Ningbo Color Master Batch Co.Ltd(301019) : self evaluation report on internal control in 2021

Ningbo Color Master Batch Co.Ltd(301019)

Self evaluation report on internal control in 2021

Ningbo Color Master Batch Co.Ltd(301019) all shareholders:

According to 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), combined with Ningbo Color Master Batch Co.Ltd(301019) (hereinafter referred to as the company) internal control system and evaluation methods, on the basis of daily supervision and special supervision of internal control, we evaluated the effectiveness of the company’s 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、 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 (I) scope of internal control evaluation

With the joint efforts of the board of directors, the management and all employees, the company has established a relatively complete and effective internal control management system, and established a systematic internal control system and necessary internal supervision mechanism from the company level to the business process level, so as to provide legal compliance, asset safety, financial reports and relevant information of the company’s operation and management, improve operation efficiency and effect Promoting the realization of the development strategy provides a reasonable guarantee. The company conducts self-evaluation on the efficiency and effect of the design and operation of internal control through risk inspection and internal audit.

The company determines the main departments, businesses and matters included in the evaluation scope and high-risk areas in accordance with the risk oriented principle. The main units included in the evaluation scope include the headquarters of the company and Zhongshan branch. The total assets of the units included in the evaluation scope account for 100% of the total assets in the company’s financial statements, and the total operating revenue accounts for 100% of the total operating revenue in the company’s financial statements; The main businesses and matters included in the evaluation scope include: corporate governance, organizational structure, development strategy, social responsibility, corporate culture, financial management, related party transactions, investment management, raised funds management, guarantee management, information and communication, procurement management, sales management, inventory management, asset management, comprehensive administrative management, production management, internal supervision management, human resources management and R & D management, The evaluation scope covers the core business processes and main professional modules of the company and its subsidiaries. The high-risk areas of focus mainly include: fund management, inventory management, sales business and procurement business.

The above departments, 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

The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and the company’s internal control evaluation system.

According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, and in combination with the company’s scale, industry characteristics, risk preference, risk tolerance and other factors, the board of directors of the company distinguished the internal control of financial reports from the internal control of non-financial reports, and studied and determined the specific identification standards of internal control defects applicable to the company.

The internal control standards of the company are determined as follows:

1. Identification standard of internal control defects in financial reporting

(1) Quantitative standard

The quantitative standard takes the operating income and total assets as the measurement standard. If the misstatement that may be caused or caused by the defect of internal control is related to the income statement, it shall be measured by the operating revenue index. The misstatement that may be caused or caused by internal control defects, which is related to asset management, shall be measured by the total asset index.

Important degree major defect important defect general defect

Company in the latest fiscal year

Misstatement ≥ the most recent misstatement ＜ the amount of operating income in the most recent financial statement

① Operating revenue fiscal year corporate fiscal year corporate fiscal year 0.5% ≤ misstatement ＜ latest

Misstatement amount financial statement business income financial statement business income financial statement of the company in the fiscal year

0.5% of 1%

1% of operating income

Financial of the latest fiscal year

Misstatement ＜ the latest misstatement ≥ 0.5% of the total assets in the latest statement ≤

② Financial report of total assets in fiscal year

Misrepresentation of 1% of total assets in the amount statement and 1% of total assets in the financial statements

0.5%

1%

(2) Qualitative criteria

Major defect important defect general defect

① Invalid control environment; ① Not selected in accordance with GAAP

② The company’s directors, supervisors and senior managers and apply accounting policies;

Management personnel have fraud; ② Failure to establish anti fraud procedures and control measures other than the above-mentioned major defects and ③ found by certified public accountants; Other than important defects, they are not recognized by the company’s internal control ③ other control defects for unconventional or special transactions.

There are problems in the current financial report that the accounting treatment has not been established or implemented

Material misstatement; The control mechanism should be and there is no corresponding

Major defect important defect general defect

④ Compensatory control of the audit committee and the audit department;

External financial report of the company ④ impact on the process of financial report at the end of the period

There are one or more defects in the internal control of reporting and financial reporting, and

Ineffective supervision; Financial statements that cannot be reasonably guaranteed to be prepared

⑤ Other objectives that may affect the statement to make it true and accurate;

Defects in the correct judgment of the user. ⑤ Significant defects or general defects in internal control

Defects have not been rectified.

2. Identification standard of internal control defects in non-financial reporting

(1) Quantitative standard

The quantitative standard takes the operating income and total assets as the measurement standard. If the loss that may be caused or caused by the defect of internal control is related to the income statement, it shall be measured by the operating revenue index. Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset index.

Important degree major defect important defect general defect

Loss amount ≥ the company’s financial loss amount in the latest fiscal year ＜ the latest

0.5% of the operating income in the financial statements of the last accounting year ≤ the last accounting year

① Operating income

Loss amount in financial statement of the company ＜ the financial statement of the company in the latest accounting period

amount of damages

Annual financial statements of the company in the form of operating income

0.5% of 1% input

Loss amount ≥ the loss amount in the financial report of the latest fiscal year ＜ the latest

② Total assets in recent accounting year table 0.5% of total assets ≤ loss in recent accounting year

Amount of loss fund amount in financial statements ＜ amount in financial statements in the latest fiscal year

1% of total assets 1% of total assets in financial statements 0.5% of total assets

(2) Qualitative criteria

Major defect important defect general defect

① Serious violation of national laws and regulations, ① the company’s decision-making procedures exist, but in addition to the above major deficiencies

Lead to major litigation, or lead to imperfect supervision mechanism, which affects the company’s production and important defects

Investigation by the agency, order to suspend business for rectification and pursue business operation; Other control deficiencies

Investigate criminal responsibility or replace senior management ② violate the company’s internal rules and regulations and cause depression.

Major defect important defect general defect

Personnel; Major losses;

② The company’s important business is lack of institutional control ③ the company is exposed by the media, the negative system or the failure of the institutional system, which produces news and has an important impact on the company

Significant impact on production and operation; Ring;

③ Lack of democratic decision-making within the company ④ important business systems or system procedures or unscientific procedures, resulting in major defects and failure to rectify

Wrong decision-making; Change;

④ Core management personnel or core technology ⑤ others have a great impact on the company

Serious loss of personnel; Negative situations that affect.

⑤ Major defects in internal control evaluation have not been rectified; ⑥ Other negative circumstances that have a significant impact on the company. (III) identification and rectification of internal control defects

1. Identification and rectification of internal control defects in financial reporting

According to the above identification standards of internal control defects in financial reporting, no major defects and important defects in the company’s internal control over financial reporting were found during the reporting period.

2. Identification and rectification of internal control defects in non-financial reports

According to the above identification standards of internal control defects in non-financial reporting, no major defects and important defects in the company’s internal control in non-financial reporting were found during the reporting period. 4、 Description of other major matters related to internal control

During the reporting period, the company did not explain other major matters related to internal control.

Ningbo Color Master Batch Co.Ltd(301019) board of directors April 25, 2022