Funeng Oriental Equipment Technology Co.Ltd(300173)
Self evaluation report on internal control in 2021
Funeng Oriental Equipment Technology Co.Ltd(300173) all shareholders:
In order to strengthen and standardize the enterprise's internal control, improve the enterprise's operation and management level and risk prevention ability, promote the sustainable development of the enterprise and safeguard the legitimate rights and interests of 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 standard system"), In combination with the implementation of various internal control systems of Funeng Oriental Equipment Technology Co.Ltd(300173) (hereinafter referred to as "the company") and the daily operation of various functional departments, we made a self-evaluation on the establishment and implementation of the company's internal control system and the effectiveness of internal control in 2021.
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、 Objectives and principles for the company to establish internal control system
(I) objective of the company to establish internal control system
1. Establish and improve the internal organizational structure that meets the requirements of modern enterprise management, and form a scientific decision-making mechanism, execution mechanism and supervision mechanism to ensure the realization of the company's operation and management objectives;
2. Establish an effective risk control system, strengthen risk management and ensure the normal and orderly operation of the company's business activities;
3. Establish a good internal control environment of the company, plug loopholes and eliminate hidden dangers, prevent and timely detect and correct errors and fraud, and protect the safety and integrity of the company's assets;
4. Standardize the accounting behavior of the company, ensure the authenticity, legality and integrity of accounting materials, and improve the quality of accounting information; 5. Ensure the implementation of relevant national laws, regulations, rules and regulations and the company's internal norms and systems.
(II) basic principles for the establishment of the company's internal control
1. Principle of legality: internal control shall comply with the provisions of laws and administrative regulations and the regulatory requirements of government regulatory departments;
2. Principle of comprehensiveness: internal control should run through the whole process of decision-making, implementation and supervision, covering various businesses and matters of the company and its subsidiaries;
3. Principle of importance: internal control should pay attention to important business matters and high-risk areas on the basis of comprehensive control;
4. Principle of checks and balances: internal control should form mutual restriction and supervision in terms of governance structure, institutional setting, distribution of rights and responsibilities and business process, and give consideration to operation efficiency at the same time;
5. Principle of adaptability: the internal control shall adapt to the company's business scale, business scope, competition status and risk level, and shall be adjusted and improved in time with the changes of the situation;
6. Cost benefit principle: internal control should weigh the implementation cost and expected benefits to achieve effective control at an appropriate cost.
3、 Internal control evaluation in 2021
(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 scope of internal control evaluation covers the main businesses and matters of the company and its affiliated units. Included in the scope of this evaluation mainly include the parent company Funeng Oriental Equipment Technology Co.Ltd(300173) and its holding subsidiaries. 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, and the total operating revenue accounts for 100% of the total operating revenue in the company's consolidated financial statements.
The main businesses and matters included in the evaluation scope include: governance structure, organizational structure, human resources, corporate culture, capital activities, investment management, subsidiary management, sales business, procurement business, guarantee business, financial report, contract management, information disclosure, related party transactions, etc. The high-risk areas of focus mainly include: subsidiary management risk, accounts receivable risk, operation risk and so on.
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.
1. Internal control environment
In accordance with the company law, the securities law and the relevant provisions of Shenzhen Stock Exchange on GEM listed companies, the company has formulated various internal management systems, improved the corporate governance structure and established an internal control environment for the standardized operation of the company.
In accordance with relevant national laws and regulations and the articles of association, the company has established a standardized corporate governance structure and rules of procedure, defined the functions and powers of decision-making, implementation and supervision, and formed a more scientific division of responsibilities and check and balance mechanism.
The company has established an internal control structure composed of the general meeting of shareholders, the board of directors, the board of supervisors, the management and various functional departments. According to the actual situation, business characteristics and relevant internal control requirements, the company has set up internal institutions and post division, defined responsibilities and authorities, and implemented rights and responsibilities to each responsible unit, which is reflected in:
(1) The general meeting of shareholders of the company is the authority of the company, which enjoys the legal rights stipulated in laws and regulations and the articles of association, and exercises the voting rights on major matters such as the company's business policy, financing, investment, profit distribution and so on. The company has formulated the rules of procedure of the general meeting of shareholders to ensure that shareholders exercise their rights according to law;
(2) The board of directors of the company is responsible for the general meeting of shareholders, exercises the power of operation and decision-making according to law, and has formulated the rules of procedure of the board of directors to ensure the work efficiency of the board of directors; The board of directors of the company has audit, remuneration and assessment committees, and each special committee has formulated special working rules, which improves the scientificity of the decision-making of the board of directors;
(3) The board of supervisors is the supervisory body of the company, which is responsible for the general meeting of shareholders and supervises the directors, managers and other senior managers of the company to perform their duties according to law in accordance with relevant regulations. The company has formulated the rules of procedure of the board of supervisors to ensure that the board of supervisors can effectively perform its supervisory powers and effectively protect the legitimate rights and interests of the company and shareholders;
(4) The company has a manager who is responsible for organizing and implementing the resolutions of the general meeting of shareholders and the board of directors, presiding over the production, operation and management of the company and being responsible to the board of directors. The company has formulated the detailed rules for the work of the general manager, which defines the rights and responsibilities of the management. The management of the company is responsible for the formulation and effective implementation of the internal control system, and ensures the normal operation of the company by commanding, coordinating, managing and supervising the functional departments to exercise the operation and management power;
(5) Combined with its own business characteristics, the company has established internal institutions such as the office of the board of directors, the audit and compliance department, the finance department, the human resources department and the administration department to manage daily affairs.
(6) The company has established an audit compliance department and formulated internal audit management system and other relevant systems. The audit and compliance department of the company carries out independent work, regularly or irregularly audits the company and its subsidiaries according to the relevant internal control system of the company, promotes the establishment and improvement of the company's internal control, effectively controls costs, improves operation and management, avoids operation risks and increases the value of the company.
(7) The company adheres to the implementation of human resources policies conducive to the sustainable development of the company, and takes professional quality and professional ability as an important standard for the selection and employment of employees. The company carries out the construction of cultural system with honesty and trustworthiness, dedication, innovation and teamwork as the core, so as to promote and strengthen the competitiveness of the company.
2. Risk assessment process
According to the strategic objectives and development ideas, in order to minimize risks, the company conducts risk analysis and prediction from the aspects of national macro and micro economic policies, product structure, market, finance and company operation, and puts forward corresponding risk countermeasures. At present, the company has not formulated a special work system and work flow on the company's risk tolerance, specific methods of identifying and analyzing risks.
3. Internal control activities
(1) Corporate governance
In accordance with the requirements of the company law, the securities law, the guidelines for the governance of listed companies and the guiding opinions on the establishment of independent director system in listed companies, the company has continuously improved the corporate governance structure, established a modern enterprise system, standardized the company's operation, and established and improved the independent director system. There is no difference between the actual situation of corporate governance and the normative documents on the governance of listed companies issued by the CSRC.
(2) Daily management
In terms of daily management, the power body of the company is the general meeting of shareholders, which makes decisions, manages and supervises through the board of directors and the board of supervisors. The management of the company consists of 1 general manager and 6 deputy general managers. The general manager is employed by the board of directors and is fully responsible for the daily operation and management of the company.
(3) Human resources
The company has formulated human resource management system and salary management system, and implemented the full staff labor contract system. It has made detailed provisions on personnel employment, employee training, salary, welfare guarantee, performance appraisal and job promotion, and established a perfect performance appraisal system. According to the characteristics of the industry, do a good job in the reserve and training of technical R & D personnel, and pay attention to the on-the-job training of employees, so as to reduce the flow of employees and ensure the stability of the staff team. (4) Business control
The company's internal control system covers all economic businesses, departments and posts within the company. For the key control points in the process of business processing, the internal control system shall be implemented to decision-making, implementation, supervision and feedback. Employees must comply with it. No department or individual shall have the power to go beyond internal control;
The company's internal control ensures the reasonable setting and division of labor of the company's institutions, posts and their responsibilities and authorities, adheres to the separation of incompatible posts, and ensures that different institutions and posts have clear rights and responsibilities, mutual restriction and mutual supervision; The formulation of the company's internal control takes into account the relationship between cost and benefit, and tries to achieve the best control effect with reasonable cost control.
(5) Asset management
For fund management, the company has formulated the management measures for raised funds, fund management system, financial approval system and other relevant systems, including fund use approval, monetary fund management, use and management of raised funds, etc. It has made clear provisions on the storage, use and supervision of the raised funds, so as to ensure the special use of the raised funds, prevent the use risks of the raised funds, ensure the safe use of the funds and effectively protect the interests of investors. For the daily asset management business, the company has formulated a series of systems and control processes to manage and control monetary funds, inventories, accounts receivable, fixed assets, etc., and implement them in strict accordance with the regulations of systems and processes.
(8) Foreign investment management, foreign guarantee and related party transaction control
The company carries out the management of foreign investment, external guarantee and control of related party transactions in strict accordance with the relevant provisions of the articles of association, and formulates and strictly implements the related party transaction management system and external guarantee management system. In addition, the company also established Guangdong Funeng Private Equity Fund Management Co., Ltd. to be responsible for foreign investment. Guangdong Funeng Private Equity Fund Management Co., Ltd. formulated the investment management measures of Guangdong Funeng Investment Holding Co., Ltd. (Trial) and the rules of procedure of the investment decision-making committee of Guangdong Funeng Investment Holding Co., Ltd. (Trial) to standardize the control of foreign investment and investment. The above system defines the principles, standards, conditions, responsibilities and approval procedures of the company's foreign investment, foreign guarantee and related party transactions, strengthens the management of relevant contracts, establishes a scientific decision-making mechanism, prevents potential risks and avoids and reduces possible losses.
(9) Internal supervision and control system
The board of directors of the company established a special audit committee, established an independent audit compliance department, formulated the internal audit management system, internal supervision management system and other relevant systems, and irregularly inspected the implementation of the company's internal control system, the control of various business operations, foreign investment and external guarantee control. The board of supervisors also strictly performed the function of internal supervision, So as to ensure the effective implementation of the company's internal control system. The self inspection of the company found that there were accounting errors in the accounting treatment of previous years, and the accounting errors have been rectified and retroactively adjusted.
(10) Management control of subsidiaries
In order to standardize the operation and management behavior of the holding subsidiary, the company has formulated the subsidiary management system, which makes clear provisions on the personnel, finance, business decision-making, information management, inspection and assessment of the holding subsidiary. The general manager, financial director and other important senior managers of the holding subsidiaries shall be selected by the company and their responsibilities and authorities shall be specified; According to the company's business strategy and risk management policy, the company supervised each holding subsidiary to establish corresponding business plans and risk management procedures; Each holding subsidiary has established a major event reporting system and review and approval system, and reported major events to the board of directors or the general meeting of shareholders for deliberation in strict accordance with the authorization provisions; The company can regularly obtain and analyze the report information of the holding subsidiary.
In the company's self-examination, it was found that in the trade business of Shenzhen Dayu Jingdiao Technology Co., Ltd. in 2019 and 2020, there were defects in the internal control of sales and procurement, the supervision and restriction mechanism of financial and business departments was not effectively established, and the financial personnel did not accurately judge the essence of trade business, resulting in the recognition of trade business income according to the total amount method, and there were errors in the financial data of the company's annual reports in 2019 and 2020. The company has rectified accounting errors and made retroactive adjustments.
(11) Management control of information disclosure
In order to standardize the company's information management, the company has established information disclosure management system, investor relations management system and internal reporting system of major information. The chairman of the company is the first person responsible for the company's information disclosure; The Secretary of the board of directors is the person directly responsible for the company's information disclosure, and is responsible for coordinating and organizing the specific matters of the company's information disclosure. The Secretary of the board of directors shall be the leader of the information disclosure Department of the board of directors, who shall directly assist in the daily work of information disclosure. All information disclosure documents and materials of the company and the records of directors, supervisors and senior managers performing their duties shall be kept by the office of the board of directors. The general manager, deputy general manager, Secretary of the board of directors, financial director and other senior managers of the company understand the internal information transmission procedures of the company and are qualified to earnestly fulfill the obligation of information disclosure.
The company has also formulated the registration and management system for insiders of the company's insider information to effectively control the communication of undisclosed information and major internal matters in the whole process and prevent the risk of disclosure of the company's insider information.
In addition to the failure to disclose the debt transfer of Sinochem Weiye in time
