Modern Avenue Group Co.Ltd(002656)
Self evaluation report on internal control in 2021
Modern Avenue Group Co.Ltd(002656) all shareholders:
In accordance with 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 normative 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 the company's development strategic objectives. 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
The company has established and improved various internal control systems in accordance with the requirements of the enterprise internal control standard system and relevant regulations to ensure the effectiveness of internal control. According to the identification standard of major defects in the company's internal control over financial reporting, the company has no major defects in the internal control over financial reporting on the benchmark date of the internal control evaluation report. According to the identification standard of the company's internal control defects in non-financial reports, there are two important defects in the company's internal control in 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) 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 its 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: organizational structure, human resources, corporate culture, social responsibility, risk assessment, information and communication, inspection and supervision of internal control, internal control in sales and collection, internal control in procurement and payment, internal control in fixed assets management, internal control in corporate financial reporting, internal control in monetary fund management, internal control in R & D Internal control of computer information system, internal control of financing management, internal control of seal management and internal control of guarantee link.
The high-risk areas of focus mainly include the control of subsidiaries, related party transactions, guarantee matters, fund management, seal management, sales business, procurement business, inventory management, major business decisions, information disclosure, inspection and supervision of internal control, etc.
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
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and relevant provisions of the company's internal control evaluation, combined with the actual situation of the company.
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 criteria for defects in internal control over financial reporting
Identification standard
Defect grade
Quantitative and qualitative criteria
1. Fraud of directors, supervisors and senior managers of the company 2 The significant defects that have been found and reported to the management have not been corrected within the time limit of the potential misstatement amount in the reasonable financial report
Major defects 3 Misstatement discovered by certified public accountants but not identified by the company's internal control ≥ 1% of total operating income
Material misstatement in the current financial report
4. The supervision of the audit committee and the audit department on the company's external financial report and internal control of financial report is invalid
1. Failure to select and apply accounting policies in accordance with GAAP 2 No anti fraud procedures and control measures have been established
Potential misstatement amount of financial report: 3 For the accounting treatment of unconventional or special transactions, there is no significant defect, the total operating income of 0.5% ≤ misstatement corresponding control mechanism is not established, or there is no corresponding compensation control of 1% of the total operating income
4. There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the goal of authenticity and accuracy.
Potential misstatement amount of financial report: refers to other general control defects other than the above major defects and important defects
Misstatement 0.5% of total operating income.
2. Identification standard of internal control defects in non-financial reporting
Identification standard
Defect grade
Quantitative and qualitative criteria
Decision making procedures lead to major mistakes; Lack of institutional control or systematic failure of important business, and lack of effective compensatory control; Direct property loss ≥ 5 million
Serious loss of middle and senior managers and senior technicians due to major defects; Inner element
The results of the Department's control evaluation, especially the major defects, have not been rectified; Other situations that have a significant negative impact on the company.
The decision-making process leads to general mistakes; Defects in important business systems or systems; The loss of business personnel in key positions is strictly 1 million yuan ≤ direct property loss
Major defects; The results of internal control evaluation, especially the important defects, have no gain or loss 5 million yuan
To rectify; Other situations that have a great negative impact on the company.
The efficiency of decision-making procedure is not high; The general business system or system has general defects, and the direct property loss is less than 1 million yuan; Serious loss of business personnel in general posts; General defects have not been rectified.
4、 Identification and rectification of internal control defects
(I) identification of defects in internal control over financial reporting
According to the above identification standards of internal control defects in financial reporting, the company did not have major defects, important defects and general defects in internal control of financial reporting during the reporting period.
(II) identification of internal control defects in non-financial reports
1. The wholly-owned subsidiary Wuhan Yueran Heart Network Technology Co., Ltd. (hereinafter referred to as "Wuhan Yueran") and some of its subsidiaries are out of control
Due to the sharp decline of Wuhan Yueran's performance and the continuous expansion of losses, in April 2021, the company plans to start a special audit of Yan Qinghua, Liu Jinzhu, Zhao Wei, Chen Guoxing, Lei shuchao and others (hereinafter referred to as the "original management team") who were members of the original management team of Wuhan Yueran, and make relevant shareholder decisions in the name of the only shareholder of Wuhan Yueran, However, the original management team of Wuhan Yueran and its subsidiaries, a wholly-owned subsidiary of the company, refused to hand over the important company materials such as the special financial seal, special contract seal, business license, business contract, personnel file and server authority of Wuhan Yueran and its subsidiaries to the company according to the company's resolution, and resisted the data handover by closing the office space and stopping business activities.
The system of manager appointment and chief financial officer appointment and the performance appraisal and salary incentive system established for them failed to safeguard the interests of the whole group; The failure of the company's control over subsidiaries reflects that the company has important defects in the management of subsidiaries.
2. Investment in Nanjing Jiayuan New Energy Vehicle Co., Ltd
Foshan Taiyuan No.1 equity investment partnership (limited partnership) (hereinafter referred to as "Taiyuan No.1"), the company's holding Sun company, invested 240 million yuan to Nanjing Jiayuan New Energy Vehicle Co., Ltd. (hereinafter referred to as "Jiayuan new energy"), accounting for 16.70% of the registered capital of Jiayuan NEW energy.
The company appointed a third-party professional institution to carry out detailed pre investment investigation such as due diligence and feasibility study on the project, conducted this investment review in strict accordance with the company's relevant investment procedures, and passed the review at the seventh meeting of the Fifth Board of directors held on June 28, 2021.
For this investment, the investment cooperation agreement signed by Taiyuan No. 1, Jiayuan new energy, Jiayuan New Energy Technology Co., Ltd. (hereinafter referred to as "Jiayuan technology") and Li Hui on June 28, 2021. According to the investment agreement, in order to avoid horizontal competition and ensure the independence of electric vehicle business, Jiayuan technology needs to complete the liquidation and business integration of affiliated companies before December 31, 2021.
However, since investing in Jiayuan new energy, Taiyuan No. 1 has repeatedly required Jiayuan new energy to disclose the basic financial situation and operation of Jiayuan new energy to shareholders in a timely manner in accordance with the provisions of the company law and the articles of association, especially the progress of related party liquidation and business integration. However, Jiayuan new energy and relevant related parties have not completely provided relevant information and explained the operation.
The company has conducted a compliant and sufficient investment audit on this investment project. Jiayuan new energy did not provide the company with complete relevant materials this time, which had a certain negative impact on the company. This event reflects that there are important defects in the company's control over investment matters.
(III) rectification measures and conditions
1. Rectification measures and conditions of internal control defects in non-financial reports of the previous year
According to the self-evaluation report on internal control in 2020 issued by the board of directors of the company on April 15, 2021, there were frequent replacement and vacancy of the head of the internal audit organization in 2020, and the internal audit organization was unable to perform its duties normally, and the related internal control had general defects.
Considering the importance of the position of the head of the audit institution, the company appointed a new head of audit on June 1, 2021 to strengthen the supervision and evaluation ability of the company's internal audit and reduce the company's operational risk; Strengthen the staffing and system construction of the internal audit department, and fully perform the function of internal audit supervision.
2. In view of the rectification measures and conditions of the original management team of Wuhan Yueran and its subsidiaries against the handover event, after the event, the company quickly carried out the change of some license materials, seals, bank materials, tax, social security and provident fund account information of Wuhan Yueran and its subsidiaries, and took over the office space of Yueran and its subsidiaries. Under the coordination of the property management company of yueranxin office and the public security police station under the jurisdiction, the company's personnel and the original management team will hand over the company's materials such as the seals, business licenses, business contracts, personnel files, fixed assets, server permissions and so on of yueranxin and its subsidiaries in the office of yueranxin and its subsidiaries.
In view of the defects and problems existing in the management of subsidiaries, the company attaches great importance to and focuses on rectification. According to the company law, the articles of association and relevant internal management systems of the company, the company adjusts the mode of fund management and adds provisions on centralized fund management
