Internal Control Evaluation System of Beijing Innotek Biotechnology Co., Ltd. (Revised in August 2025)
Internal Control Evaluation System of Beijing Innotek Biotechnology Co., Ltd.
(Revised in August 2025) Beijing Innotek Biotechnology Co., Ltd. Internal Control Evaluation System
Chapter 1 General Provisions
Article 1 In order to standardize the internal control evaluation work of Beijing Innotek Biotechnology Co., Ltd. (hereinafter referred to as the "Company") and ensure the effective operation of internal control, this system is formulated in accordance with the provisions of the "Company Law of the People's Republic of China", the "Basic Standards for Enterprise Internal Control" and its supporting guidelines and other laws and regulations, and in combination with the actual situation of the company.
Article 2 The term "internal control evaluation" as mentioned in this system refers to the process implemented by the company's board of directors and management to comprehensively evaluate the effectiveness of the company's internal control, formulate evaluation conclusions, and issue an evaluation report. The effectiveness of internal control refers to the company's ability to provide reasonable guarantee for the realization of control objectives through the establishment and implementation of internal controls.
Article 3 This system applies to the company and its wholly-owned or controlled subsidiaries.
Article 4 A company’s implementation of internal control evaluation should at least follow the following principles:
(1) Principle of comprehensiveness. The evaluation work should include the design and operation of internal controls, covering various businesses and matters of the company and its affiliated units.
(2) Principle of importance. The evaluation work should be based on a comprehensive evaluation and focus on important business units, major business matters and high-risk areas.
(3) Principle of objectivity. The evaluation work should accurately reveal the risk status of operation and management and truthfully reflect the effectiveness of internal control design and operation.
(4) Principle of checks and balances. The internal control system ensures the reasonable establishment and division of labor of the company's institutions, positions and their responsibilities and authorities, insists on the separation of incompatible positions, and ensures that different institutions and positions have clear powers and responsibilities, mutual restrictions and mutual supervision, while taking into account operational efficiency.
(5) Principle of adaptability. The internal control system is constantly revised and improved with changes in the external environment, adjustments to the company's business functions and improvements in management requirements to ensure that it is compatible with the scale, business scope, competition status and risk level of the internal control evaluation system of Beijing Innotech Biotechnology Co., Ltd. of the enterprise.
(6) Cost-benefit principle. The evaluation work should weigh the implementation costs and expected benefits, and complete effective evaluation at an appropriate cost.
Article 5 The evaluation basis and standards shall comply with relevant national laws and regulations, the "Basic Standards for Enterprise Internal Control" and supporting guidelines for enterprise internal control, relevant company systems, processes and other relevant documents.
Chapter 2 Organization and Implementation of Internal Control Evaluation
Article 6 The company's internal control evaluation is led by the company's board of directors, and the company's audit department is authorized to be responsible for organization and implementation.
Article 7 Division of responsibilities for internal control evaluation
(1) The board of directors is responsible for the design, operation and evaluation of the company's internal control, and is responsible for the authenticity of the internal control evaluation report.
(2) The Audit Committee of the Board of Directors guides the internal control evaluation work, supervises the self-evaluation of internal control, and reviews the internal control evaluation report submitted by the audit department.
(3) For internal control deficiencies finally identified by the board of directors, the management should organize relevant departments or units to formulate rectification plans, implement rectifications and supervise implementation to ensure effectiveness.
(4) The Audit Department is responsible for leading the organization and implementation of internal control evaluation, and guiding, supervising and inspecting the internal control evaluation of wholly-owned or controlled subsidiaries.
(5) The remaining functional departments of the company are participating units in the internal control evaluation and cooperate with the audit department in carrying out the internal control evaluation work. Propose rectification plans and specific plans for the discovered internal control design and operation deficiencies, actively implement the rectifications, and guide, supervise, and inspect the rectification of internal control deficiencies in wholly-owned or controlled subsidiaries.
Beijing Innotek Biotechnology Co., Ltd. Internal Control Evaluation System
Article 8 The company's internal control evaluation generally includes annual evaluation and daily evaluation. Annual evaluation refers to the company's evaluation of the effectiveness of the company's establishment and implementation of internal controls in a certain year based on internal control objectives; daily evaluation refers to the company's evaluation of the effectiveness of internal controls within a specific scope at a specific point in time.
Article 9 The annual evaluation is a regular evaluation. After the end of each calendar year and before the annual report is submitted to the Board of Directors for review, the annual evaluation should be completed and the internal control evaluation report submitted to the Audit Committee of the Board of Directors for review; daily evaluations are generally irregular evaluations, which are determined according to specific circumstances as needed, and are not limited by inspection time and number of inspections.
Article 10 All departments and subsidiaries of the company shall be responsible for organizing relevant personnel to actively cooperate and provide all required information in a timely manner in accordance with the requirements of the company's audit department.
Chapter 3 Contents of Internal Control Evaluation
Article 11 A company shall determine the specific content of internal control evaluation based on internal control elements such as internal environment, risk assessment, control activities, information communication, and internal supervision, and conduct a comprehensive evaluation of internal control design and operation.
Article 12 Internal environment assessment shall be based on application guidelines such as organizational structure, development strategy, human resources, corporate culture, social responsibility, etc., and shall be combined with the internal control system of the company and its subordinate departments to identify and evaluate the design and operation of the company's internal environment.
Article 13 Risk assessment and evaluation shall be based on the relevant risk assessment requirements of the "Basic Standards for Enterprise Internal Control" and the main risks listed in various application guidelines, combined with the internal control systems of the company and its affiliated departments, to identify and evaluate risk identification, risk analysis, response strategies, etc. in the daily operation and management process.
Article 14 The evaluation of control activities shall be based on the control measures in the "Basic Standards for Enterprise Internal Control" and the various application guidelines of the internal control evaluation system of Beijing Innotek Biotechnology Co., Ltd., combined with the internal control systems of the company and its affiliated departments, to identify and evaluate the design and operation effectiveness of relevant business control measures.
Article 15 The evaluation of information communication shall be based on the relevant application guidelines for internal information transmission, financial reporting, information systems, etc., combined with the internal control system of the company and its affiliated departments, and identify and evaluate the timeliness of information collection, processing and transmission, the soundness of the anti-fraud mechanism, the authenticity of financial reports, the security of information systems, and the effectiveness of using information systems to implement internal controls.
Article 16 Internal supervision and evaluation shall determine and evaluate the effectiveness of the internal inspection and supervision mechanism based on the requirements of the "Basic Standards for Enterprise Internal Control" and various application guidelines regarding internal inspection and supervision, combined with the internal control systems of the company and its affiliated departments. Focus on whether the audit committee, internal audit organization, etc. effectively play a supervisory role in the design and operation of internal controls.
Article 17 The scope of evaluation includes all operating links of the company’s headquarters departments, wholly-owned or holding subsidiaries, and various management systems that run through all aspects of business activities.
Chapter 4 Procedures and Methods for Internal Control Evaluation
Article 18 The company's internal control evaluation procedures generally include: formulating an evaluation work plan, forming an evaluation working group, conducting on-site testing, identifying control deficiencies, summarizing evaluation results, and preparing and submitting evaluation reports.
Article 19 Annual inspection and evaluation procedures
(1) Organize and hold annual evaluation meetings to clarify the overall goals and key points.
(2) The company's audit department formulates a work plan, clarifying the evaluation scope, work tasks, personnel organization, progress arrangements, etc.
Beijing Innotek Biotechnology Co., Ltd. Internal Control Evaluation System
(3) The company's audit department takes the lead in promoting the internal control evaluation of various departments of the company, and conducts random inspections of the internal control evaluation of wholly-owned or controlled subsidiaries.
(4) Based on the summarized evaluation results and identified internal control deficiencies, the company's audit department will compile an annual internal control evaluation report based on the overall situation of internal control work, submit it to the company's general manager's office meeting for review and approval, and then submit it to the audit committee of the company's board of directors for review.
(5) The Audit Committee of the company's board of directors shall review the internal control evaluation report and provide corresponding opinions and suggestions on existing deficiencies and problems.
(6) The company's audit department shall submit the internal control evaluation report after deliberation by the audit committee to the company's board of directors for review and resolution.
(7) The company's board of directors shall disclose the annual internal control evaluation report in accordance with regulations at the same time as the annual report is disclosed.
(8) The company's audit department should report to the board of directors the internal control deficiencies and problems found during the inspection and then follow up to ensure that relevant units have taken appropriate improvement measures in a timely manner.
Article 20 In addition to regular inspections and evaluations, the company's audit department may conduct irregular inspections and evaluations on the establishment and implementation of the company's internal controls to standardize management, control and prevent risks.
Article 21 The company may also entrust an intermediary agency to conduct internal control evaluation. Accounting firms that provide internal control audit services may not also provide internal control evaluation services.
Article 22 When the inspection and evaluation department carries out internal control inspection and evaluation work, it shall conduct on-site testing of the evaluated unit, comprehensively use individual interviews, questionnaires, special discussions on internal control evaluation system theory of Beijing Innotech Biotechnology Co., Ltd., walk-through testing, on-site inspections, sampling and comparative analysis, etc., to fully collect evidence on whether the internal control design and operation of the evaluated unit is effective, truthfully fill in the evaluation work papers according to the specific content of the evaluation, and study and analyze the deficiencies in internal control.
Chapter 5 Identification of internal control deficiencies
Article 23 Internal control defects include design defects and operational defects. The company's identification of internal control deficiencies shall be based on daily supervision and special supervision, combined with the annual internal control evaluation, and the audit department shall conduct a comprehensive analysis and put forward identification opinions, and make a final identification after review in accordance with the prescribed authority and procedures.
Article 24 Internal control deficiencies are divided into major deficiencies, important deficiencies and general deficiencies according to their degree of impact.
(1) Definition of internal control deficiencies
A major deficiency refers to a combination of one or more control deficiencies that may cause an enterprise to seriously deviate from its control objectives.
Important deficiencies refer to a combination of one or more control deficiencies, the severity and economic consequences of which are lower than major deficiencies, but which may still cause the enterprise to deviate from the control objectives.
General defects refer to defects other than major defects and important defects.
(2) Standards for identifying internal control deficiencies
Internal defect type identification standard Indicator name Major defect Important defect General defect Defect or defect combination possible 3% of total profit ≤ misstatement<
Misstatement ≥ 5% of total profit Misstatement < 3% of total profit
Impact on total profit 5% of total profit
Inside Financial Reporting
quantitative standards
control deficiencies
Defects or combinations of defects may be 0.3% of total assets ≤ misstatement misstatement < total assets misstatement ≥ 0.5% of total assets
Impact on total assets Reported <0.5% of total assets 0.3%
Beijing Innotek Biotechnology Co., Ltd. Internal Control Evaluation System
- Ineffective control environment; 2) Directors
One or more controls exist
and senior management engaged in fraud
Defects lead to period-end financial statements
Because it seriously affects the company's standardized operations
The report cannot be true and reasonable
; 3) Due to major accounting errors, the company
standards, due to these internal
Correct the published financial report; 4) It does not constitute a major defect or may be caused by a serious control defect.
Qualitative standards and indications: If there are any major defects that have not been identified by internal control, they are considered to be general misstatements even if they do not reach materiality.
Material misstatements in period financial reports; defects. sexual level, but should still arouse the
- The company’s audit committee and internal audit
the attention of the board of directors and management,
There is no oversight of internal controls by the accounting agency
The defect is considered to be a serious
Effective; 6) Possible consequences due to accounting errors
Want defects.
Severe penalties from regulators.
3% of total profit ≤ direct
Direct property loss accounts for profit Direct property loss ≥ total profit Direct property loss < profit Property loss < total profit
Total ratio 5% 3% of total 5%
quantitative standards
Direct property losses account for 0.3% of total assets ≤ misstatement < misstatement of total assets ≥ 0.5% of total assets
Total ratio reported <0.5% 0.3% of total assets
The company’s decision-making process is unscientific
Serious violation of laws and regulations; 2)
Learning leads to general mistakes; 2)
Major safety and environmental accidents occur in non-financial reports,
Wholly-owned and holding subsidiaries are not
Defects in internal control lead to serious consequences; 3) Major decisions
Establish appropriate laws and regulations
Without effective collective voting, resulting in serious
governance structure and management system
Big mistake; 4) The overall institutional system is lacking
degree and disorganized management; 3) If it does not constitute a major defect or serious loss, it may or has caused the company
Qualitative standards, signs and symptoms. Deficiencies of general managers and technicians are identified as general control failures; 5) Senior managers
There is a high turnover of employees; 4) Defects occur. or serious loss of personnel in key technical positions.
General safety accident, not formed
Serious, affecting the company's normal operations
Serious consequences; 5) Information
Action; 6) Results of internal control evaluation
Tolerance is unreal, incomplete, and subject to
In particular, major and important defects have not been identified
to external regulators
Rectification.
punishment.
Note: ① The financial indicator values are based on the company’s audited consolidated statement data of the previous year for specific application. ②The above standards are determined for each incident. If multiple incidents occur, the defect levels will be determined based on the direct property losses caused by each incident and the extent of its impact. The amount of direct property losses shall be subject to the amounts already determined by external audits, headquarters departments, inspected units, etc.; if there is no conclusion on handling, it shall be determined on-site by the internal control inspection team. ③ For accounting accounts that implement 100% inspection, potential misstatements are equal to the actual misstatements discovered; when sampling inspection is adopted, the amount of potential misstatements = the cumulative amount of corresponding accounting accounts in the same direction × the potential misstatement rate.
Article 25 The company's audit department shall prepare a summary table of identification of internal control deficiencies, and conduct a comprehensive analysis and comprehensive review of internal control deficiencies, their causes, manifestations and extent of impact based on the internal control deficiencies discovered by daily supervision and special supervision and their continuous improvement.
review, put forward identification opinions, and report to the board of directors or management in an appropriate form. Major deficiencies in the internal control evaluation system of Beijing Innotek Biotechnology Co., Ltd. shall be ultimately determined by the board of directors. For major deficiencies identified by the board of directors, the company should adopt response strategies in a timely manner, effectively control risks within an acceptable range, and hold relevant departments or personnel accountable.
Chapter 6 Internal Control Evaluation Report
Article 26 The company shall issue an annual internal control evaluation report in accordance with laws, administrative regulations, departmental rules, the relevant provisions of the China Securities Regulatory Commission and the Shanghai Stock Exchange (hereinafter referred to as the "Shanghai Stock Exchange"), and based on the evaluation report and relevant information issued by the internal audit institution and reviewed by the audit committee.
Article 27 The internal control evaluation report shall be designed based on elements such as internal environment, risk assessment, control activities, information communication, internal supervision, etc., and shall disclose the internal control evaluation process, identification and rectification of internal control defects, and conclusions on the effectiveness of internal control.
Article 28 The internal control evaluation report shall generally include at least the following contents:
(1) Statement by the board of directors on the authenticity of the internal control evaluation report;
(2) The overall situation of internal control evaluation work;
(3) The basis, scope, procedures and methods of internal control evaluation;
(4) Defects in internal control and their identification;
(5) Rectification of internal control deficiencies in the previous year;
(6) Corrective measures to be taken to address internal control deficiencies this year;
(7) Conclusion on the effectiveness of internal control.
The accounting firm should verify and evaluate the company's internal control self-evaluation report with reference to the relevant regulations of the competent authorities.
Article 29 The important statement in the annual internal control evaluation report shall explain the relevant responsibilities of the board of directors, the Internal Control Evaluation System Audit Committee of Beijing Innotek Biotechnology Co., Ltd., directors, and senior managers regarding internal control and the annual internal control evaluation report, as well as the objectives and inherent limitations of internal control.
Article 30 The board of directors shall form a resolution on the company's internal control evaluation report while reviewing the annual financial report and other matters. The internal control evaluation report shall be disclosed externally or submitted to relevant departments after approval by the board of directors. The company should disclose the annual internal control evaluation report at the same time as the annual report, and disclose the verification and evaluation opinions of the accounting firm on the internal control evaluation report.
The company's audit department should pay attention to whether factors that affect the effectiveness of internal control have occurred between the base date of the internal control evaluation report and the issuance date of the internal control evaluation report, and make corresponding adjustments to the evaluation conclusions based on their nature and degree of impact.
Article 31 The company shall use December 31 of each year as the base date for the annual internal control evaluation report. The annual internal control evaluation report shall be submitted within 4 months after the base date.
Article 32 Relevant documents, working papers and supporting materials related to the company’s internal control evaluation shall be properly kept.
Chapter 7 Supervision of Internal Control Evaluation and Assessment Rewards and Punishments
Article 33 All internal control evaluation activities of the company are supervised by the Audit Committee of the Board of Directors. If relevant units have doubts about the fairness of the inspection and evaluation process or results, they can report it to the Audit Committee.
Article 34 The company's board of directors shall implement appropriate rewards and punishments for relevant units, departments or personnel based on the evaluation conclusions and incorporate them into the assessment mechanism.
Article 35 If the board of directors or the audit committee believes that there are major flaws or major risks in the company's internal control, or if the sponsor or accounting firm points out that there are major flaws in the effectiveness of the company's internal control system, the board of directors shall report to the Stock Exchange in a timely manner and disclose it.
The company shall disclose in the announcement any major deficiencies or major risks in internal control, the consequences that have occurred or may result, and the measures that have been taken or planned to be taken. The audit committee should urge relevant responsible departments to formulate rectification measures and rectification schedules, conduct follow-up reviews of internal controls, supervise the implementation of rectification measures, and promptly disclose the completion of rectifications.
Article 36 A company shall truthfully prepare and provide an annual internal control evaluation report to the outside world based on the testing and evaluation evidence obtained from the internal control evaluation work, and shall not contain false information or conceal important facts. The company's board of directors and all directors should ensure that the annual internal control evaluation report provided does not contain false records, misleading statements or major omissions, and bear individual and joint legal liability for the authenticity, accuracy and completeness of the annual internal control evaluation report.
Chapter 8 Supplementary Provisions
Article 37 If any matter is not covered in this system or conflicts with laws, regulations, normative documents and the Articles of Association, the relevant provisions of the relevant laws, regulations, normative documents and the Articles of Association shall be followed.
Article 38 This system will come into effect on the date it is reviewed and approved by the board of directors.
Article 39 The right to interpret this system belongs to the company's board of directors.