Company code: Shang Gong Group Co.Ltd(600843) 900924 company abbreviation: Shang Gong Group Co.Ltd(600843) Shanggong B share Shang Gong Group Co.Ltd(600843) (Group) Co., Ltd
Internal control evaluation report in 2021
All shareholders of Shang Gong Group Co.Ltd(600843) (Group) Co., Ltd.:
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 company’s (hereinafter referred to as the company’s) internal control system and evaluation methods, and 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 internal control evaluation report). I 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. II Internal control evaluation conclusion 1 On the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting
□ yes √ No 2 Evaluation conclusion of internal control over financial reporting
√ valid □ invalid
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. 3. Whether major defects in internal control over non-financial reporting are found
□ yes √ no
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.
4. Factors affecting the evaluation conclusion of internal control effectiveness from the base date of internal control evaluation report to the date of issuance of internal control evaluation report
□ applicable √ not applicable
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. 5. Whether the internal control audit opinion is consistent with the company’s evaluation conclusion on the effectiveness of internal control over financial reporting
√ yes □ No 6 Whether the disclosure of major defects in internal control of non-financial reports in the internal control audit report is consistent with the disclosure of the company’s internal control evaluation report
√ yes □ no III 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. 1. The main units of the scope include: the headquarters of the group company, branches: Shang Gong Group Co.Ltd(600843) Shanghai butterfly sewing machine branch, Shang Gong Group Co.Ltd(600843) industrial sewing machine branch, Shang Gong Group Co.Ltd(600843) Shanghai Shanggong DUKEPU intelligent equipment branch; Subsidiaries: Shanghai Shang Gong Group Co.Ltd(600843) Electronics Co., Ltd., Shanghai Shanggong butterfly sewing machine Co., Ltd., Shanghai Butterfly import and Export Co., Ltd., Duke pubaifu Industrial (Shanghai) Co., Ltd., Duke puaihua industrial manufacturing (Shanghai) Co., Ltd., Baifu industrial equipment (Shanghai) Co., Ltd., Shanghai Shenbei Office machinery import and Export Co., Ltd., Shanghai Shang Gong Group Co.Ltd(600843) Asset Management Co., Ltd Shanghai Shensi Enterprise Development Co., Ltd., Zhejiang Shanggong gem Sewing Technology Co., Ltd., Baifu industrial sewing machine (Zhangjiagang) Co., Ltd., Shanggong Fuyi intelligent manufacturing (Tianjin) Co., Ltd., Shanghai sewing construction property Co., Ltd., Shanggong sewing machinery (Zhejiang) Co., Ltd., D ü rkopp Adler GmbH. 2. Proportion of units included in the scope of evaluation:
Proportion of indicators (%)
The ratio of the total assets of the units included in the evaluation scope to the total assets of the company’s consolidated financial statements is 99.64
The total operating income of the units included in the evaluation scope accounts for 99.58% of the total operating income in the company’s consolidated financial statements
3. The main operations and matters included in the scope of evaluation include:
Organizational structure, development strategy, human resources, social responsibility, corporate culture, capital activities, procurement business, asset management, sales business, engineering project, guarantee business, financial report, comprehensive budget, contract management and information system. 4. High risk areas of focus mainly include:
Industry and market risks; Transnational operation risk; Foreign exchange risk; Internal management is the risk of reducing cost, increasing efficiency and improving efficiency; Risk of new product development and promotion. 5. 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. Is there any major omission
□ yes √ no
6. Is there a statutory exemption
□ yes √ No 7 Other explanatory matters
(1) Basic information of overseas enterprises
① Shanggong (Europe) Holding Co., Ltd. (hereinafter referred to as “Shanggong Europe”), a wholly-owned subsidiary of the company, has purchased 94.98% shares of DUKEPU Aihua Co., Ltd. (hereinafter referred to as “Da company”) since July 1, 2005; On November 1, 2010, Shanggong Europe transferred 29% of the shares of Da company to Zoje Europe Co., Ltd. in Kaiserslautern; On September 25, 2014, Shanggong Europe has repurchased all 29% shares of Da company owned by Zoje Europe Co., Ltd. of Kaiserslautern; In 2017, according to the proposal on further integration of Shanggong Europe deliberated and adopted at the 35th meeting of the seventh board of directors of the company, Shanggong Europe changed its legal form from an original limited company to a joint-stock company and renamed it DAP industrial Ag (hereinafter referred to as “DAP Ag”), and obtained a new business registration document on December 20, 2017; Meanwhile, dapag and the board of directors of Da company jointly signed the merger agreement and the merger report on the merger of Da company into dapag on February 6, 2018, which have been deliberated and approved by the board of directors and the board of supervisors of Da company. Therefore, Da company has held the general meeting of shareholders on March 20, 2018 and approved the merger resolution.
On July 16, 2018, the merger and registration of DAP Ag and Da company in the local court was officially completed, and the minority shareholder transfer agreement came into force; Pay compensation for stock transfer of minority shareholders and handle stock transfer on July 19; The delisting procedures of its shares in Frankfurt, Dusseldorf and Berlin were completed on July 26; The name of the merged company is DAP industrialag and changed its name to D ü rkoppadlerag on July 24. On December 4, 2020, D ü rkoppadler AG was renamed D ü rkoppadler GmbH.
② On March 31, 2013, Germany Baifu Industrial System Co., Ltd. (hereinafter referred to as “Baifu”) was successfully acquired.
③ On July 31, 2013, Shanggong Europe successfully acquired 100% shares of Germany KSL Kelman special machinery manufacturing Co., Ltd. (hereinafter referred to as “Germany KSL”).
④ On March 26, 2015, KFC absorbed and merged KSL as a surviving company. After the merger, KFC’s headquarters was still located in Kaiserslautern, canceling the independent legal person status of KSL. After the integration, KSL became a branch of KFC.
(2) Implementation of internal control of overseas enterprises
In 2021, the supervision department of the company conducted an investigation on the internal control management of overseas subsidiaries. The internal control work of overseas subsidiaries is mainly in accordance with the German joint stock company law, the German commercial code, various tax laws, the articles of association and other laws and regulations in the board of supervisors (the decision-making level of overseas companies), the board of directors (the executive level of overseas companies) and the responsible departments. The board of supervisors is mainly responsible for the company’s business decisions; The board of directors is responsible for all management responsibilities of the company in accordance with the rules of procedure. At the same time, the system construction and information management have been continuously improved, and the financial system has been used in accounting treatment to protect it from unauthorized intrusion through relevant facilities in the IT field; Through the advanced ERP system and cost control system, the profits of different products in different countries will be decomposed and refined in detail, further improving the risk control in the implementation process. Therefore, overseas companies have done practical work in standardizing the business behavior of enterprises, safeguarding the rights and interests of assets, preventing the loss of assets, and effectively controlling risks. They comply with the local laws and regulations and meet the requirements of standardizing the construction of internal control system.
(3) The company’s internal control and management of overseas enterprises
In order to strengthen the supervision and management of the company’s overseas assets, standardize the business behavior of overseas enterprises, safeguard shareholders’ rights and interests, prevent the loss of assets, timely grasp the business status of overseas enterprises, effectively control risks, and actively implement the work requirements of the measures for the administration of overseas investment enterprises adopted by the 14th session of the 7th board of directors of the company, in view of the transnational operation characteristics of the company’s main business with a large proportion of overseas subsidiaries, The company implemented the internal control norms of the company in accordance with the laws and regulations of the country where it is located, and actively referred to the spirit of the basic norms of enterprise internal control and its supporting guidelines issued by the five ministries and commissions. In 2021, according to the internal control evaluation plan of 2021, the company discussed how overseas enterprises implement the basic norms of enterprise internal control and its supporting guidelines issued by the five ministries and commissions, The internal control working group specially deployed the self-evaluation work of Da company. After comparing the “basic norms” in China with the relevant corporate governance regulations in Germany, it is considered that they are consistent in terms of the principles and important nodes of the internal control norms of the company; Considering that Da company is an important part of the company, the self-evaluation work shall be carried out by Da company according to its own internal control requirements and the test data provided by the company; In the independent evaluation part, the company shall appoint relevant personnel to conduct independent tests according to the self-evaluation test materials provided by the company, and the evaluation working group of the company shall review them to determine the effectiveness of the design and implementation of its internal control. （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 compilation of enterprise internal control standard system and internal control system. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ no
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. 2. 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:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
0.2% of total operating revenue ≤ misstatementPotential misstatement of operating revenue 0.5% of total operating revenue ≤ misstatement 0.2% of total operating revenue 0.5% of total operating revenue
2% of total profit ≤ misstatement total profit
Total profit potential misstatement 5% of total profit ≤ misstatement 2% of total profit
5% of the amount
0.2% of total assets ≤ misstatement assets
Potential misstatement of total assets 0.5% of total assets ≤ misstatement 0.2% of total assets
0.5% of the total
0.2% of total owner’s equity ≤ misstatement owner’s equity of total owner’s equity potential misstatement 0.5% of total owner’s equity ≤ misstatement
Report 0.5% of total owner’s equity
