Securities code: Sichuan Etrol Technologies Co.Ltd(300370) securities abbreviation: St security control announcement Code: 2022043 Sichuan Etrol Technologies Co.Ltd(300370)
Self evaluation report on internal control in 2021
Sichuan Etrol Technologies Co.Ltd(300370) 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 Sichuan Etrol Technologies Co.Ltd(300370) (hereinafter referred to as the “company”), 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 the 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, 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 internal control of the company’s financial report, on the benchmark date of the internal control evaluation report, there were major defects that lost control of the subsidiary Ningbo Dongwang Intelligent System Engineering Co., Ltd. and still continued during the reporting period. In addition, the company did not have other major defects in the internal control of financial report. The board of Directors believes that the company has failed to maintain 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 important defects in the company’s internal control over non-financial reports, there were important defects that the investment of Hangzhou smart Industrial Park project exceeded the budget on the benchmark date of the internal control evaluation report. In addition, the company did not find any significant or important defects in the internal control over non-financial reports.
The company has no 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.
3、 Internal control evaluation
(I) evaluation scope of internal control
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 Sichuan Etrol Technologies Co.Ltd(300370) , Zhejiang Security Control Technology Co., Ltd., Beijing zetianshenghai Oilfield Technology Service Co., Ltd., Xinjiang Tian’an Engineering Co., Ltd., Karamay Sanda New Technology Co., Ltd., Hangzhou Qingniao Electronics Co., Ltd. and Jiangsu Jingxiong Technology Co., Ltd. The total assets of the units included in the evaluation scope account for 138.74% of the total assets of the company’s consolidated financial statements, and the total operating revenue accounts for 94.55% of the total operating revenue of the company’s consolidated financial statements. The main businesses and matters included in the evaluation scope include: governance structure, organization, human resources, corporate culture, financial management, transaction authorization control, supervision of holding subsidiaries, related party transactions, external guarantee, use of raised funds Major investment and information disclosure; The high-risk areas that internal control focuses on mainly include business risk, financial risk, market risk, policy and regulation risk, etc.
1. Corporate governance structure
In accordance with the provisions of the company law, the securities law, the articles of association and other relevant laws and regulations, the company has gradually established and improved the corporate governance structure suitable for the nature and scale of its business. The general meeting of shareholders, the board of directors and the board of supervisors have clear rights and responsibilities, perform their respective duties, check and balance each other, coordinate each other, form a reasonable division of labor and check and balance, and ensure the effectiveness and standardization of the corporate governance structure, internal organization setting and operation mechanism.
The highest authority of the company is the general meeting of shareholders, which exercises the decision-making power on major matters such as the company’s business policy, fund-raising, investment and plan, the deliberation of annual financial budget plan and final account plan, profit distribution and so on. The rules of procedure of the general meeting of shareholders formulated by the company ensure that all shareholders, especially small and medium-sized shareholders, enjoy equal status and that all shareholders can fully exercise their rights.
The board of directors of the company shall be responsible to the general meeting of shareholders, exercise the company’s business decision-making power according to law, determine the company’s business plan and investment plan, formulate the company’s annual financial budget, final settlement plan and profit distribution plan, determine the establishment of the company’s internal management organization, and formulate the company’s basic management system, etc. The rules of procedure of the board of directors formulated by the company strictly stipulates the procedures of the board of directors to ensure the correct decision-making and implementation of major and important business matters of the company.
According to the regulations, the board of directors of the company has three special committees: Audit Committee, strategy committee and salary and assessment committee, and has formulated corresponding rules of procedure for each special committee to ensure the good operation of each special committee. The company has established the position of secretary of the board of directors, and three of the nine members of the board of directors are independent directors. The directors of the company have good professional ethics, high ability and good social prestige.
The audit committee is responsible for reviewing the enterprise’s internal control, supervising the effective implementation of internal control and self-evaluation of internal control, guiding and coordinating external audit and other related matters.
The board of supervisors established by the company is responsible for the general meeting of shareholders. The board of supervisors supervises the directors, general manager and other senior managers of the company to perform their duties according to law and supervises the implementation of internal control of the company.
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.
The company has formulated the rules of procedure of the board of directors, the rules of procedure of the board of supervisors and the working rules of the general manager, which stipulate the responsibilities, authorities and procedures of the board of directors, the board of supervisors and the general manager. 2. Internal organization
The company has formed an effective production and operation management system under the leadership of the general manager, and formed an internal organization composed of the president’s office, administration department, legal affairs department, operation management center, human resource management center, financial management center, Beijing Research Institute and other functional departments; Each department has a clear division of labor, performs its own duties, cooperates and supervises each other. Through the preparation of employee manual and job description, the company enables all employees to master the internal organization setting, job responsibilities and business processes, clarify the distribution of rights and responsibilities and correctly exercise their functions and powers.
3. Human resources
People oriented is the foundation of the company’s development. It advocates the enterprise talent concept of “appropriate post identification, integrity and responsibility”, and takes improving the quality of employees and introducing high-level talents as an important strategy for the development of the enterprise.
The company formulates and implements the human resources strategy conducive to the sustainable development of the enterprise, takes professional ethics and professional ability as important standards for the selection and employment of employees, and attaches importance to the cultivation and incentive of employees. Continuously improve the ability and quality of employees through the combination of internal training and external training. The company has formulated recruitment and employment management measures, salary management measures, performance management measures, cadre management measures, employee training management measures, reward and punishment management measures and other relevant systems and processes to ensure the implementation of the company’s human resources strategy. The company strictly abides by national labor and personnel laws and policies, standardizes employment, actively protects employees’ labor rights and interests, pays attention to employees’ physical and mental health development, and creates a positive, healthy, happy and harmonious working atmosphere.
4. Corporate culture
The company adheres to the core values of “integrity, responsibility, sunshine, innovation, inclusiveness, cooperation and pragmatism”; Implement the business philosophy of “excellence originates from higher pursuit”, establish the enterprise spirit of “cooperation, preciseness, diligence and excellence”, and realize the good development of products and services in all aspects such as investors, customers and employees. The company attaches great importance to the publicity and promotion of corporate culture and requires managers at all levels to set an example and participate in it. The company has formulated the company’s corporate culture manual and conveyed the company’s core values and ideas to all employees through internal journals, meetings, training and various employee activities.
5. Financial management
In order to ensure the quality of accounting information and protect the safety and integrity of assets, the company has formulated and effectively implemented management systems and processes such as comprehensive budget management regulations, fund management measures, expense reimbursement and control management measures, asset management measures, financing management measures and financial information use management measures. At the same time, it defines the post responsibilities of financial institutions and accountants, strengthens the code of conduct of the company’s accounting work, and effectively improves the quality of accounting work. Establish a strict accounting control system for business risks, strictly control the financial discipline of the company, and ensure the healthy operation of the company.
6. Transaction authorization control
According to the size and nature of the transaction, the company adopts different transaction authorization according to the articles of association and the above management systems. For frequent sales business, purchase business, expense reimbursement of normal business and financing within the scope of authorization, the company’s subsidiaries and departments shall adopt the level by level authorization and approval system; For major businesses and matters, the system of collective decision-making examination and approval or joint signing shall be implemented, and no individual shall make decisions alone or change collective decisions without authorization; Non recurring business transactions, such as foreign investment, issuance of shares, asset restructuring, transfer of equity, guarantee, related party transactions and other major transactions, shall be approved by the chairman of the company, the board of directors and the general meeting of shareholders according to different transaction amounts.
7. Supervision of holding subsidiaries
According to the needs of its own operation and management, the company has formulated the measures for the management of subsidiaries and the regulations on the management of directors selected by security control technology to strengthen the control of subsidiaries, standardize the internal operation mechanism of the company and safeguard the legitimate rights and interests of the company and investors. The company mainly exercises shareholders’ rights by appointing directors, supervisors, senior managers and supervision of major business activities to its holding subsidiaries. The functional departments of the company shall conduct business guidance, supervision and management on the holding subsidiaries according to the business counterpart principle, and the subsidiaries shall report relevant approval and filing matters according to the regulations. 8. Related party transactions
In strict accordance with the provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange on the disclosure of related party transactions and the provisions of the company law, the articles of association and other relevant laws and regulations, the company standardizes the content, pricing principles, decision-making procedures and approval authority of related party transactions, and ensures that the related party transaction contracts concluded between the company and related parties comply with the principles of fairness, openness and impartiality, Ensure that the related party transactions of the company do not harm the interests of the company and all shareholders.
9. External guarantee
According to the requirements of the company law, the articles of association and other relevant laws and regulations, the company has established the external guarantee decision-making system, which stipulates the decision-making authority of external guarantee, the acceptance and review procedures of external guarantee application, strengthens the daily management and continuous risk control of external guarantee, comprehensively standardizes the company’s guarantee behavior and prevents business risks.
10. Use of raised funds
In order to standardize the management of the company’s raised funds, improve the use efficiency of raised funds and protect the interests of investors, the company has formulated the management system for the use of raised funds, which clearly stipulates the custody, use, change, management and supervision of raised funds.
11. Major investment
According to the company law, the articles of association and other regulations, the company has formulated the foreign investment management system, which defines the approval authority and deliberation procedures of project investment, research and evaluation of investment matters, progress tracking of investment plan, investment risk and control, assessment, reward and punishment and other matters; Purposefully plan and implement the company’s strategy of sustainable development, strengthen investment plan management, strengthen project analysis and feasibility research, standardize investment behavior and decision-making procedures, realize the whole process management of all control links of investment projects, and establish an effective investment risk restraint mechanism to ensure the accuracy of investment project decision-making.
12. Information disclosure
According to the company law, the articles of association and other regulations, the company has formulated the information disclosure management system, the accountability system for major errors in the information disclosure of the company’s annual report, and the insider registration management system, which defines the basic principles of information disclosure, the content of information disclosure, the definition of information transmission, review and disclosure, as well as the corresponding procedures and confidentiality measures, Conduct full and effective control over the company’s public information disclosure and major internal information communication.
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
In accordance with the requirements of the company law, the securities law, the basic norms of enterprise internal control, the guidelines for the application of enterprise internal control and other relevant laws and regulations, combined with the company’s internal control system and evaluation methods, and on the basis of daily and special supervision of internal control, evaluate the effectiveness of the design and operation of the company’s internal control as of December 31, 2021.
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. The identification standards of internal control defects determined by the company are as follows: 1. Identification standards of internal control defects in financial reports
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Take the operating income and total assets of the consolidated financial report as the measurement indicators. If the misstatement items that may be caused or caused by internal control defects are related to the income statement, it shall be measured by the operating revenue index. If the amount of misstatement in the financial report caused by the defect alone or in combination with other defects is less than 0.5% of the operating revenue, it is recognized as a general defect; If it exceeds 0.5% but less than 1% of the operating revenue, it is an important defect; If it exceeds 1% of the operating revenue, it is recognized as a major defect.
Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset index. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than 0.5% of the total assets, it is recognized as a general defect; If it exceeds 0.5% but less than 1% of the total assets, it is recognized as an important defect; If it exceeds 1% of the total assets, it is recognized as a major defect.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
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