Shenzhen Increase Technology Co.Ltd(300713) : self evaluation report on internal control in 2021

Shenzhen Increase Technology Co.Ltd(300713)

Self evaluation report on internal control in 2021

Shenzhen Increase Technology Co.Ltd(300713) all shareholders:

In accordance with 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 normative system"), combined with the internal control management system of Shenzhen Increase Technology Co.Ltd(300713) (hereinafter referred to as "the company" or "the company") and relevant 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, 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 the situation 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, on the benchmark date of the internal control evaluation report, the company has no major defects in the internal control over financial reporting. 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

According to the risk oriented principle, the company determines the units, businesses and matters included in the evaluation scope and high-risk areas.

(I) evaluation scope of internal control

Those included in the evaluation scope include the company, subsidiaries and departments of the company. According to the company's strategic objectives, the company's cultural concept and the development of the industry, the company has established a series of management systems such as subsidiary management system, related party transaction system, safety production system, raised fund use system and accounting control system. The company's management and employees have a high understanding of standardized operation, can better implement the decisions of the board of directors and form a good internal control environment.

(II) objectives and principles of the company's internal control system

The company designs and establishes the company's internal control system and control system in accordance with the requirements of the basic norms of enterprise internal control and other relevant laws and regulations.

1. Basic objectives of internal control

The basic objective of the company's internal control is to reasonably ensure the legality of enterprise operation and management, compliance, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the realization of enterprise development strategy. (1) Establish and improve the internal organizational structure that meets the requirements of modern management, and form a scientific decision-making mechanism, implementation mechanism and supervision mechanism to ensure the normal and orderly operation of the company's business activities and the realization of business management objectives;

(2) Establish an effective risk management system for each risk control point, strengthen comprehensive risk prevention and control, and ensure the normal, orderly and efficient operation of the company's business activities;

(3) Standardize the accounting behavior of the company, ensure the authenticity, accuracy and integrity of accounting materials, and improve the quality of accounting information;

(4) Establish a good internal control environment of the company, prevent and timely detect and correct errors and fraud, and protect the safety and integrity of the company's assets;

(5) Ensure that all business activities must be carried out according to appropriate authorization, and ensure that the contact and handling of assets and records are properly authorized;

(6) Ensure the implementation of relevant national laws and regulations and the company's internal control system.

2. Basic principles followed by the company's internal control system

(1) Principle of legality: internal control shall comply with the provisions of relevant national laws and regulations and the regulatory requirements of relevant government supervision 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 enterprise and its subordinate units;

(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 effectiveness: internal control should be able to provide a reasonable guarantee for the realization of internal control objectives, all employees of the enterprise should consciously maintain the effective implementation of internal control, and the problems existing in the establishment and implementation of internal control should be corrected and handled in time;

(5) 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, business process, etc., while taking into account operational efficiency;

(6) Principle of adaptability: the internal control shall adapt to the business scale, business scope, competition status and risk level of the enterprise, and shall be adjusted in time with the changes of the situation;

(7) Cost benefit principle: internal control should weigh the implementation cost and expected benefits to achieve effective control at an appropriate cost.

(III) internal control elements of the company

1. Control environment

(1) Organizational structure

In accordance with the company law, the securities law and other relevant laws and documents, the company has established a corporate governance structure based on the general meeting of shareholders, the board of directors, the board of supervisors and the management. In combination with the actual situation of the company, the company has formulated the articles of Association, the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors and the rules of procedure of the board of supervisors, respectively for the power organ, decision-making organ The supervision organization and operation management have standardized. The articles of association and the three board system clearly stipulate the nature, responsibilities and working procedures of the general meeting of shareholders, the board of directors and the board of supervisors, as well as the qualifications, powers and obligations of the chairman, directors and supervisors, and clarify the balance of rights among the general meeting of shareholders, the board of directors and the board of supervisors. The general meeting of shareholders is the power organ of the company, the board of directors is the executive organ of the general meeting of shareholders, and the board of supervisors is the internal supervision organ of the company. According to the management functions and specific affairs, the company has set up new energy business department, power business department, key customer department, supply chain department, quality management department, human administration department, financial management department, comprehensive management department and other functional departments. At the same time, the company has established an independent director system and hired independent directors. The board of directors of the company has four special committees: nomination committee, salary and assessment committee, strategy committee and audit committee, and has formulated the working rules of each special committee.

Since its establishment, the special committees have operated well, and the members have earnestly performed their duties to ensure the healthy operation of the company.

During the reporting period, the above-mentioned institutions and personnel of the company operated in accordance with relevant rules, realized the legal and effective operation of the corporate governance structure and protected the interests of all shareholders.

(2) Distribution of authority and responsibility

The company adopts the method of assigning control responsibilities to individuals and establishes a set of authorization mechanism for performing specific functions (including transaction authorization) to ensure that everyone clearly understands the reporting relationship and responsibilities.

The financial department reasonably ensures that business activities are carried out in accordance with appropriate authorization through various measures; Reasonably ensure that transactions and events can be recorded in appropriate accounts in a timely manner with the correct amount in the appropriate accounting period, so that the preparation of financial statements meets the relevant requirements of the accounting standards for business enterprises.

(3) Emphasis on Competence

The management of the company attaches great importance to the setting of the use ability level required for specific jobs, as well as the requirements for the knowledge and ability necessary to achieve this level. The company also carries out various forms of post training and education for different posts according to the needs of actual work, so that employees can be competent for their current jobs.

(4) Participation procedures of governance

The responsibilities of the management have been clearly stipulated in the articles of association and policies of the company. Through its own activities and with the support of the audit committee, the governance layer supervises the company's accounting policies and internal and external audit work and results. The responsibilities of the governance layer also include supervising whether the policies and procedures designed to review the effectiveness of internal control are reasonable and effective.

2. Risk assessment process

Through the formulation and implementation of various management systems, the responsibilities and check and balance mechanism of the company's three meetings and management can operate effectively, the decision-making procedures and rules of procedure established by the company are democratic and transparent, and the internal supervision and feedback system is basically sound and effective. The company has made clear provisions on corporate governance structure, risk assessment, control activities, information communication and internal control supervision and inspection to ensure the integrity and effectiveness of the company's internal control system, supplemented by specific strategies and business process plans to clearly convey the business objectives of the enterprise to every employee. The management attaches great importance to internal control, including information technology control, information management personnel and accounting personnel, and timely deals with the weaknesses of internal control received.

3. Information and communication

The company has established an information and communication system to clarify the collection, processing and transmission procedures of information related to internal control, ensure timely communication of information and promote the effective operation of internal control.

(1) Information collection channels are unblocked. The company can obtain internal information through financial and accounting materials, operation and management materials, research reports, special information, office network and other channels; External information can also be obtained through industry associations, social intermediaries, business units, market research, letters and visits, online media and relevant regulatory authorities.

(2) Timely information transmission procedures. The company can timely communicate and feed back information related to internal control among internal management levels, responsible units and business links, as well as between the enterprise and external investors, creditors, customers, suppliers, intermediaries and regulatory authorities. Problems found in the process of information communication can be reported and solved in time. Important information can be transmitted to the board of directors, the board of supervisors and the management in time. (3) Safe operation information system. The company has established control systems for information system development and maintenance, access and change, data input and output, document storage and custody, network security and other aspects to ensure the safe and stable operation of the information system.

(4) The anti fraud mechanism is transparent. The company has established an anti fraud mechanism to clarify the key areas and key links of anti fraud work and the responsibilities and authorities of relevant institutions in anti fraud work, and standardize the reporting, investigation, handling, reporting and remedial procedures of fraud cases.

4. Control activities

In order to achieve the control objectives, as well as effective monitoring, management and operation, the company has established effective control procedures in terms of transaction authorization, responsibility division, voucher and record control, asset contact and record use, and independent audit.

(1) Transaction authorization: according to the size and nature of the transaction, the company adopts different transaction authorization according to the articles of association, decision-making system for related party transactions, management system for external guarantee, internal control system and other management systems. For general transactions such as purchase and sales business and expense reimbursement business, a hierarchical approval system has been adopted for the heads of functional departments, financial principals, deputy general managers and general managers to ensure that all kinds of businesses are carried out according to procedures. For unconventional transaction events, such as major asset acquisition, major capital expenditure, guarantee, related party transaction and stock issuance, the board of directors or the general meeting of shareholders shall consider and approve according to the decision-making authority. Within the scope of authority granted by the general meeting of shareholders to the board of directors, it shall be approved by the board of directors; Those beyond the scope authorized by the general meeting of shareholders shall be approved by the general meeting of shareholders.

(2) Responsibility division: the responsibility division control procedure is to reasonably divide the responsibilities involved in the transaction to ensure post checks and balances. In the actual operation and management, the company has established the post responsibility system and the work standards and management standards of each post. Detailed responsibility division procedures have been formulated in various links such as R & D, production, quality control, procurement, sales, administration, accounting and computer information system.

(3) Voucher and record control: the voucher circulation procedure has been reasonably formulated, so that the operators can prepare relevant vouchers in time when executing transactions, and the prepared vouchers shall be sent to the accounting department as soon as possible for recording, and the registered vouchers shall be filed in order. Relevant records must be made for various transactions (such as employee salary records, inventory receipt / issue records, sales invoices, etc.), and the records must be independently compared with the corresponding entries.

(4) Asset contact and record use: the company establishes complete rules and regulations for asset purchase, acceptance, storage, use, maintenance and disposal. Strictly restrict the direct contact of unauthorized personnel with property, and adopt methods such as regular inventory, property records and account verification to ensure the safety of assets.

(5) Independent audit: the company sets up an audit department to inspect the implementation of the internal control system, and audit the legitimacy, compliance, authenticity and integrity of the accounting data and other relevant economic data of the company's internal institutions, as well as the reflected financial revenue and expenditure and relevant economic activities; In addition, conduct independent audit on important economic businesses to ensure the compliance of various businesses of the company and verify the correctness of various transactions and records; Assist in establishing and improving the anti fraud mechanism, determine the key areas, key links and main contents of anti fraud, and reasonably pay attention to and inspect possible fraud in the process of internal audit.

(6) Information system application control: through the implementation of ERP system, the company has improved the efficiency of information transmission and decision-making. According to the requirements of ERP system, the company shall assign special personnel to be responsible for bookkeeping, review, posting, settlement and statements, so as to ensure that the contents of account books are complete and the figures are accurate, and strictly implement the requirements of financial system.

5. Supervision of control

The company regularly evaluates various internal controls, and on the one hand, establishes various mechanisms to enable relevant personnel to obtain evidence of the effective operation of internal control to a considerable extent when performing their normal post responsibilities; On the other hand, confirm the internal information or point out the existing problems through external communication. The management of the company attaches great importance to the reports and suggestions of various functional departments and regulatory bodies of internal control, and takes various measures to correct the deviations in the control operation in time.

(IV) implementation of the company's main internal control systems

The company has evaluated the effectiveness of the design and implementation of the internal control system, and now the implementation of the company's main internal control systems is described as follows:

1. Accounting system control system

The company strictly follows the company law, accounting law, accounting standards for business enterprises and internal