Zheshang Securities Co.Ltd(601878)
About Huabao Flavours & Fragrances Co.Ltd(300741)
Verification opinions of internal control evaluation report in 2021
Zheshang Securities Co.Ltd(601878) (hereinafter referred to as ” Zheshang Securities Co.Ltd(601878) ” or “recommendation institution”) as a recommendation institution for initial public offering and listing of Huabao Flavours & Fragrances Co.Ltd(300741) (hereinafter referred to as ” Huabao Flavours & Fragrances Co.Ltd(300741) ” or “company”), in accordance with the administrative measures for recommendation business of securities issuance and listing In accordance with the relevant provisions of regulations and rules, such as the guidelines for self regulation and supervision of listed companies of Shenzhen Stock Exchange No. 13 – recommendation business, and the guidelines for self regulation and supervision of listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM, the relevant conditions of internal control in Huabao Flavours & Fragrances Co.Ltd(300741) 2021 have been verified. The verification conditions and opinions are as follows:
1、 Internal control evaluation
(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 the company and its subordinate enterprises and branches. The total assets of the units included in the evaluation scope account for 100% of the total assets in the company’s consolidated financial statements, and the total operating revenue accounts for 100% 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, development strategy, human resources, social responsibility, corporate culture, capital activities, procurement business, asset management, sales business, research and development, engineering projects, financial reports, comprehensive budget, contract management, internal information transmission, information system, etc; The high-risk areas of focus mainly include: capital activities, procurement business, asset management, sales business, engineering projects, financial reports, contract management, 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 enterprise internal control standard system and the requirements of relevant laws, regulations, rules and regulations such as the guidelines for self discipline supervision of Listed Companies in Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM.
According to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, and in combination with factors such as the company’s size, industry characteristics, risk preference and risk tolerance, the board of directors of the company distinguished internal control over financial reports from internal control over non-financial reports, studied and determined specific identification standards for internal control defects applicable to the company, which were consistent with those in 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 identification criteria for defects in internal control over financial reporting determined by the company are as follows:
Recognition standard in financial report
Department control defect
Identification criteria quantitative criteria qualitative criteria
Including but not limited to:
The amounts that lead to misstatement in the financial statements are as follows: ① fraud by directors, supervisors and senior managers;
Lower range: ② the company found major accounting differences and major defects in previous years ① misstatement ≥ 2% of operating revenue; Error, correct the disclosed financial report;
② Misstatement ≥ 3% of total profits; ③ The audit committee and the internal audit institution shall report the error and omission of internal control supervision ③ ≥ 0.5% of the total assets. Invalid supervision;
④ The certified public accountant found that there were significant errors and omissions in the financial report of the current year, and the internal control operation failed to find such errors and omissions.
Including but not limited to:
The amount that leads to misstatement in the financial statements is as follows: ① the accounting policy is not selected and applied in accordance with generally accepted accounting standards;
① 0.5% of operating income ≤ false and missing report ＜ business ② anti fraud procedures and control measures are not established;
2% of the income of major defect industries; ③ For the accounting treatment of unconventional or special transactions, ② 1% of the total profit ≤ false and missing report ＜ the corresponding control mechanism is established or not implemented and there is no corresponding 3% of the total profit; Compensatory control;
③ 0.2% of total assets ≤ misstatement ＜ assets ④ there is one item or 0.5% of total assets in the control of the financial reporting process at the end of the period. There are many defects and can not reasonably guarantee that the prepared financial statements achieve the true and complete objectives.
The amount resulting in misstatement in the financial statements is as follows:
Lower range: other internal general defects that do not constitute major defects and important defect standards ① misstatement 0.5% of operating revenue; Control defects.
② Misstatement ＜ 1% of total profit;
③ Misstatement ＜ 0.2% of total assets.
2. Identification standard of internal control defects in non-financial reporting
The identification criteria of internal control defects in non-financial reporting determined by the company are as follows:
Recognition standard of non-financial Report
Lack of internal control
Identification criteria quantitative criteria qualitative criteria
The amount resulting in misstatement in the financial statements includes but is not limited to:
Lower range: ① insufficient decision-making leads to major mistakes;
① Misstatement ≥ 2% of operating income; ② Violating national laws and regulations and being severely punished; Major defect ② misstatement ≥ 3% of total profit; ③ Loss of middle and senior managers and senior technicians ③ misstatement ≥ 0.5% of total assets.
Serious;
④ The results of internal control evaluation, especially major defects, have not been rectified.
The amount resulting in misstatement in the financial statements is as follows:
The following sections include but are not limited to:
① 0.5% of operating revenue ≤ false and missing report ＜ ① general errors due to insufficient decision-making procedures; 2% of the operating income of major defects; ② Violation of the company’s internal rules and regulations, resulting in a large amount of loss ② 1% of the total profit ≤ misstatement ＜ loss of profit;
3% of the total profit; ③ The results of internal control evaluation, especially the important defects ③ 0.2% of the total assets ≤ errors and omissions not rectified.
0.5% of total assets.
The amount resulting in misstatement in the financial statements is as follows:
Lower range: other internal general defects that do not constitute major defects and important defect standards ① misstatement ＜ 0.5% of operating revenue; Control defects of the Department.
② Misstatement ＜ 1% of total profit;
③ Misstatement ＜ 0.2% of total assets.
(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 has no 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.
(IV) description of other major matters related to internal control
The company has no explanation on other major matters related to 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 on December 31, 2021. 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 benchmark of 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.
3、 Main verification procedures of the recommendation institution
Zheshang Securities Co.Ltd(601878) sponsor representatives and the project team of continuous supervision communicated with Huabao Flavours & Fragrances Co.Ltd(300741) directors, senior managers and other personnel, and consulted the minutes of the general meeting of shareholders, the board of directors, the board of supervisors and other meetings, internal audit report, 2021 internal control evaluation report and various business management rules and regulations, from the company’s internal control environment The construction and implementation of the internal control system have verified the integrity, rationality and effectiveness of its internal control system.
4、 Verification opinions of the recommendation institution
After verification, the sponsor believes that: Huabao Flavours & Fragrances Co.Ltd(300741) has established a relatively perfect corporate governance structure and formulated relatively complete rules and regulations on corporate governance and internal control. Its internal control system is well implemented and complies with relevant laws and regulations and the normative requirements of the securities regulatory department for the management of the internal control system of listed companies; The 2021 internal control evaluation report issued by the board of directors basically reflects the construction and operation of its internal control system.
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(there is no text on this page, which is the signature page of Zheshang Securities Co.Ltd(601878) verification opinions on Huabao Flavours & Fragrances Co.Ltd(300741) 2021 annual internal control evaluation report) sponsor representative:
Wang Jianhua and Hong Tao
Zheshang Securities Co.Ltd(601878) March 25, 2022
