of asset acquisition, acceptance and warehousing, receiving and issuing, inventory disposal and other links, and strictly separate the post management of physical process and corresponding accounting process. The company attaches importance to the safety management of assets and conducts inventory regularly to ensure the consistency between accounts and facts and the integrity of assets. Carry out special analysis on the abnormal conditions in the inventory, find out the causes, and deal with them timely and accurately.
7. Sales business
The company has established a sales business management system, formulated appropriate sales policies and strategies, and clarified the responsibilities and approval authority of sales pricing, collection and other links. All functional units and departments handle the sales business according to the specified authority and procedures, and have taken effective control measures to ensure the realization of sales objectives and the return of funds.
8. Guarantee business
The company has formulated the external guarantee management system, improved the ex ante evaluation, in-process monitoring, ex post recovery and disposal mechanism of the company’s guarantee matters, prevented the potential debt repayment risk caused to the company due to the deterioration of the guarantor’s financial situation as far as possible, reasonably avoided and minimized the possible losses, so as to safeguard the interests of the company’s shareholders and investors. 9. Financial Report
The company has established a financial report preparation and disclosure management system and control process to standardize the company’s business operations such as financial processing and settlement, related party transaction management, financial report preparation, external provision of financial reports and analysis and utilization of financial reports, and continuously improve the accounting management system in combination with the company’s development and the regulatory requirements of China Securities Regulatory Commission and Shenzhen Stock Exchange, so as to ensure that the company’s financial information during the reporting period can be truthful Accurate and complete processing, in line with the information disclosure procedures and requirements, effectively protect the interests of the majority of investors, continuously improve the operation and management level and improve the company’s operating performance. 10. Comprehensive budget
The company has established a comprehensive budget management system to standardize business operations such as budget preparation, budget implementation and budget assessment, ensure that the budget preparation during the reporting period meets the requirements of the company’s development strategy and objectives, comprehensively improve the quality and operation efficiency of budget management, and ensure that the company’s development strategic objectives can be effectively controlled and implemented through budget management.
11. Information disclosure
In combination with the provisions of the company law, the articles of association and other laws and regulations, the company has formulated the information disclosure management system, and made clear provisions on the contents, approval procedures and internal reports of major information, so as to ensure the timeliness, accuracy and integrity of the company’s information disclosure. Protect the legitimate rights and interests of the company, investors, creditors and other stakeholders.
12. Related party transactions
The company has standardized the internal control of connected transactions in accordance with the guidelines on internal control of listed companies of Shenzhen Stock Exchange and other relevant provisions; In accordance with relevant laws, administrative regulations, departmental rules, listing rules and other relevant provisions, the approval authority of the company’s general meeting of shareholders and the board of directors for related party transactions shall be clearly divided, and the deliberation procedures and voting avoidance requirements for related party transactions shall be stipulated. Refer to the listing rules and other relevant provisions to determine the list of related parties of the company and update it in time to ensure that the list of related parties is true, accurate and complete. The related party transactions between the company and its related parties shall follow the principles of equality, voluntariness, equivalence and compensation, sign a written agreement, and follow the pricing principles of open, fair and just market.
13. Raised funds
The company has formulated the measures for the management of raised funds, which clearly stipulates the storage, use and approval procedures, purpose adjustment and change, internal audit and supervision of raised funds, so as to ensure that the raised funds are used exclusively.
14. Internal information transmission
The company has established relevant management systems and control processes for internal information transmission, standardized business operations such as production and operation information transmission, official document information transmission, financial information transmission, meeting information transmission and insider information management, ensured the compliance, integrity, soundness and scientificity of the internal reporting system, ensured strict internal reporting processes, strengthened the integration and sharing of internal reporting information, and ensured the timely and effective transmission of internal information.
15. Internal supervision
The board of supervisors of the company shall exercise the supervisory authority on behalf of the general meeting of shareholders, comprehensively supervise the operation and management activities of the company, supervise the performance of the board of directors and its members, the general manager and other senior managers and the operation of the company according to law, and be responsible to the general meeting of shareholders.
The audit committee of the company is mainly responsible for the communication, supervision and verification of internal and external audits of the company, so as to ensure the effective supervision of the board of directors over the management. The internal audit department of the company is responsible for auditing and supervising the financial revenue and expenditure and economic activities of the company and its holding subsidiaries, making a reasonable evaluation of the authenticity, rationality and legitimacy of its economic benefits, timely discovering the defects and deficiencies of internal control, proposing rectification plans, supervising the implementation, and timely reporting to the audit committee of the board of directors.
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, relevant guidelines and codes of internal control of Shenzhen Stock Exchange and other relevant documents, combined with the actual situation 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, studied and determined the specific identification standards for internal control defects applicable to the company, and the reporting period is consistent with that of 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
(1) The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Quantitative standard general defect important defect major defect
Total profit potential misstatement ＜ 5% of total profit 5% ≤ potential misstatement ＜ potential misstatement ≥ 10% of total profit 10% of total profit
Potential misstatement of operating revenue 1% of total revenue ≤ 1% of total revenue ≤ potential misstatement potential misstatement ≥ 2% of total revenue and 2% of total revenue
Potential misstatement of total assets ＜ 0.5% of total assets ＜ 0.5% of total assets ≤ potential misstatement ＜ potential misstatement ≥ 1% of total assets 1% of total assets
Note: when the total profit of the company is positive, the main quantitative standard for the evaluation of internal control defects in the company’s financial report is the total profit; Profit in the company
