Internal control evaluation report in 2021
Midea Group Co.Ltd(000333) 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 Midea Group Co.Ltd(000333) (hereinafter referred to as the "company") internal control system and 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 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 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.
(I) internal control organization system
The board of directors of the company authorizes the internal control project team to be responsible for the specific organization and implementation of internal control evaluation, and conduct internal control evaluation on the risk areas and units included in the evaluation scope in 2021. The internal control project team includes two levels: the internal control project leading group and the implementation group.
The internal control project leading group is the leader and decision-making body of the internal control project, which is responsible for the formulation of the implementation strategy of the whole internal control project, the decision-making of major matters and the supervision of the implementation of the project. Mr. Fang Hongbo, chairman and President of the company, served as the leader of the leading group. The internal control project leading group is responsible to the board of directors for the overall situation of internal control construction and evaluation.
The internal control project implementation team is the organization and implementation organization of the internal control project and completes the specific implementation of the internal control project. Including determining the units to be included in the evaluation in 2021; Record the internal control of important business units, important business processes and transactions; Evaluate the effectiveness of internal control design and implementation; Maintain and update internal control evaluation documents; Monitor the discovery of internal control problems and whether the rectification suggestions confirmed by the management are implemented as planned; Regularly report the project progress, quality and major problems to the internal control project leading group.
The person in charge of the risk areas and unit processes included in the evaluation scope is the specific person in charge of the internal control construction and evaluation of various control activities. Under the guidance of the internal control project implementation team, the process leader describes the business process, relevant control points and other relevant process information, confirms the process record documents, identifies important control measures and rectifies internal control defects. The company hired PricewaterhouseCoopers Zhongtian Certified Public Accountants (special general partnership) to conduct independent audit on the effectiveness of the company's internal control. (II) evaluation scope of internal control
According to the principle of risk orientation, the company determines the main units, businesses and matters and high-risk areas included in the evaluation scope, analyzes the total assets, net profit and operating income of the parent company and its important subsidiaries in 2020, and includes the internal control of the following units in the evaluation scope of 2021: Midea Group Co.Ltd(000333) (parent company), Guangdong Midea refrigeration equipment Co., Ltd., Handan Midea refrigeration equipment Co., Ltd Guangdong Midea Group Co.Ltd(000333) Wuhu refrigeration equipment Co., Ltd. Midea Group Co.Ltd(000333) Wuhan refrigeration equipment Co., Ltd., Guangzhou Hualing refrigeration equipment Co., Ltd., Chongqing Midea refrigeration equipment Co., Ltd., Wuhu Meizhi air conditioning equipment Co., Ltd., Guangdong Midea Kitchen Appliance Manufacturing Co., Ltd., Hefei Midea washing machine Co., Ltd., Wuxi Little Swan Electric Appliance Co., Ltd., Wuxi Feiling Electronics Co., Ltd Hefei Midea refrigerator Co., Ltd., Hefei Hualing Co., Ltd., Hubei Midea refrigerator Co., Ltd., Guangdong Midea HVAC Equipment Co., Ltd., Hefei Midea HVAC Equipment Co., Ltd., Foshan Shunde Midea electric heating appliance manufacturing Co., Ltd., Guangdong Midea environmental Appliance Manufacturing Co., Ltd., Wuhu Midea living appliance manufacturing Co., Ltd., Wuhu Midea kitchen and bathroom appliance manufacturing Co., Ltd Foshan Shunde Midea washing appliance manufacturing Co., Ltd., Guangdong Meizhi refrigeration equipment Co., Ltd., Guangdong Meizhi Precision Manufacturing Co., Ltd., Anhui Meizhi Precision Manufacturing Co., Ltd., Zhejiang Meizhi Compressor Co., Ltd., Wuhu Weiling Motor Sales Co., Ltd., ande Zhilian Technology Co., Ltd., Wuhu ande Zhilian Technology Co., Ltd., Ningbo Midea United material supply Co., Ltd Ningbo meimeijiayuan Electric Appliance Service Co., Ltd., Midea Group Co.Ltd(000333) Finance Co., Ltd., Midea microfinance Co., Ltd., Chongqing Midea commercial factoring Co., Ltd., Tianjin Midea commercial factoring Co., Ltd., Foshan Shunde Midea home appliance industry Co., Ltd., Midea Group Co.Ltd(000333) e-commerce Co., Ltd., Midea (Singapore) Trading Co., Ltd., Midea International Holding Co., Ltd., Mecca International (BVI) Limited Foshan Midea air conditioning industry Investment Co., Ltd., Midea Innovation Investment Co., Ltd. Midea Group Co.Ltd(000333) (Shanghai) Co., Ltd., Midea Investment Co., Ltd., Midea electric Netherlands (I) B.V., Toshiba Consumer Marketing Corporation, KUKA Aktiengesellschaft, etc. The total assets, net profit and operating income of the units included in the evaluation scope account for more than 70% of the corresponding items in the company's consolidated financial statements.
The main businesses and matters included in the evaluation scope include: organizational structure, development strategy, corporate culture, social responsibility, internal information communication, risk assessment, internal supervision, subsidiary management, information disclosure, fund-raising, guarantee business, related party management, human resources, financial management, asset management, domestic sales and collection, export sales and collection, R & D management, procurement and inventory, production management, information system, etc.
High risk areas of focus include financial management, asset management, domestic sales and collection, export sales and collection, procurement and inventory, 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. In this year, according to relevant regulations of China Securities Regulatory Commission, the company newly acquired Beijing Wandong Medical Technology Co.Ltd(600055) , which is not included in the evaluation scope of this year. (III) identification and internal control standards
According to the enterprise internal control standard system and in combination with the enterprise internal control system and evaluation methods, the company evaluates the effectiveness of the design and operation of internal control of the parent company and its selected important subsidiaries as of December 31, 2021 on the basis of daily and special supervision of internal control.
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 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:
Major defect important defect general defect
Defect impact greater than or equal to defect impact greater than or equal to defect impact less than the quantitative standard of 2021 consolidated on December 31, 2021 consolidated on December 31, 2021 consolidated financial statements net profit before tax financial statements net profit before tax 1% of 1% of 1% of 1% of 1% of 1% of 20% of net profit before tax
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows: (1) whether it involves fraud by directors, supervisors and senior managers; (2) Whether there are defects in accounting basis; (3) Whether there are defects in key information systems related to financial reporting; (4) Whether it has a significant impact on the company's operation and management, such as the impact on the following factors: production safety, quality, compliance, and may require the intervention of senior management; (5) The interaction or relationship between the control and other controls, and the interaction between the defect and other defects; (6) Control the possible impact of defects in the future. 2. Identification criteria for internal control defects in non-financial reports the quantitative criteria for the evaluation of internal control defects in non-financial reports determined by the company are as follows:
Major defect important defect general defect
The brand and market have a greater impact (brand, image, market share, image, competitiveness, market) in the region (province / region) where the event occurs (brand, image, greater impact (brand, county), and a certain impact (product competitiveness, market share, image, competitiveness, market), which needs public amount, etc.), This kind of influence can be eliminated by the company in a long time through long-term efforts, and the company needs to pay a huge amount of money to eliminate it in a short time.
Price. Big price.
Monopoly or improper behavior recognized by the competent supervision and law enforcement unit. When the competition behavior is determined to have monopoly or improper behavior, which leads to the obvious competition behavior of the corporate image, it will only be fined, but it will have a significant impact, and lead to crimes in the future and be investigated for criminal responsibility. Not constituting a crime; Or cause losses to others, such as litigation or fines, and bear civil compensation
Liability.
If there are major safety hazards in the production safety link, which are exposed by the media at all levels, resulting in serious consequences, and the hidden dangers are hidden by the production safety hazards of the competent safety supervision machine, which constitutes a crime to the enterprise, the criminal law agency shall circulate a notice of criticism and order it to create an obvious image within a time limit.
Major defect important defect general defect
The relevant provisions have been investigated for criminal correction or have not been corrected within the time limit
Responsibility. Order to stop construction or production
Suspend business for rectification and impose a fine.
The qualitative criteria for the evaluation of non-financial reporting internal control defects determined by the company are as follows: (1) whether the company lacks democratic decision-making procedures or the efficiency of decision-making procedures is not high; (2) Whether it violates national laws and regulations; (3) Whether there are internal control evaluation results, especially major or important defects that have not been rectified; (4) Whether the business control system is ineffective or not; (5) Whether it has a significant impact on the company's operation and management, such as the impact on the following factors: production safety, quality, compliance, and may require the intervention of senior management; (6) The interaction or relationship between the control and other controls, and the interaction between the defect and other defects; (7) Control the possible impact of defects in the future.
For the major defects of internal control over financial reporting and non-financial reporting, the management also pays attention to the following possible signs of major defects: (1) fraud by directors, supervisors and senior managers; (2) Restate previously published financial statements to correct material misstatement due to fraud or error; (3) It is found that there is a material misstatement in the current financial report, but the internal control fails to find the misstatement in the operation process; (4) The supervision of enterprise audit committee and internal audit institution on internal control is invalid; (5) There are many defects in the same important account, presentation and related identification or internal control elements; (6) Punished by the regulatory authority within this year; (7) Significant loss occurs, which can reasonably be proved to be caused by one or more control defects.
Important defects refer to individual defects or a combination of other defects. Their severity is lower than that of major defects, but they may still cause the company to deviate from the control objectives.
General defects refer to other internal control defects that do not constitute major defects or important defects.
The evaluation of the impact degree of internal control defects also needs to consider the following effects: (1) pay attention to and analyze the impact on other controls, and fully consider the risk superposition effect of defect combinations at different control points. (2) The role of compensatory control. Compensatory control is the containment or remedy of a control defect by other formal or informal controls. (IV) identification and rectification of internal control defects 1 Lack of internal control over financial reporting
