Self evaluation report on internal control of the company in 2021
According to the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements (hereinafter referred to as the enterprise internal control standard system), combined with the company’s (hereinafter referred to as the company’s) internal control system and evaluation methods, 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 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. 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
During the reporting period, the company further improved and optimized the company’s internal control system in accordance with the basic norms of enterprise internal control, guidelines for the application of enterprise internal control and guidelines for the internal control of Listed Companies in Shenzhen Stock Exchange, so as to adapt to the changing external environment and internal management requirements. (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: Guangdong Vtr Bio-Tech Co.Ltd(300381) headquarters, Inner Mongolia Guangdong Vtr Bio-Tech Co.Ltd(300381) Biotechnology Co., Ltd., Hunan Hongying Biotechnology Co., Ltd., Hunan xinhongying Bioengineering Co., Ltd., Henan Lihua Pharmaceutical Co., Ltd., Hunan xinhexin biomedical Co., Ltd., Hunan Liaoning Chengda Biotechnology Co.Ltd(688739) Technology Co., Ltd., Hunan Longteng Biotechnology Co., Ltd., Hunan Nuokai biomedical Co., Ltd Changsha Kaiyuan Chemical Co., Ltd., Beijing keyifeng Biotechnology Development Co., Ltd., Changsha Shiwei Technology Co., Ltd., Changsha Shiwei Biotechnology Co., Ltd., Hunan Meida biological resources Co., Ltd., Hunan fitoway Plant Resources Co., Ltd., Hunan traditional Chinese medicine extraction Engineering Research Center Co., Ltd., Hunan Gerui Biotechnology Co., Ltd., Hunan keyixin biomedical Co., Ltd Hunan Kangjie Biotechnology Co., Ltd., Hunan jintaida Investment Development Co., Ltd., Zhuhai Guangdong Vtr Bio-Tech Co.Ltd(300381) Animal Pharmaceutical Co., Ltd., Zhuhai Ruikang Biotechnology Co., Ltd., Zhuhai Yinong Biotechnology Co., Ltd., Macao Guangdong Vtr Bio-Tech Co.Ltd(300381) Co., Ltd.
The main businesses and matters included in the evaluation scope include: corporate governance, organizational structure, development strategy, human resources, corporate culture, capital activities, procurement business, asset management, sales business, research and development, technical secrets and intellectual property management, financial reporting, contract management, major investment, related party transactions, comprehensive budget, information system and internal information transmission.
The high-risk areas of focus mainly include accounts receivable management risk, financial report quality, major investment (M & A) risk, management risk of holding subsidiaries, technology risk and human resources risk.
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.
The board of directors of the company authorizes the audit department to be responsible for the specific organization and implementation of the internal control evaluation, evaluate the high-risk fields and units included in the evaluation scope, and the company employs Grant Thornton Certified Public Accountants (special general partnership) to verify the effectiveness of the company’s internal control. The scope of the company’s internal control self-assessment in 2021 mainly includes: 1. Governance structure
In accordance with the provisions of the company law, the securities law and the articles of association, the company has established a relatively perfect corporate governance structure. The general meeting of shareholders is the highest authority of the company, which manages and supervises the company through the board of directors. The board of directors is the company’s permanent decision-making body and is responsible to the general meeting of shareholders. The board of directors deliberates and makes decisions on major decision-making issues in the company’s business activities, or submits them to the general meeting of shareholders for deliberation. The board of supervisors is the supervisory body of the company, which is responsible for supervising the behavior of directors and managers and the company’s finance. The general manager of the company is appointed by the board of directors. Under the leadership of the board of directors, he is fully responsible for the daily operation and management activities of the company and organizes the implementation of the resolutions of the board of directors.
The board of directors of the company has four special committees: strategy, audit, nomination, remuneration and assessment. The members of the special committee are all composed of directors. According to the articles of association, the company sets up a board of supervisors to supervise the management of the enterprise by the board of directors and the management on behalf of all shareholders; The company is equipped with full-time auditors to conduct internal audit supervision on the company’s financial revenue and expenditure and economic activities.
2. Internal control organization of the company
The internal organization of the company has a research institute, three functional centers and five business departments. The research institutes include biomedical research center, biological industry research center and medicinal plant research center; The three functional centers are financial center, human resource center and operation center; The five business divisions are medicinal plant business division, biological industry business division, biological medicine business division, biological agriculture and animal husbandry business division and animal medicine business division. The company’s organizational structure has clear division of labor, sound and clear functions, mutual restraint, and is supported by relevant systems.
3. Organizational structure of parent subsidiary
All wholly-owned and holding subsidiaries of the company establish a complete decision-making system, execution system and supervision feedback system under the first-class corporate governance structure, and set up internal institutions and operation and management departments according to the principle of mutual checks and balances. The wholly-owned and holding subsidiaries include Inner Mongolia Guangdong Vtr Bio-Tech Co.Ltd(300381) Biotechnology Co., Ltd., Hunan Hongying Biotechnology Co., Ltd., Hunan xinhongying Bioengineering Co., Ltd Hunan xinhexin biomedical Co., Ltd., Hunan Liaoning Chengda Biotechnology Co.Ltd(688739) Technology Co., Ltd., Hunan Nuokai biomedical Co., Ltd., Changsha Kaiyuan Chemical Co., Ltd., Beijing keyifeng Biotechnology Development Co., Ltd., Henan Lihua Pharmaceutical Co., Ltd., Zhuhai Ruikang Biotechnology Co., Ltd., Zhuhai Guangdong Vtr Bio-Tech Co.Ltd(300381) Animal Pharmaceutical Co., Ltd., Hunan jintaida Investment Development Co., Ltd., Hunan Longteng Biotechnology Co., Ltd Hunan Gerui Biotechnology Co., Ltd., Hunan keyixin biomedical Co., Ltd., Hunan Kangjie Biotechnology Co., Ltd., Changsha Shiwei Technology Co., Ltd., Changsha Shiwei Biotechnology Co., Ltd., Hunan Meida biological resources Co., Ltd., Hunan fitoway Plant Resources Co., Ltd., Hunan traditional Chinese medicine extraction Engineering Research Center Co., Ltd., Zhuhai Yinong Biotechnology Co., Ltd Macau Guangdong Vtr Bio-Tech Co.Ltd(300381) Co., Ltd.
4. Institutional system
Combined with the current management situation and development needs of the company, adhere to the principle of combining scientificity, standardization, feasibility and operability, sort out and improve the system, constantly promote the standardization, institutionalization, procedure and standardization of various work, and build an institutional system with coordinated content, strict procedures, complete supporting and effective use. The company has formulated the company’s financial reimbursement regulations, financial approval system, daily financial work report system of Guangdong Vtr Bio-Tech Co.Ltd(300381) subsidiaries and branches, financial management system of subsidiaries, project initiation and budget management system, bidding management system, Interim Provisions on file management, legal review system of economic contracts, regulations on rewards and punishments for quality management performance of production system, attendance management system and fixed assets management system A series of systems, including internal control system, measures for the administration of external guarantees, measures for the administration of foreign investment, information disclosure management system, rules of procedure of the general meeting of shareholders, rules of procedure of the board of directors and rules of procedure of the board of supervisors, jointly form the company’s institutional system to make the company operate in an orderly manner, avoid risks and comprehensively improve the level of governance.
5. Corporate culture
Adhering to the enterprise style of “focusing on pragmatism, modesty and efficiency” and the enterprise core values of “science and technology first, customer first, integrity, pragmatism, harmony and win-win”, the company carries forward the enterprise spirit of “innovation responsibility and value sharing”, is committed to the research and application of Biotechnology, meets the needs of customers with excellent products and services, and continuously improves the quality of human life. The corporate culture concept system is the company’s unified behavior program, the basic criterion guiding the company’s work, the basic rule guiding the company’s strategy, policy and system, and the ideological and conceptual guide guiding the company to become a world leading biotechnology enterprise. Through the publicity, implementation and training of the corporate culture department, the majority of employees of the company deeply understand the core concept of the company. The advanced culture has formed the core values of the company, greatly enhanced the cohesion and centripetal force of the enterprise, and promoted the rapid development of the enterprise.
6. Social responsibility
The company earnestly performs its social responsibilities and obligations in the process of operation and development, mainly including safe production, product quality, environmental protection, resource conservation, employment promotion, employee rights and interests protection, etc. The company’s safety production measures are in place and responsibilities are implemented. The company earnestly performs its social responsibility of promoting employment and protecting the rights and interests of employees, pays various social insurance for employees in accordance with relevant national regulations, and continuously provides employment posts for the society while the enterprise develops, and relevant systems are implemented.
7. Risk assessment
In the development process of the company, it is necessary to effectively control and prevent internal and external risks such as environmental risk, business risk and financial risk. According to the strategic objectives and development ideas, combined with the characteristics of the industry, the company comprehensively and systematically collects relevant information, timely carries out risk assessment, organizes the risk analysis team, carries out work according to strict and standardized procedures, accurately identifies internal and external risks, weighs risks and benefits according to the results of risk analysis and risk tolerance, determines risk response strategies, and achieves controllable risk.
8. Control activities
The company has necessary control policies and procedures for its main business activities. The management of the company has clear objectives in terms of budget, production, income, expenses, investment, profit and other financial and operating performance. The company has clear records of these objectives and monitors them. In accordance with the accounting standards for business enterprises, accounting law and other relevant laws and regulations, the financial department of the company has formulated financial management systems, including the provisions on financial reimbursement of the company, financial approval system, daily financial work reporting system of Guangdong Vtr Bio-Tech Co.Ltd(300381) subsidiaries and branches, financial management system of subsidiaries, etc., and established appropriate protective measures to reasonably ensure that the contact and treatment of assets and records are properly authorized; Reasonably ensure that the book assets are consistent with the actual assets on a regular basis. And focus on the following aspects:
(1) Management of holding subsidiaries
The company has established, improved and maintained the effective internal control of its holding subsidiaries in accordance with the guidelines on internal control of listed companies of Shenzhen Stock Exchange and other relevant regulations, and effectively managed and controlled its subsidiaries through the formulation of regulations on the management of subsidiaries and other systems.
(2) 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 company has clearly divided the approval authority of the general meeting of shareholders and the board of directors on related party transactions, and stipulated the deliberation procedures and voting avoidance requirements for related party transactions. The company has determined the list of related parties of the company with reference to the listing rules and other relevant provisions, and updated it in time to ensure that the list of related parties is true, accurate and complete. The company has formulated the decision-making system for related party transactions, which has made clear provisions on related party transactions; A written agreement shall be signed between the company and related parties for related party transactions. The signing of the agreement shall follow the principles of equality, voluntariness, equivalence and compensation, and the content of the agreement shall be clear and specific. Related party transactions shall follow the pricing principle of fair, fair and open market, and the price or charge of related party transactions shall adopt the market price, which shall not deviate from the standard of an independent third party in the market in principle. For related party transactions that are difficult to compare the market price or whose pricing is limited, the pricing method shall be determined according to the specific conditions of related party transactions, and the standards related to costs and profits shall be clarified in the relevant related party transaction agreement.
(3) External guarantee
The company has established, improved and maintained effective internal control over external guarantees 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 company has clarified in the articles of association the approval authority of the general meeting of shareholders and the board of directors on external guarantees, as well as the accountability mechanism for violation of the approval authority and review procedures. The company has formulated the external guarantee system, which specifies in detail the guarantee object, approval authority, decision-making procedures and safety measures when the company conducts external guarantee; Establish strict review and decision-making procedures for external guarantee; When providing external guarantee, the company shall take counter guarantee, mutual guarantee or other effective risk prevention measures, which must correspond to the amount of guarantee.
(4) Raised funds
The company has established, improved and maintained the effective internal control of raised funds in accordance with the guidelines on internal control of listed companies of Shenzhen Stock Exchange and other relevant provisions. The company has formulated the management system for raised funds, which clearly stipulates the storage, use and approval procedures of the special account for raised funds, purpose adjustment and change, internal audit supervision and other aspects, so as to ensure the special use of raised funds.
(5) Major investment
The company has established, improved and maintained effective internal control over major investments in accordance with the guidelines on internal control of listed companies of Shenzhen Stock Exchange and other relevant provisions; The company has defined the approval authority of the general meeting of shareholders and the board of directors for major investments in the articles of association, and formulated corresponding deliberation procedures. In accordance with the principles of conforming to the company’s development strategy, reasonably allocating enterprise resources, promoting the optimal combination of factors and creating good economic benefits, the measures for the administration of foreign investment of the company regulate the company’s foreign stock, bond and other securities investment, company merger, cooperative operation, leasing operation and other investment projects, as well as domestic major technological transformation projects, renewal, capital construction, purchase of new equipment, development of new products and other investment projects.
(6) Information disclosure
The company has complied with the internal control of Listed Companies in Shenzhen Stock Exchange
