5I5J Holding Group Co.Ltd(000560)
Self evaluation report on internal control in 2021
5I5J Holding Group Co.Ltd(000560) all shareholders:
In order to further improve the company's internal control system, improve the company's management level and risk prevention ability, ensure the continuous and healthy operation of the company's operation and management, and protect the legitimate rights and interests of investors, 5I5J Holding Group Co.Ltd(000560) (hereinafter referred to as "the company" or "the company") according to the basic norms of enterprise internal control and its supporting guidelines The guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 - standardized operation of listed companies on the main board and other relevant provisions and regulatory requirements on internal control (hereinafter referred to as the "enterprise internal control standard system"), combined with the company's internal control system and evaluation methods, on the basis of daily and special supervision of internal control, This report is issued after self-evaluation of the effectiveness of the company's internal control on December 31, 2021 (benchmark date of 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. Establish and implement the internal control of the board of supervisors. 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 and important 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) internal control evaluation organization system
According to the requirements of relevant laws and regulations and normative documents, the company has established an internal control system with the board of directors and its subordinate professional committees as the decision-making level, the board of supervisors as the supervision level, the management team as the leadership and executive level, each center, functional department and subsidiary company as the specific construction executive level, and the audit department and the audit team of the internal control and compliance center as the supervision and evaluation department. The board of directors and its subordinate professional committees are the leading bodies for the company to implement the internal control norms. They are responsible for leading the construction of the company's internal control system, studying and approving the work ideas, work objectives, work contents and work development methods of the company's internal control system, listening to the report on the results of the construction of the internal control system, and putting forward the requirements or opinions for revision and improvement. The management team is responsible for organizing and promoting the orderly development of the construction of internal control system. The audit committee is responsible for supervising the audit department and the internal control and compliance center to formulate the annual work plan, reporting the implementation of the internal audit work plan and the problems found in the internal audit work to the audit committee once a quarter, and submitting the internal control evaluation report to the audit committee at least once a year. The audit department and the audit team of the internal control and compliance center are the specific leading departments of the company's internal control standardization supervision and evaluation. Under the specific guidance of the audit committee of the board of directors, the audit team organizes and coordinates relevant functional departments and subsidiaries to carry out the specific work of internal control implementation and evaluation, supervises and inspects the implementation of internal control systems and processes, collects the feedback information of each center, functional departments and subsidiaries on the systems and processes, and records Analyze and propose solutions and ideas for existing problems, and report to the board of directors and Audit Committee regularly. Among them, the audit department is responsible for the company's audit and supervision, paying attention to the company's key issues such as raised funds, securities investment, provision of guarantees, related party transactions and large amount of capital exchanges, regularly auditing the commodity sales, commercial leasing and service sectors in the Kunming region of the company, issuing audit reports, and evaluating the appropriateness and effectiveness of the company's organizational governance and risk management; The internal control and compliance center is responsible for taking the lead in organizing and coordinating the establishment and implementation of the company's internal control system, continuously coordinating the daily work of improvement and optimization, providing professional knowledge and technical support for risk related affairs, and assigning an independent audit team to supervise and inspect the accuracy and effectiveness of the internal control and risk management of the company's brokerage business, asset management business and new house business. All centers, functional departments and subsidiaries of the company are cooperating departments, which carry out risk identification and assessment according to the unified organization and planning of the company, comprehensively sort out business processes, assess the standardization and effectiveness of control measures, analyze and summarize the problems found, formulate rectification measures, and implement the requirements of the internal control standard system one by one.
In 2021, under the supervision and guidance of the board of directors and the audit committee of the board of directors, according to the basic norms, supporting guidelines, relevant laws and regulations and the articles of Association issued by the five national ministries and commissions, combined with the actual situation of the company, focusing on the internal environment, risk assessment, control activities, information and communication, internal supervision and other elements, and on the basis of combing the standard business processes of internal control, the company passed the inspection Control test and other procedures shall evaluate the internal control of the risk areas and units included in the evaluation scope this year, and form the internal control self-evaluation report on this basis. Zhongshen Zhonghuan Certified Public Accountants (special general partnership) hired by the company shall audit the effectiveness of the company's internal control over financial reports and issue an internal control audit report. (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 business segments included in the evaluation scope include five business segments: brokerage business segment, asset management business segment, new house business segment, commodity sales segment, commercial leasing and service segment. The main units included in the evaluation scope include the company, 5I5J Holding Group Co.Ltd(000560) Cloud Data Co., Ltd. and Kunming Department Store Investment Holding Co., Ltd. the total assets of the units included in the evaluation scope account for 92.87% of the total assets in the company's consolidated financial statements, and the total operating revenue accounts for 88.13% of the total operating revenue in the company's consolidated financial statements.
1. The main operations and matters included in the scope of evaluation include:
(1) Control environment: including development strategy, organization, human resources, social responsibility, corporate culture and legal affairs management.
(2) Risk assessment: including risk identification, analysis and assessment.
(3) Control activities: including comprehensive budget management, capital activities (financing, investment and capital operation) management, assets (fixed assets and intangible assets) management, procurement management, contract management, outsourcing management, guarantee management, related party transaction management, subsidiary management, business activities (housing brokerage, new house agent, housing assets, real estate finance, overseas real estate) management, financial report management, etc.
(4) Information and communication: including internal and external communication, decision information support, anti fraud measures, etc.
(5) Internal supervision: including internal audit, special investigation, internal control evaluation, etc.
2. High risk areas of focus mainly include:
(1) Strategic risk. It mainly includes: macroeconomic and policy risks, strategic decision-making risks, investment decision-making risks, growth (expansion and new business development) risks.
(2) Operational risk. It mainly includes: price risk, competition risk, industry cyclical and seasonal fluctuation risk, customer and supplier credit risk, sales risk, procurement risk, human resources risk, safety production and environmental protection risk, information system risk and affiliated enterprise management and control risk.
(3) Financial risk. It mainly includes: capital flow risk, tax risk, guarantee risk and financial reporting risk.
(4) Compliance risk. It mainly includes: related party transaction risk, employee ethics risk, risk of exceeding authorization of business activities, risk of illegal operation of business activities.
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. (III) identification and internal control standards
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and the company's internal control management system.
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
The recognition criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Identification standard of defect type
Quantitative and qualitative criteria
(1) Directors, supervisors and senior managers abuse their power and commit corrupt acts such as embezzlement, bribery and misappropriation of public funds;
(2) Correction of published financial reports;
Potential misstatement amount of major defects ≥ profit (3) illegal disclosure of major information such as financial reports, mergers and acquisitions and investment, resulting in serious fluctuations in the company's share price of 5% of the total corporate profits or serious negative impact on the company's image;
(4) The audit committee and the Audit Department of the company have no effect on the supervision of internal control;
(5) When the external auditor finds that there is a material misstatement in the current financial report and the internal control operation fails to find the misstatement, it is recognized as a material defect.
(1) Economic losses caused by unauthorized guarantee, investment in securities, financial derivatives transactions and disposal of property rights / equity and related party transactions;
(2) The company corrects the reported or disclosed financial report due to major accounting errors in previous years;
(3) the financial personnel or relevant business personnel of the company have unclear rights and responsibilities, their positions are chaotic, and the important defect is that the amount of misstatement ≥ profit. They are suspected of economic and job-related crimes and are handed over to the judicial authority;
1% (4) of the total amount is punished or the company's image is seriously negatively affected due to policy deviation, accounting error, etc;
(5) Destroy, hide and arbitrarily change important original documents such as invoices / cheques, resulting in economic losses;
(6) Non entry of cash income, private deposit of public funds or establishment of "small treasury" in violation of regulations are identified as important defects.
Potential misstatement amount ＜ profit (1) there may be misstatement of financial information, but it only has a slight impact on the accuracy of information, affecting 1% of the total profit of general defects, which will not affect the judgment of users;
(2) Non important findings in external audit.
2. Identification standard of internal control defects in non-financial reporting
The recognition criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Identification standard of defect type
Quantitative and qualitative criteria
Major defects non-financial reporting internal control (1) the board of directors and its special committees, the board of supervisors, the management's responsibilities, authorities and system defects, resulting in the lack of clear provisions on the company's direct qualifications and rules of procedure, or failure to comply with the authorities and responsibilities
The amount of property loss ≥ performance;
5% of the total profit (2) major M & a failure due to unscientific decision-making procedures or mistakes, or the newly acquired unit cannot continue to operate;
(3) The company's investment, procurement, sales, finance and other important businesses lack control or the overall failure of the internal control system;
(4) Violation of national laws or internal regulations and procedures, major environmental pollution or quality problems, causing investigation or litigation by the government or regulatory authorities, resulting in major economic losses or serious damage to the company's reputation;
(5) Significant internal control and
