Internal control evaluation report in 2021
Anji Foodstuff Co.Ltd(603696) 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 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: all departments of the company and its subsidiaries 2 Proportion of units included in the scope of evaluation:
Proportion of indicators (%)
The ratio of the total assets of the units included in the evaluation scope to the total assets of the company’s consolidated financial statements 100
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:
Corporate Governance: organizational structure, development strategy, human resources, corporate culture and internal supervision
Business process: financial management, sales business, procurement business, asset management, engineering project management, production management and information system. 4. High risk areas of focus mainly include:
Management control over subsidiaries, internal control over major investments and external guarantees, internal control over connected transactions, internal control over information disclosure, internal control over the use and management of raised funds, and control over food safety. 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 other laws and regulations. 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
Potential misstatement of total assets ≥ 1% of total assets ≤ 0.5% of total assets ≤ misstatement ＜ 0.5% of total assets ＜ 1% of total assets
Potential misstatement of operating revenue ≥ 1% of total operating revenue, 0.5% of total operating revenue ≤ misstatement 1% of total operating revenue, 0.5% of total operating revenue
Potential misstatement of owner’s equity ≥ 0.5% of total owner’s equity ≤ misstatement 1% of total owner’s equity misstatement 0.5% of total owner’s equity
1%
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) the certified public accountant finds that the directors, supervisors and senior managers commit fraud and cause heavy losses and adverse effects to the company; (b) The company corrects the material errors in the published financial report; (c) 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; (d) The supervision of the board of directors, its audit committee and the audit department on the internal control of financial reporting is invalid.
Significant deficiencies (a) failure to select and apply accounting policies in accordance with GAAP; (b) Failure to establish fraud prevention procedures and control measures; (d) 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; (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 goal of authenticity and accuracy.
General defects control defects other than the above major defects and important defects are recognized as general defects.
Note: none 3 Identification standard of internal control defects in non-financial reporting
The quantitative criteria for 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
Loss of direct property loss ≥ 0.2% of total assets ≤ 0.1% of total assets ≤ loss 0.1% of total assets 0.2% of total assets
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 lacks democratic decision-making procedures; (b) Violation of national laws and regulations; (c) Failure to comply with procedures and authorization, resulting in heavy losses; (d) Serious loss of middle and senior managers and senior technicians of the company; (e) Negative news frequently appears in the media, involving a wide range, and the negative impact has not been eliminated; (f) The company’s important business lacks system control or the system fails; (g) Major defects in the company’s internal control have not been rectified;
Significant deficiencies (a) general errors caused by the company’s decision-making procedures; (b) Failing to follow the procedures and authorization, resulting in great losses; (c) Serious loss of business personnel in key positions of the company; (d) Negative news in the media, involving local areas; (e) There are defects in the company’s important business system or system; (f) Important management accounts are not established, and important materials are not effectively filed for future reference;
General defect (a) not handled in accordance with procedures and authorization, resulting in small losses or no substantial losses; (b) Serious loss of business personnel in general posts of the company; (c) Negative news appears in the media, but the impact is small; (d) Defects in the company’s general business system or system; (e) General defects of the company have not been rectified.
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 the 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
In 2022, the company will continue to improve the internal control system and strictly implement relevant regulations to ensure the orderly operation of the company’s work. At the same time, strengthen internal supervision and rectification, optimize the work process, and provide control and feedback on the process, so as to make the internal operation of the company efficient, healthy and sustainable. 3. Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Lin Xiaofang Anji Foodstuff Co.Ltd(603696) April 21, 2022
