Huadian Heavy Industries Co.Ltd(601226)
Internal control evaluation report in 2021
Huadian Heavy Industries Co.Ltd(601226) 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: the company and its affiliated units 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:
First, the construction of internal control system, including organization system construction, system system construction, process system construction, cultural system construction, etc; Second, the operation of the internal control system, including the daily development of risk management and control, internal control information management and control, etc; Third, the supervision of internal control system, including the establishment of supervision mechanism, the operation of supervision mechanism and the application of supervision results; Fourth, the reporting of internal control system, including internal control management reporting mechanism, etc. 4. High risk areas of focus mainly include:
Organizational structure, development strategy, human resources, social responsibility, corporate culture, capital activities, procurement business, fixed assets, intangible assets, research and development, guarantee business, business outsourcing, financial management, budget management, contract management, internal information transmission, information system, system management, investment management, EPC project management, production and manufacturing management, marketing business, 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
None (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 company's internal control evaluation management measures. 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 profit ≥ 5% of total profit ≤ 3% of total profit ≤ misstatement profit misstatement 3% of total profit
5% of the total reported profit
Potential misstatement of total assets ≥ 1% of total assets, 0.5% of total assets ≤ misstatement misstatement 0.5% of total assets, 1% of total assets
Potential misstatement of operating income ≥ 1% of operating income, 0.5% of operating income ≤ misstatement misstatement 0.5% of operating income, 1% of operating income
Potential misstatement of owner's equity ≥ 1% of owner's equity, 0.5% of owner's equity ≤ misstatement 0.5% of owner's equity, misstatement 1% of owner's equity
explain:
When multiple answers are determined according to the above criteria, the one with the most serious defect shall prevail.
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
(1) Fraud by directors, supervisors and senior managers;
(2) Correction of published financial reports;
Major defects (3) the certified public accountant finds that there is a major misstatement in the current financial report, but the internal control fails to find the misstatement in the operation process;
(4) The supervision of internal control by the audit committee and internal audit institutions is invalid.
Important defects (1) there are defects in the internal control of the financial reporting process at the end of the period and have a significant impact;
(2) There are deficiencies in the compliance control function, in which violations may have a significant impact on financial reporting.
General defects general defects refer to other control defects except major defects and important defects.
explain:
When multiple answers are determined according to the above criteria, the one with the most serious defect shall prevail. 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
Description of direct loss of RMB 10 million yuan (including) - 5 million yuan and above:
nothing
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
(1) Lack of democratic decision-making procedures;
(2) Unscientific decision-making procedure;
(3) Violation of national laws and regulations;
Major defects (4) loss of managers or technicians;
(5) Frequent negative news in the media;
(6) Lack of system control or systematic failure of important businesses such as procurement and project management;
(7) Major or important defects evaluated by internal control have not been rectified.
(1) Defects in anti fraud procedures and control procedures;
Important defects (2) defects in internal control of internal audit function or risk assessment function;
(3) It has been reported to the management and the audit committee, and after a reasonable period of time, the important defects have not been corrected.
General defects general defects refer to other control defects except major defects and important defects.
explain:
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 any major defects in internal control over financial reporting during the reporting period
□ yes √ no
1.2. Important defects
Whether the company has any significant defects in internal control over financial reporting during the reporting period
□ yes √ no
1.3. General defect
nothing
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, does the company have 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
During the evaluation, it is found that the company still has general defects in the internal control of non-financial reporting in the construction and operation of internal control. In the process of promoting and deepening the reform and expanding business, it is necessary to further improve the process design and strengthen the control execution. The following aspects need to be further improved and improved. First, the assessment of the supervision and evaluation results of the internal control system needs to be strengthened; Second, the relevant systems of procurement management need to be improved; Third, the function of information system needs to be improved. 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, does the company find any important defects in the internal control of non-financial reporting 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
The company attaches great importance to the continuous improvement and improvement of the construction of internal control system. In view of the general defects existing in the previous year, the internal control evaluation working group of the company and relevant departments jointly analyze the causes and effects of the defects, formulate rectification plans and measures, implement the responsible departments and personnel, and actively carry out rectification and improvement. As of December 31, 2021, all general defects have been rectified. Through defect rectification, the internal control system has been improved, and regulation 2 Operation of internal control in this year and improvement direction in the next year
√ applicable □ not applicable
At present, the company has established a relatively comprehensive internal control system from top to bottom, and the internal control system runs well this year. In 2022, the company will strengthen internal control, supervision and inspection, further strengthen procurement standardization, strive to improve the level of fine management, and promote the healthy and sustainable development of the company. 3. Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Wen Duanchao Huadian Heavy Industries Co.Ltd(601226) April 22, 2022
