Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) : performance report of the audit committee of the board of directors in 2021

Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738)

Performance report of the audit committee of the board of directors in 2021

Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) (hereinafter referred to as “the company”) the audit committee of the board of directors has performed due diligence, actively carried out its work and earnestly performed its audit and supervision duties in accordance with the relevant provisions of the standards for the governance of listed companies, the rules for the listing of shares on the Shanghai Stock exchange, the guidelines for the self discipline supervision of listed companies on the Shanghai Stock Exchange No. 1 – standardized operation, the articles of association and the rules of procedure of the audit committee of the board of directors. The performance of the audit committee of the board of directors in 2021 is reported as follows:

1、 Basic information of the audit committee of the board of directors

The audit committee of the ninth board of directors of the company is composed of five directors, namely Li Wanjun, Liu Jiapeng, Jiang Qingyun, Shi Feng and Ji Xiaoli, of which Li Wanjun is the chairman of the audit committee.

2、 Meetings of the audit committee of the board of directors

During the reporting period, the audit committee of the board of directors of the company held 6 meetings, and all the audit members attended the meeting and expressed professional opinions on the relevant proposals of the meeting. The details are as follows:

(I) on March 15, 2021, the audit committee of the company held its first meeting by means of communication, deliberated and adopted the 2020 annual report and summary, the 2020 annual financial statement report, the 2020 report on the performance of the audit committee of the board of directors, the proposal on renewing the appointment of the audit institution, and the 2020 self-evaluation report on internal control, which were submitted to the board of directors for deliberation.

(II) on April 20, 2021, the audit committee held its second meeting by means of communication, deliberated and adopted the report and text of the first quarter of 2021, and submitted it to the board of directors for deliberation.

(III) on July 22, 2021, the audit committee held its third meeting by means of communication, deliberated and approved a total of 12 relevant proposals such as the company’s major asset sale plan, and submitted them to the board of directors for deliberation.

(IV) on August 19, 2021, the audit committee held its fourth meeting by means of communication, deliberated and adopted the proposal on the company’s major asset sale plan (Revised Draft) and summary, the proposal on adjusting the company’s major asset sale plan, and the proposal on the fact that the transaction could not be determined to constitute a connected transaction for the time being, and submitted it to the board of directors for deliberation.

(V) on August 24, 2021, the audit committee held its fifth meeting by means of communication, deliberated and adopted the 2021 semi annual report and summary, and submitted it to the board of directors for deliberation.

(VI) on October 21, 2021, the audit committee held its sixth meeting by means of communication, deliberated and adopted the third quarter report of 2021, and submitted it to the board of directors for deliberation.

3、 Main work of the audit committee of the board of directors in 2021

（1） Audit of financial report

During the reporting period, we carefully reviewed the company’s financial report, discussed and communicated with external audit institutions, determined the audit plan, audit scope, audit methods and schedule of the annual report, and actively coordinated the communication between the company’s management, internal audit department and external audit institutions to ensure timely and effective communication between all parties and promote the promotion of audit work. By inquiring the company’s relevant financial personnel and management personnel, consulting the information of the general meeting of shareholders, the board of directors, the board of supervisors and other relevant meetings, reading the company’s relevant account books and vouchers, and analyzing the major financial data, we believe that the company’s financial report is true, complete and accurate, and there is no major misstatement or omission; No major shareholder is found to occupy the company’s funds; The company has not found any external illegal guarantee and abnormal connected transactions.

（2） Supervise and evaluate the work of external audit institutions

1. Assessing the independence of external auditors

Tianjian Certified Public Accountants (special general partnership), a professional external audit institution, has the audit qualification of relevant businesses, adheres to the independent audit with a fair and objective attitude, and completes the audit work entrusted by the company on time. In the audit work, Tianjian Certified Public Accountants (special general partnership) and its audit members have always maintained the dual independence in form and substance, and adhered to the basic principles of professional ethics.

2. Discuss and communicate with external auditors

During the audit, the audit committee and Tianjian Certified Public Accountants (special general partnership) had full communication on the audit scope, audit plan and audit methods in the annual report audit. Urge the annual audit certified public accountants to audit according to the agreed plan and submit the audit report within the agreed time limit. No other major matters that should be disclosed but not disclosed are found in the audit.

3. Monitor and evaluate the diligence of external audit institutions

The Audit Committee believes that Tianjian Certified Public Accountants (special general partnership) was diligent and conscientious during the audit of the company and followed the professional standards of independence, objectivity and impartiality.

（3） Guide internal audit

During the reporting period, the audit committee timely understood the progress of the company’s internal audit work, put forward guiding opinions on the problems found in the internal audit, focused on the follow-up rectification of relevant problems, believed that the relevant staff of the company’s audit department had relevant professional knowledge, worked conscientiously and responsibly, actively carried out the internal audit work around the company’s development objectives, and found no major problems in the internal audit work.

（4） Evaluate the effectiveness of internal control

During the reporting period, the audit committee gave full play to its professional advantages, actively urged the construction of the company’s internal control system, guided the company’s internal audit department to complete the company’s internal control self-evaluation work, completed the company’s internal control evaluation report, and urged and reviewed the company’s internal control audit report issued by the audit institution. We believe that the company’s internal control system is relatively complete, reasonable and effective, meets the relevant requirements of the CSRC on the governance norms of listed companies, has no major defects and important defects, and can meet the current management requirements and development needs of the company.

（5） Review of related party transactions of the company

During the reporting period, we learned about the related transactions of the company in advance and made detailed inquiries with relevant personnel. We found no damage to the interests of the company and shareholders in related transactions, and expressed professional opinions on this.

（6） Coordinate the communication between management, internal audit department and relevant departments and external audit institutions

The audit committee pays attention to timely and in-depth communication with external audit institutions. At different stages of external audit work, the audit committee gives tips on relevant matters to external audit institutions and listens to the reports of external audit institutions. Urge the external audit institutions to perform their duties diligently and fulfill various audit procedures as planned. At the same time, coordinate the management and external audit institutions, and require the management to fully cooperate with the external audit institutions to ensure the quality of external audit work and complete the external audit tasks according to the established progress.

4、 Overall evaluation

During the reporting period, the members of the audit committee of the board of directors of the company were diligent and conscientious in their work, made full use of their professional knowledge, actively and fully performed their functions and performed the duties of the audit committee diligently and conscientiously in strict accordance with the guidelines for self discipline supervision of listed companies on Shanghai Stock Exchange No. 1 – standardized operation, the articles of association, the rules of procedure of the audit committee of the board of directors and other relevant provisions, Effectively promoted the improvement of corporate governance.

In 2022, we will continue to earnestly perform our duties, strengthen the prior audit of relevant matters of the board of directors, continue to strengthen the audit guidance of the company, promote the continuous improvement of the company’s internal control system, promote the standardized operation and steady development of the company, and safeguard the legitimate rights and interests of all shareholders.

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(there is no text on this page, which is the signature page of the 2021 performance report of the audit committee of Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) board of directors) members of the Audit Committee:

Li Wanjun, Liu Jiapeng

Jiang Qingyun and Shi Feng

Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) board of directors audit committee April 2, 2022