Internal Control & Risk Management
In order to regulate operation and management, evade and prevent risks, promote establishment and improvement of all management systems, improve management, ensure achievement of development strategy, observe external supervision requirements, improve soundness and effectiveness of internal control, and realize internal control responsibilities of SEG headquarters and its affiliated (branch) companies (hereinafter referred to as “companies”), SEG has created SEG Internal Control Manual in accordance with Corporate Law of the People’s Republic of China, Securities Law of the People’s Republic of China, Accounting Law, Limited Corporation Listing Rules of Hongkong Stock Exchange, Basic Rules of Enterprise Internal Control, Application Guidelines of Enterprise Internal Control, Evaluation Guidelines of Enterprise Internal Control and other related law and regulations.
SEG Internal Control Manual is composed of six parts: general principles, corporate respect control, business respect control, jurisdiction guide, checking evaluation and examination methods and by-laws. Business respect control consists of 58 internal control matrices, covering 23 categories of asset activity, purchase and production activity, asset management, sales business, research and development, project management, guarantee business, business outsourcing, financial report, financial budget, legal affairs management, associated transaction, tax management, human resources, HSE management, quality management, information resources management, information system management, information disclosure, audit management, enterprise reform and management, foreign management and overseas organ management.
Board of directors is the top decision making body of the corporation for full risk management. In the corporate headquarters is set Risk Management Commission, which is in charge of corporate full risk management and internal control work. The headquarters departments and the affiliated (branch) companies are implementation and execution organs for risk management work, which are responsible for timely distinction, analysis and evaluation of risk items in the production and operation process, proposing corresponding measures and solutions, and enforcing them.
The corporation establishes a risk management system that consists of the links of objective setting, risk identification, risk evaluation, risk handling and supervision and improvement. Taking into consideration the current operation situations in the beginning of each year, the headquarters and affiliated (branch) companies analyze and judge internal and external environment changes and their influence, identify risk factors and major risk tips facing all professional sectors, and evaluate by marking the identified risks, with corresponding measures and monitoring and warning indices being designed for major and important risks and corporate operation risks being dynamically monitored. The internal risk control organs of the corporate headquarters and the affiliated (branch) companies at least conduct quarterly risk and internal control checking evaluation, and the auditing organs at least conduct yearly risk-oriented internal control comprehensive checking evaluation and regularly make annual and mid-term risk management and internal control work report which is submitted to the corporate management and board of directors.
