Shenzhen Ridge Engineering Consulting Co.Ltd(300977)
Self evaluation report on internal control in 2021
Shenzhen Ridge Engineering Consulting Co.Ltd(300977) all shareholders:
In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines jointly issued by the Ministry of finance, the CSRC and other departments and other internal control supervision requirements (hereinafter referred to as the enterprise internal control system), combined with Shenzhen Ridge Engineering Consulting Co.Ltd(300977) (hereinafter referred to as the company) internal control system and evaluation methods, on the basis of daily and special supervision of internal control, We have evaluated the rationality, integrity and effectiveness of the establishment of internal control of the company as of December 31, 2021 (benchmark date of internal control evaluation report), and identified the defects existing in the design and operation of internal control. The self-evaluation of the company’s internal control related to the company’s financial statements as of December 31, 2021 is reported as follows:
1、 Important statement
Internal control is a process implemented by the board of directors, the board of supervisors, managers and all employees to achieve control objectives. It is the responsibility of the board of directors of the company to design, implement and maintain effective internal control, evaluate its effectiveness and truthfully disclose the internal control evaluation report under the supervision of the corporate governance and 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 liabilities for the authenticity, accuracy and completeness of the contents of the report.
The objective of establishing and implementing internal control is to reasonably ensure the legal compliance of enterprise operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the realization of enterprise 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 or procedures, there is a certain risk to speculate the effectiveness of internal control in the future according to the internal control evaluation results.
2、 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 Shenzhen Ridge Engineering Consulting Co.Ltd(300977) and its subsidiaries Shenzhen Ruisheng Engineering Research Institute Co., Ltd., Shenzhen Ruicheng Engineering Technology Co., Ltd. and Wuhan ruiyunjie Engineering Technology Co., Ltd.
The main businesses included in the evaluation scope include: engineering evaluation services, on-site management services, management consulting services, etc.
The items included in the evaluation scope include: corporate governance, organizational structure, corporate culture, information disclosure, information and communication, and internal audit at the company level; Business level human resources, financial reporting, asset management, capital operation management, procurement business, sales and collection, foreign investment management, related party transactions, foreign guarantee, research and development, control of subsidiaries, etc.
The high-risk areas of focus mainly include revenue recognition, accounts receivable, R & D, financial investment and other businesses.
As the amount of revenue is significant and is a key performance indicator, there are differences in the timing of operating revenue recognition under different business categories, resulting in the inherent risk that the management manipulates revenue recognition to achieve specific goals or expectations. Therefore, we identify the company’s revenue recognition as a high risk of key concern.
If the accounts receivable cannot be recovered on schedule or bad debts occur due to non recovery, it will have a significant impact on the consolidated financial statements of the company, as well as the industrial risks faced by real estate customers. Therefore, we determine the accounts receivable as the key high-risk area.
R & D risk is not only affected by the external environment, but also the reason why the internal management of the enterprise is not in place. R & D risks need to be strictly controlled on the basis of in-depth analysis of market demand and reasonable cost investment. Therefore, we identify R & D as a key high-risk field.
Mistakes in financial investment decisions may lead to blind expansion or loss of development opportunities, which may lead to low investment benefits. The company has just been listed. After the raised funds are in place, there are large-scale temporary idle funds, which have a great impact on the income and loss risk of financial management. Therefore, we identify the company’s investment and financial management as the high risk we focus on.
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.
（1） Governance structure
In accordance with the company law, the securities law, the articles of association and other laws and relevant provisions, the company has established a standardized corporate governance structure and rules of procedure, defined the responsibilities and authorities in decision-making, implementation and supervision, and formed a scientific and effective division of responsibilities and check and balance mechanism.
1. The general meeting of shareholders is the highest authority of the company. The company has formulated the rules of procedure of the general meeting of shareholders, which clearly stipulates the nature and functions of the general meeting of shareholders and the working procedures such as convening and notification, proposal, voting and resolution of the general meeting of shareholders. The formulation and effective implementation of the rules ensure that the general meeting of shareholders exercises the decision-making power on major matters according to law, which is conducive to protecting the legitimate rights and interests of shareholders. 2. The board of directors is the company’s permanent decision-making body, which is responsible to the general meeting of shareholders, deliberates and makes decisions on major decision-making issues in the company’s business activities, or submits them to the general meeting of shareholders for deliberation. The directors are elected by the general meeting of shareholders and the chairman is elected by the board of directors. The board of Directors consists of five directors, with one chairman, including two independent directors. It has a strategy committee, an audit committee, a remuneration and assessment committee, a nomination committee and other institutions; The special committees are held by the directors and independent directors of the company. The company has formulated the rules of procedure of the board of directors, the working system of independent directors, the working system of the strategy committee, the working system of the audit committee, the working system of the remuneration and assessment committee and the working system of the nomination committee, which stipulate the selection and employment procedures of directors, the obligations of directors, the composition and responsibilities of the board of directors, the rules of procedure of the board of directors, the working procedures of independent directors, the composition and responsibilities of various special committees, etc. The formulation and effective implementation of these systems can ensure that the special committee can effectively perform its duties and provide help for the scientific decision-making of the board of directors.
3. The board of supervisors is the supervisory body of the company, which is responsible for supervising the behavior of the directors and managers of the company and the company’s finance. The board of supervisors of the company is composed of three supervisors, one of whom is the employee representative supervisor. The company has formulated the rules of procedure of the board of supervisors, which clearly stipulates the responsibilities of supervisors, the functions and powers of the board of supervisors, the convening and notification of the board of supervisors, resolutions, etc. The formulation and effective implementation of the rules will help give full play to the supervisory role of the board of supervisors and protect the interests of shareholders, the company and the legitimate interests of employees from infringement.
4. The president is fully responsible for the daily operation and management activities of the company and organizes the implementation of the resolutions of the board of directors. The company has formulated the president’s working system, which stipulates the president’s responsibilities, President’s office meeting and operation management meeting, President’s reporting system, supervision system and so on. The formulation and effective implementation of these systems ensure the effective implementation of various decisions of the board of directors, and improve the operation and management level and risk prevention ability of the company.
（2） Internal organizational structure
The internal institutions set up by the company include: real estate business center, product center, business management center, public utility center, marketing center, incubation center, Research Institute, process information center, human resources center, administration department, financial center, audit and supervision department, board office and President’s office.
By reasonably dividing the responsibilities of each department and post, and implementing the principle of separation of incompatible positions, a mechanism of clear division of labor, mutual cooperation and mutual checks and balances is formed between each department, which ensures the orderly and healthy operation of the company’s production and operation activities and the realization of control objectives.
（3） Corporate culture
The company adheres to the corporate mission vision of “intelligent engineering management, service quality and life” and the core values of “respect, honesty, growth and responsibility”. The company attaches great importance to strengthening cultural construction, cultivating positive values and sense of social responsibility, advocating integrity and self-discipline, truth-seeking and pragmatic, pioneering and innovative spirit and teamwork spirit, establishing modern management concept and strengthening risk awareness. Directors, supervisors, senior managers and other business managers shall play a leading role in the construction of enterprise culture. Employees of the enterprise shall abide by the code of conduct for employees and earnestly perform their post responsibilities.
（4） Information disclosure
In accordance with the company law of the people’s Republic of China, the securities law of the people’s Republic of China and other relevant national laws and regulations, as well as the relevant requirements of the Shenzhen Stock Exchange GEM Listing Rules, the measures for the administration of information disclosure of listed companies and the articles of association, the company has formulated the information disclosure management system, which defines the person in charge of information disclosure, the information disclosure management department and relevant obligors Responsibilities of each responsible person and obligor, contents and standards of information disclosure, review process of information disclosure, file management of documents and materials related to information disclosure, investor relations activities, such as regular reports, interim reports and circulation procedures of major events.
（5） Information and communication
The company has invested in the planning and operation of the internal website. Taking the e-mail system as the starting point and using modern information platforms such as ERP and OA, the information transmission between each center / department and between employees and management is more rapid, effective, fast and smooth. At the same time, the company has implemented the physical isolation between the intranet mailbox and the external website in the information construction to ensure the information security.
The company has established perfect channels for timely, accurate and complete transmission and communication of internal information, including communication between the management and the management, release of business objectives, main business process information, transmission of capital and asset flow information and financial information, feedback of performance appraisal and difference analysis information, etc. At the same time, the company establishes communication with external consulting institutions, competent departments, regulators, media and external auditors, and is willing to accept their beneficial opinions on the company’s internal governance and internal control. Perfect and effective information transmission and communication channels ensure the efficiency and health of the company’s business activities.
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. The company has established the employee reporting and complaint management system, which has been timely transmitted to all employees, and set up a reporting line to clarify the reporting and complaint handling procedures, handling time limit and completion requirements, so as to ensure that reporting and complaint become an important way for enterprises to effectively grasp information.
（6） Establishment of internal audit institutions
The audit committee under the board of directors of the company is responsible for the communication, supervision and verification of internal and external audit of the company in accordance with the working system of audit committee and other regulations. The audit committee consists of three directors and two independent directors, one of whom is an accounting professional and serves as the convener of the Committee. The audit committee has an audit and supervision department, a director, an audit manager and a commissioner. It has the professional ability to carry out audit work independently. The company has established an internal control and supervision system, defined the responsibilities and authorities of internal audit institutions and other internal institutions in internal supervision, and standardized the procedures, methods and requirements of internal supervision, as well as the scope and frequency of daily supervision and special supervision. For internal control defects found in the process of supervision, timely analyze the nature and causes of defects, put forward rectification plans, and timely report to the board of directors, the board of supervisors or the management in an appropriate form.
（7） Human resources policy
The company has formulated human resources policies conducive to the sustainable development of the enterprise, including: employment, training, dismissal and resignation of employees; Salary, assessment, promotion, reward and punishment of employees; Compulsory leave system and regular job rotation system for employees in key positions; Restrictive regulations on the departure of employees who master state secrets or important business secrets, etc.
At the same time, the company attaches great importance to the quality of employees and takes professional ethics and professional competence as important standards for selecting and employing employees. The company also carries out various forms of follow-up training and education for different positions according to the needs of actual work, so that employees can be competent for their jobs and continuously improve the support of human resources for enterprise strategy.
（8） Financial Report
The company has established a relatively perfect financial management system in accordance with the accounting law, accounting standards for business enterprises, tax law and other relevant laws and regulations. The company has set up an independent accounting organization, set up more reasonable posts in financial management and accounting, formulated corresponding job instructions, and equipped with sufficient full-time personnel to ensure the smooth progress of financial work. The division of labor of accounting personnel is clear, and the post responsibility system is implemented. Each post can play a role of mutual restraint, and the approval, execution and recording functions are separated. According to the perfect financial management system, the financial personnel have done a good job in the recording and integration of financial information, and sorted and prepared the financial statements in strict accordance with national standards and industrial accounting standards.
（9） Capital operation management system
The company has formulated the fund management system, reimbursement and payment management system and financial responsibility manual to standardize the authorization and approval procedures for the revenue and expenditure and custody of monetary funds, and the separation of incompatible positions. The fund management system mainly stipulates the expenditure, approval principles, approval authority and daily management of monetary funds. The reimbursement and payment management system mainly stipulates the approval authority of advance payment and loan, the requirements of expense reimbursement vouchers, and the reimbursement standards of travel and other expenses. The manual of financial responsibility and authority also stipulates the approval process and authority of other capital expenditures such as foreign investment, reserve fund and margin.
The promulgation and implementation of the above system has strengthened the supervision and management of the company’s fund use, ensured the rationality of fund use, improved fund use efficiency and saved expenses.
According to the actual payment of the raised funds in 2021, without affecting the normal progress of the investment plan of the raised funds and ensuring the safety of the funds, the company uses the idle raised funds for cash management to purchase investment products with high safety, good liquidity and guaranteed principal, which improves the use efficiency of the raised funds, makes rational use of the idle raised funds and increases the company’s income. （10） Asset management
By formulating the asset management system, the company has made specific specifications for the purchase process of fixed assets and intangible assets, equipment management, maintenance, provision for scrapping and impairment and other links. The payment of fixed assets and intangible assets can only be paid after the relevant assets have been implemented and the procedures are complete. The company has no major defects in asset operation and management.
（11） Procurement and payment business
The company has formulated the procurement management system and the reimbursement and payment management system, which have made clear provisions on the procurement plan and implementation management, supplier management and payment settlement, so as to plug the loopholes in the procurement link and reduce the procurement risk.
（12） Sales and collection business
The company has formulated the business quotation management system, the contract specification management system and the reconciliation system between the financial center and the business center. At the same time, it defines the responsibilities and approval authority of each link of the sales and collection business, ensures the separation, restriction and supervision of incompatible posts, defines the responsibilities of relevant departments in the quotation process, confirms the rationality of the quotation and ensures the
