Changjiang Securities Company Limited(000783) underwriting and recommendation Co., Ltd
About Henan Liliang Diamond Co.Ltd(301071)
Verification opinions on self-evaluation report of internal control in 2021
Changjiang Securities Company Limited(000783) underwriting and recommendation Co., Ltd. (hereinafter referred to as “Changjiang recommendation” or “recommendation institution”) is a recommendation institution for Henan Liliang Diamond Co.Ltd(301071) (hereinafter referred to as “power shares” or “company”) to issue shares to the public for the first time and to be listed in a startup, in accordance with the basic rules for internal control of enterprises and the measures for the administration of securities issuance and listing recommendation business In accordance with the requirements of relevant laws and regulations, such as the Listing Rules of Shenzhen Stock Exchange on the growth enterprise market and the guidelines for the standardized operation of companies listed on the growth enterprise market of Shenzhen Stock Exchange, the self-evaluation report of Henan Liliang Diamond Co.Ltd(301071) on the company’s internal control in 2021 has been verified. The details of the audit are as follows:
1、 Verification work carried out by the recommendation institution
The sponsor representative and project team personnel appointed by the sponsor to serve as the continuous supervision of force shares shall consult the company’s internal control system related to financial reports and information disclosure; Consult the documents of the third session, internal audit report, etc; Through communication with the company’s internal auditors and senior executives, the internal control evaluation report issued by the company’s board of directors was verified on the basis of reasonable evaluation of the integrity, rationality and effectiveness of the company’s internal control.
2、 Internal control evaluation conclusion
According to the identification of major defects in the company’s internal control over financial reporting, the company has 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 is no impact between the benchmark date of the internal control evaluation report and the date of issuance of the internal control evaluation report
3、 Internal control evaluation of Power Co., Ltd
(I) 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 units included in the evaluation scope include: Henan Liliang Diamond Co.Ltd(301071) , Shenzhen Kemei Diamond Technology Co., Ltd. Henan Liliang Diamond Co.Ltd(301071) Hong Kong Co., Ltd. and Henan Baojing New Material Technology Co., Ltd. The total assets of the units included in the evaluation scope account for 100.00% of the total assets in the company’s consolidated financial statements, and the total operating revenue accounts for 100.00% of the total operating revenue in the company’s consolidated financial statements;
The main businesses and matters included in the evaluation scope include: organizational structure, human resources, capital activities, sales business, procurement business, asset management, related party transactions, financial reports, foreign investment and foreign guarantee. The high-risk areas of focus mainly include: sales business, procurement business, capital activities, 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.
(II) basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation in accordance with the basic norms of enterprise internal control, guidelines for the evaluation of enterprise internal control, guidelines for the application of enterprise internal control, internal control and relevant systems and evaluation methods formulated by the enterprise.
According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, and in combination with the company’s scale, industry characteristics, risk preference, risk tolerance and other factors, the board of directors of the company distinguished internal control over financial reports from internal control over non-financial reports, and studied and determined the specific identification standards of internal control defects applicable to the company, And consistent with previous years. The identification standards of internal control defects determined by the company are as follows: 1. Identification standards of internal control defects in financial reports
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
The standards adopted by the company directly depend on the size of the potential misstatement caused by the internal control defect. The operating revenue, total profit and total assets are taken as the measurement indicators, and the ratio of the potential misstatement to the total potential misstatement items in the company’s consolidated statements of the previous year is taken as the judgment standard, as follows:
Potential misstatement major defects important defects general defects
project
Potential misstatement of operating revenue ≥ 3% of total operating revenue ≤ potential misstatement ＜ 5% of total operating revenue ＜ 3% of 5% of total revenue
Potential misstatement of total profit ≥ 5% of total profit ≤ potential misstatement ＜ 10% of total profit potential misstatement ＜ 10% 5% of total profit
Potential misstatement of total assets ≥ 3% of total assets ≤ potential misstatement potential misstatement of total assets 5% of 5% of total assets
When a potential misstatement caused by an internal control defect affects multiple indicators, the nature of the defect shall be determined according to the lower principle.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Major defects: ineffective control environment; The supervision of the company’s audit committee and internal audit institutions on internal control is invalid; Discover major fraud of directors, supervisors and senior managers; The company makes significant corrections to the published financial statements; The external audit found that there were significant misstatements in the current financial statements, but the internal control failed to find such misstatements in the operation process; Major defects that have been found and reported to the management have not been corrected within a reasonable time; Other defects that may affect the correct judgment of report users.
Important defects: the severity of individual defects or combined with other defects is lower than that of major defects, but it may still cause the company to deviate from the control objectives.
General defects: other internal control defects that do not constitute major defects or important defects
2. Identification standard of internal control defects in non-financial reporting
The identification of non-financial report defects of the company is mainly based on the severity of the business nature involved, the nature of direct or potential negative impact, the scope of impact and other factors, and the defects are divided into major defects, important defects and general defects.
The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
The standard adopted by the company directly depends on the property loss caused by the internal control defect. Taking the total assets as the measurement index and the ratio of the loss amount to the total assets of the company’s consolidated statements of the previous year as the judgment standard, the details are as follows:
Major defect: economic loss ≥ 5% of total assets
Important defect: 3% of total assets ≤ economic loss ＜ 5% of total assets
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Major defects: violation of national laws, regulations or normative documents; Lack of decision-making procedures or unscientific decision-making procedures, resulting in major mistakes; Lack of institutional control or systematic failure of important business; The results of internal control evaluation, especially major or important defects, have not been rectified; Other circumstances that have a significant impact on the company.
Important defects: the severity of individual defects or combined with other defects is lower than that of major defects, but it may still cause the company to deviate from the control objectives
General defects: other internal control defects that do not constitute major defects or important defects
(III) identification and rectification of internal control defects
1. Identification and rectification of internal control defects in financial reporting
According to the above identification standards of internal control defects in financial reporting, the company did not have major defects and important defects in internal control of financial reporting during the reporting period.
2. Identification and rectification of internal control defects in non-financial reports
According to the above identification standards of internal control defects in non-financial reports, no major defects and important defects in the company’s internal control over non-financial reports were found during the reporting period.
4、 Description of other major matters related to internal control
None.
5、 Verification opinions of the recommendation institution
Through the verification of the establishment and implementation of the internal control system of power shares, Changjiang sponsor believes that the current internal control system of power shares meets the requirements of relevant laws, regulations and normative documents such as the basic norms of enterprise internal control, the supporting guidelines of enterprise internal control and the guidelines for the standardized operation of companies listed on the gem of Shenzhen Stock Exchange. In 2021, the company’s internal control system was well implemented, and the 2021 Henan Liliang Diamond Co.Ltd(301071) self evaluation report on internal control issued by the company’s board of directors was in line with the actual situation of the company.
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(there is no text on this page, which is the signature and seal page of the verification opinions of Changjiang Securities Company Limited(000783) underwriting recommendation Co., Ltd. on the 2021 annual internal control self-evaluation report of Henan Henan Liliang Diamond Co.Ltd(301071) Co., Ltd.) by the sponsor representative:
Luo Lingwen, Guo Jia
Changjiang Securities Company Limited(000783) underwriting and recommendation Co., Ltd. mm / DD / yyyy
