Shanghai Step Electric Corporation(002527)
Self evaluation report on internal control in 2021
Shanghai Step Electric Corporation(002527) all shareholders:
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 internal control system and evaluation methods of the company (hereinafter referred to as the “company”), 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 (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. The main units included in the evaluation scope include: the company and all 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 included in the evaluation scope include: elevator control products and elevator Internet of things business, energy saving and industrial transmission products business, Siasun Robot&Automation Co.Ltd(300024) and motion control products business; The main items included in the evaluation scope include: the internal control environment of the company and its holding subsidiaries, risk assessment and prevention, internal control activities, information system and communication, internal supervision and inspection, subsidiary management, etc., including corporate governance structure, corporate culture, human resources, strategic management, information disclosure and capital activities, procurement business, asset management, sales business, research and development, engineering projects, guarantee business Business outsourcing, financial reporting, comprehensive budget, contract management, information management, foreign investment management, related party transactions, raised funds and other links; The high-risk areas of focus mainly include corporate governance structure, corporate culture, strategic management, human resources, related party transactions, financial reports, foreign investment management, information disclosure, etc. (1) Corporate governance structure
The general meeting of shareholders of the company is the highest authority of the company, which can ensure that all shareholders fully exercise their rights and have equal rights to review major matters such as profit distribution and major investment of the company. The board of directors of the company is responsible for the general meeting of shareholders and exercises the company’s business decision-making power according to law. It has four special committees: strategy, audit, nomination, remuneration and assessment. The audit committee is responsible for reviewing the enterprise’s internal control, supervising the effective implementation of internal control and self-evaluation of internal control, and coordinating internal control audit and other related matters. The board of supervisors of the company is responsible for the general meeting of shareholders and is the supervision organization of the company. It supervises and inspects the performance of duties of directors and senior managers and the financial situation of the company. The management of the company is responsible for implementing the resolutions of the general meeting of shareholders and the board of directors, and presiding over the daily production, operation and management of the company. Through command, coordination, management and supervision, all functional centers and business divisions exercise operation and management power, manage the daily affairs of the company and ensure the normal operation of the company. The Secretary of the board of directors shall complete the information disclosure and investor relations management of listed companies, and coordinate relevant affairs.
(2) Corporate culture
The company actively cultivates the enterprise culture with its own characteristics, that is, the core values of the enterprise are: customer-oriented, struggle first, teamwork, dare to do, realistic and innovative; The mission of the enterprise is: let mankind share the convenience and happiness of an intelligent society; The company’s vision is to become an international famous brand in the field of intelligent manufacturing; The strategic path is to focus on servo drive, variable frequency speed regulation, Siasun Robot&Automation Co.Ltd(300024) and industrial controller with motion control technology as the core, develop digitization and intelligence, and provide customers with high-quality intelligent manufacturing comprehensive solutions. Directors and senior managers play a leading role in the construction of corporate culture, drive and influence the whole team and jointly create a positive corporate cultural environment; In addition, the company also actively promotes the effective communication of cultural construction at all internal levels, strengthens the publicity and implementation of corporate culture, and ensures that all employees abide by it.
(3) Human resources
The company formulates the annual human resource demand plan every year, improves the human resource introduction system, standardizes the work flow, and organizes the human resource introduction according to the plan, system and procedure. Set up posts according to the needs of posts, formulate post instructions according to post requirements, and select talents according to post instructions. In terms of talent training, we have established a professional personnel development team, established a long-term mechanism for employee training, created a cultural atmosphere of respecting knowledge, respecting talents and caring for employees’ career development, strengthened the construction of reserve talent team and promoted the knowledge development of all employees
Knowledge and skills are continuously updated to continuously improve the service efficiency of employees.
In terms of performance appraisal, annual performance appraisal and quarterly performance appraisal are established. The setting of performance indicators is scientific and reasonable, and employees are assessed in strict accordance with the requirements of performance appraisal. At the same time, formulate a salary system linked to performance appraisal to effectively motivate employees. In terms of labor contracts, the company and the resigned employees agree on the period of keeping key technologies, trade secrets and competition restrictions according to law. Before leaving, the personnel in key positions of the enterprise shall hand over their work according to relevant company regulations. (4) Strategic management
The company has established a strategy committee under the board of directors to study and make suggestions on the company’s long-term development strategy and major investment decisions. The company organized a comprehensive and in-depth analysis of the internal and external environment, based on its own reality, and ensured the effective implementation of the plan through a number of measures such as the decomposition and refinement of the annual work plan. (5) Related party transactions
In the articles of association and related party transaction management system, the company has made clear provisions on related parties, related relationships, related party transaction prices, approval authority of related party transactions, avoidance and decision-making procedures of related party transactions, special restrictions on controlling shareholders, information disclosure and legal liabilities of related party transactions, so as to ensure that the related party transactions concluded between the company and related parties comply with the principles of fairness, openness and impartiality, Ensure the fairness of all related party transactions. The major connected transactions required by the company are first submitted to the board of directors for deliberation after obtaining the written confirmation of independent directors, and the connected directors withdraw. When submitted to the general meeting of shareholders of the company for deliberation, the related shareholders also voted to withdraw. During the reporting period, the approval procedures of related party transactions of the company were compliant, the pricing was fair, met the needs of the company’s operation and development, and did not damage the rights and interests of the company and other shareholders. (6) Financial Report
The company has established an independent accounting system, including accounting, related party transaction approval, financial reimbursement approval authority, procurement approval, fixed assets management, budget management, business trip management, financial statement submission management and other systems, and defined internal control links such as authorization. The company strictly implements the financial system, strengthens internal financial management, defines the approval authority and approval procedures for various fund payments, and strictly controls the company’s bank account and centralized fund management system. (7) Foreign investment management
The internal control of the company’s foreign investment follows the principles of legality, prudence, safety and effectiveness. In the articles of association and investment management system, the company clearly stipulates the approval authority and deliberation procedures of the general meeting of shareholders and the board of directors for major investments. The company conducts special research and evaluation on the feasibility, investment risk, investment return and other matters of major investment projects. Before the review of major investment projects at the meeting, the board of directors shall organize directors or members of the strategy committee to conduct on-site investigation and research. Once the project is successfully invested, the board of directors shall track the progress, investment risks and investment benefits of the project investment. (8) Information disclosure
All functional centers and subsidiaries of the company regularly report internal major information to the Secretary of the board of directors, and timely inform the Secretary of the board of directors of temporary major information, so that the Secretary of the board of directors of the company can timely and accurately enter the information reported by each department
The bank shall collect, sort and analyze to determine whether the information to be disclosed is involved. In accordance with relevant laws and regulations and the company’s regulations, the Secretary of the board of directors of the company, as the person in charge of investor relations management, organized and implemented investor relations management in each reporting period. The company maintains good communication with investors and securities investment institutions through diversified communication channels such as general meeting of shareholders, online performance briefing, receiving visits from institutional investors and telephone network communication, so that investors can better understand the daily operation and development trends of the company. At the same time, the company and the media can also communicate with each other and treat each other honestly.
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.
（2） Basis of internal control evaluation and identification standard of internal control defects
In accordance with the enterprise internal control standard system, the company’s internal control system, the guidelines on internal control of listed companies, the company law, the securities law and other relevant laws and regulations issued by Shenzhen Stock Exchange, and the rules for the preparation of information disclosure of companies offering securities to the public No. 21 – general provisions on the annual internal control evaluation report jointly issued by the CSRC and the Ministry of finance, And organize and carry out internal control evaluation in combination with enterprise internal control evaluation system and evaluation methods.
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. The identification standards of internal control defects determined by the company are as follows:
1. 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:
The quantitative standard takes the operating income and total assets as the measurement indicators.
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. If the amount of misstatement in the financial report caused by the defect alone or in combination with other defects is less than 0.5% of the operating revenue, it is recognized as a general defect; If it exceeds 0.5% but less than 1% of the operating revenue, it is an important defect; If it exceeds 1% of the operating revenue, it is recognized as a major defect.
Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset index. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than 0.5% of the total assets, it is recognized as a general defect; If it exceeds 0.5% but less than 1% of the total assets, it is an important defect; If it exceeds 1% of the total assets, it is recognized as a major defect.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
In case of any of the following circumstances, it shall be deemed as a major defect:
(1) Invalid control environment;
(2) Fraud of directors, supervisors and senior managers of the company;
(3) The company corrects the published financial report (and makes more than 10% amendments to the main indicators);
(4) Material misstatement in the current financial report found by the certified public accountant but not identified by the company’s internal control; (5) The audit committee of the board of directors and the audit department supervise the company’s external financial reports and internal control over financial reports
