China Securities Co.Ltd(601066)
About Konfoong Materials International Co.Ltd(300666)
Verification opinions on self-evaluation report of internal control in 2021
China Securities Co.Ltd(601066) (hereinafter referred to as ” China Securities Co.Ltd(601066) securities” or “sponsor”) as a sponsor of Konfoong Materials International Co.Ltd(300666) (hereinafter referred to as ” Konfoong Materials International Co.Ltd(300666) ” or “company”) issuing convertible corporate bonds to unspecified objects, In accordance with the requirements of relevant regulations such as the measures for the administration of securities issuance and listing recommendation business, the Listing Rules of Shenzhen Stock Exchange on the gem, the self regulatory guidelines for listed companies on the Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on the gem, the Konfoong Materials International Co.Ltd(300666) “self evaluation report on internal control in 2021” was carefully verified. The specific conditions are as follows: I. The company’s internal control objectives
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 the 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
(I) basis of internal control evaluation
This internal control self-evaluation is based on the basic norms of enterprise internal control, supporting guidelines for enterprise internal control, guidelines for enterprise internal control evaluation, No. 2 guidelines for self-discipline supervision of Listed Companies in Shenzhen Stock Exchange – standardized operation of companies listed on GEM, combined with various rules and regulations of the company, according to the environment and its own business characteristics, 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. (II) 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 the company and all its wholly-owned subsidiaries and 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: control environment, risk assessment, control activities, information and communication, supervision and other elements, specifically including the internal control related to financial statements involved in the company’s business: corporate governance structure and organizational structure, financial management system and financial report, raised fund management, sales and collection, procurement and payment, asset management, contract management, related party transaction management Foreign investment and foreign guarantee management, major investment management, internal audit and supervision, subsidiary management system, information disclosure management, etc.
The above units, businesses and matters included in the evaluation scope cover the main aspects of the company’s operation and management, and there are no major omissions. The high-risk areas of focus mainly include: foreign investment and foreign guarantee management, related party transactions, major investment decision management, raised funds management and information disclosure.
(III) principles of the company’s internal control
1. Principle of legality: internal control shall comply with the provisions of relevant national laws and administrative regulations and the regulatory requirements of relevant government regulatory departments, and comply with the actual situation of the company.
2. Principle of comprehensiveness: the establishment of internal control should run through the whole process of decision-making, implementation and supervision, covering all 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 restrict and supervise each other in terms of governance structure, institutional setting, distribution of rights and responsibilities and business processes, and give consideration to operation efficiency at the same time.
5. Principle of adaptability: the internal control shall adapt to the business scale, business scope, competition status and risk level, and shall be adjusted in time with the changes of the situation.
6. Cost benefit principle: internal control should weigh the implementation cost and expected benefits, and implement effective control at an appropriate cost.
(IV) procedures and methods of internal control evaluation
The internal control evaluation shall be carried out in strict accordance with the procedures specified in the basic norms, evaluation guidelines and the company’s internal control evaluation measures. The audit department is responsible for formulating the internal control evaluation plan and evaluation work plan. All departments and units carry out self-evaluation. The audit department comprehensively reviews and identifies the control defects, prepares the internal evaluation report and submits it to the Audit Committee for consideration. In the process of internal control evaluation, the company adopts the methods of individual interview, questionnaire, special discussion, review and inspection, walk through test, sampling and analytical review to fully collect the evidence of the effectiveness of the company’s internal control design and operation, and analyze and identify the internal control defects according to the specific contents of the evaluation.
3、 Construction and implementation of internal control system
(I) internal control environment
1. Corporate governance structure and organizational structure
In accordance with the company law of the people’s Republic of China (hereinafter referred to as the “company law”), the securities law of the people’s Republic of China (hereinafter referred to as the “Securities Law”) and other relevant national laws and regulations and the requirements of regulatory authorities, the company has reasonably set up an organizational structure that meets the needs of the company’s business scale and operation and management, including the management system of the general meeting of shareholders, the board of directors, the board of supervisors and the management. The company has formulated the articles of association, rules of procedure of the general meeting of shareholders, rules of procedure of the board of directors, working system of independent directors, rules of procedure of the board of supervisors, decision-making system of connected transactions, management system of external guarantee, management system of raised funds and other systems, clarified the responsibilities and authorities in decision-making, implementation and supervision, and formed a scientific, effective and reasonable division of responsibilities and check and balance mechanism.
The general meeting of shareholders is the highest authority of the company, which deliberates and makes decisions on major matters such as the company’s business policies, investment plans and major transactions, and exercises voting rights according to law. The general meeting of shareholders of the company shall exercise its powers in strict accordance with the articles of association and the rules of procedure of the general meeting of shareholders.
The board of directors is responsible for the general meeting of shareholders, consisting of 9 directors and 1 Chairman. The board of directors includes 3 independent directors. The board of directors is the business decision-making body of the company. It has four special committees: Strategy Committee, salary and assessment committee, nomination committee and audit committee. It has formulated the working rules of corresponding professional committees and clarified their respective responsibilities and authorities in the corporate governance structure.
The of the board of directors of the company has faithfully performed the rights and obligations conferred by the company law and the articles of association. The special committees of the board of directors can perform their duties diligently in accordance with laws, regulations, the articles of association and the work regulations of the special committees, and the operation is in good condition. The independent directors of the company can earnestly perform the functions and powers of independent directors, ensure the scientificity of the decision-making of the board of directors and safeguard the rights and interests of small and medium-sized investors in accordance with the requirements of laws, regulations and systems such as the company law, the articles of association and the working system of independent directors.
The board of supervisors is responsible to the general meeting of shareholders and is the supervision organization of the company. It is responsible for supervising the directors, general manager and other senior managers of the company to perform their duties according to law, and supervising and inspecting the company’s financial status and internal control standard system. The board of supervisors faithfully performed the rights and obligations conferred by the company law and the articles of association in accordance with the law.
The management of the company is responsible for the daily operation and management of the company. According to the needs of business development, internal control and its own characteristics, the company sets up functional departments such as technical service department, production and operation Department, sales department, logistics department, quality department, finance department, human resources department, procurement department, administration department and audit department, including subordinate holding subsidiaries. All departments carry out work according to the provisions of department responsibilities, with clear division of labor and perform their respective duties Each has its own responsibilities, cooperates with each other, restricts and supervises each other.
2. Development strategy
Adhering to the responsibility of “adding glory to made in China and giving more connotation to made in China”, the company grasps the historical opportunity of the rapid growth of the global semiconductor industry, continuously improves its competitive advantages in terms of technical level, quality system and customer service level, strives to reach the global leading level in the field of ultra-high purity metal materials and sputtering targets, and further improves the layout of precision parts of semiconductor equipment, With the vision of becoming a “world-class semiconductor material enterprise”. Comprehensively considering macroeconomic policies, changes in market demand outside China, technological development trends, industry and competitor conditions, their own strengths and weaknesses and other influencing factors, organize strategic seminars, widely solicit opinions from all parties, establish strategic objectives, development plans and business plans, and timely grasp market information and company operation through management and control measures and regular analysis, so as to make corresponding management decisions and countermeasures, Guide management and business behavior.
“Attaching importance to technology, respecting talents and taking R & D and innovation as the driving force of enterprise development” is the hard truth of enterprise sustainable development. The company has established and implemented more scientific personnel management systems such as recruitment, employment, assessment, salary, reward and punishment and promotion. Through the combination of external introduction and internal training, the company continues to strengthen the introduction of high-end talents at home and abroad, improve the quality of employees, improve the talent structure, establish an echelon talent team suitable for the company’s development strategy, and strengthen the vocational training and ability training of employees, Organically combine the career planning of employees with the development planning of the company, strive to create a mechanism and environment to attract, retain and encourage talents to stand out, attract and encourage excellent talents to serve the company for a long time, and provide human resources guarantee for the overall development strategy of the company.
4. Corporate culture
The company adheres to the core values of “common success in Entrepreneurship and win-win with employees, customers and industrial chain”, adheres to the business philosophy of “openness, integration, innovation and win-win”, and the enterprise spirit of “four whatevers: make every effort, stick to the end, pursue perfection and strive for the first in everything”, actively promotes the technological progress of the enterprise and continues to reform and innovate, Take “adding glory to made in China and giving more connotation to made in China” as its own responsibility, realize resource-saving and environment-friendly sustainable development, and aspire to become a world-class semiconductor material enterprise.
5. Social responsibility
The company attaches importance to the performance of social responsibilities. In the process of operation and business development, the company takes efficiency, consumption reduction, energy conservation and pollution reduction as the principles of environmental protection, complies with the all-round development of the country and society, and strives to achieve the coordination of economic and social benefits, short-term and long-term interests, self-development and social development, so as to realize the healthy and harmonious development of the company and employees, the company and society, the company and the environment.
(II) risk assessment and control
According to the set control objectives, the board of directors of the company comprehensively, systematically and continuously collects relevant information, timely analyzes and discusses, determines the corresponding risk tolerance in combination with the actual situation, carries out regular risk assessment, and accurately identifies the internal and external risks related to the realization of the control objectives. For the identified acceptable risks, the combination of qualitative and quantitative methods is adopted to analyze and rank the identified risks according to the possibility of risk occurrence and its impact degree, so as to determine the focus of attention and priority control risks.
According to the results of risk identification and risk analysis, combined with risk tolerance, weigh the risks and benefits, determine the coping strategies of various risks, and control the risks within an acceptable range. At the same time, the company takes appropriate and effective control measures according to the risk preferences of directors, managers, other senior managers and employees in key positions, so as to avoid major losses to the operation of the enterprise due to personal risk preferences. At the same time, the comprehensive use of risk avoidance, risk reduction, risk sharing and risk tolerance and other risk response strategies to achieve effective risk control.
(III) internal control activities
According to the risk assessment results, the company adopts corresponding control measures to control the risk within the tolerable range. The details are as follows:
1. Control measures
(1) Incompatible job separation control
When formulating the responsibilities of each post, the company fully considered the control requirements of incompatible job separation, implemented corresponding separation measures when formulating specific business processes and job responsibilities, and formed a working mechanism of performing their duties, assuming their responsibilities and mutual restriction.
(2) Authorization approval control
According to the specific business process and actual needs, the company adopts different authorization controls, defines the scope, authority, procedures, responsibilities and other relevant contents of authorization and approval, and requires the management personnel at all levels of the unit to exercise the corresponding authority within the scope of authorization, and the handling personnel must also handle economic business within the scope of authorization. For major businesses and matters, a collective decision-making examination and approval or joint signing system shall be implemented. No individual may make decisions alone or change collective decisions without authorization.
(3) Accounting system control
The company strictly implements the accounting standards, strengthens the basic work of accounting, establishes a standardized accounting and monitoring system, defines the processing procedures of accounting vouchers, accounting books and financial accounting reports, and ensures the authenticity and integrity of accounting materials. The company has set up an accounting organization, equipped with accounting practitioners, and formulated relevant financial systems, covering basic accounting work, revenue and expenditure and custody of monetary funds, sales and collection, procurement and payment and other financial accounting businesses, so as to ensure the accuracy, security and reliability of accounting and records and their data.
(4) Property protection control
The company has established the daily use management and regular inventory system of property, including property records, physical storage, regular inventory, account verification and other measures, and clarified the specific workflow and division of rights and responsibilities through the system to ensure the safety of the company’s property.
(5) Performance appraisal control
The company has established and implemented a performance evaluation system, scientifically set up an evaluation index system, regularly and objectively evaluate the performance of all responsible departments and all employees within the enterprise, and take the evaluation results as the basis for determining employees’ salary, job promotion, excellent evaluation and job transfer.
2. Main internal control activities
(1) Fund management
The company has formulated monetary fund management and control system, financial management system, online banking supervision system, financial bill management system, petty cash management system, reimbursement process, seal management system and other systems and regulations to standardize the company’s fund-raising, investment and capital operation activities. The company has established strict authorization review procedures for daily fund management business, and clarified the responsibilities and authorities of relevant departments and posts in the links of monetary fund revenue and expenditure management and expense reimbursement, so as to ensure incompatible posts
