China Industrial Securities Co.Ltd(601377) , Donghai Securities Co., Ltd
About Changchai Company Limited(000570)
Verification opinions on self-evaluation report of internal control in 2021
China Industrial Securities Co.Ltd(601377) (hereinafter referred to as ” China Industrial Securities Co.Ltd(601377) “) and Donghai Securities Co., Ltd. (hereinafter referred to as “Donghai securities”) are the sponsors of Changchai Company Limited(000570) (hereinafter referred to as “Changchai shares” or “the company”) non-public offering of A-Shares in 2020, In accordance with the provisions of relevant regulations and normative documents such as the measures for the administration of securities issuance and listing recommendation business, 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. 1 – standardized operation of listed companies on the main board, the self-evaluation report on internal control of Changchai shares in 2021 was carefully and prudently verified, Express the following independent verification opinions: I. verification work carried out by the recommendation institution
The sponsor checked the establishment and implementation of the internal control system of Changchai shares by reviewing relevant materials and consulting the company’s announcement. The main verification contents include: reviewing the minutes of the board of directors and other meetings, the annual internal control self-evaluation report, the report of the board of supervisors, the relevant reports of intermediaries, the relevant information disclosure documents of the company, the company’s management rules and regulations, and verifying the integrity, rationality and effectiveness of the company’s internal control. 2、 Internal control evaluation (I) scope of internal control evaluation
According to the risk oriented principle, the company will include the main units, businesses and matters as well as high-risk areas into the evaluation scope.
The main units included in the evaluation scope include Changchai Company Limited(000570) , Changzhou Changchai Benniu Diesel Engine Parts Co., Ltd., Changzhou Wanzhou Diesel Engine Co., Ltd., Changzhou Housheng Investment Co., Ltd., Changzhou Changchai Housheng Agricultural Equipment Co., Ltd., Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd., Changzhou Xingsheng Property Management Co., Ltd. and Jiangsu Changchai Machinery Co., Ltd.
Proportion of units included in the evaluation scope: the total assets of the units included in the evaluation scope account for 100% of the total assets of the company’s consolidated financial statements, and the total operating revenue accounts for 100% of the total operating revenue of the company’s consolidated financial statements. The main businesses and matters included in the evaluation scope include: organizational structure, human resources, social responsibility, corporate culture, fund management, expense management, procurement management, fixed assets management, inventory management, sales management, contract management, accounting, financial report, etc.
Focus on the following high-risk areas: authorization risk, human resources risk, operation risk, asset safety risk, procurement acceptance risk, credit risk, production safety risk, financial accounting risk, capital control risk, etc.
The above units, businesses, matters and risk areas included in the evaluation scope 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 according to the enterprise internal control standard system, the company’s internal control manual and internal control evaluation measures.
The board of directors of the company has formulated the following defect identification standards according to the identification requirements of the enterprise internal control standard system for major defects, important defects and general defects, combined with the company’s scale, industry characteristics, risk preference and risk tolerance and other factors: 1. Identification standards of internal control defects in financial reports
(1) Qualitative criteria
Major defects: fraud of directors, supervisors and senior managers of the company; The combination of one or more control defects may cause the enterprise to seriously deviate from the control objectives.
Significant deficiencies: failure to select and apply accounting policies in accordance with GAAP; There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the goal of authenticity and accuracy.
General defects refer to other control defects other than the above major defects and important defects.
(2) Quantitative standard
Based on the consolidated statement data of 2021, the quantitative standard for determining the importance of misstatement (including omission) in the consolidated statements of listed companies is as follows:
Major defects: misstatement ≥ 5% of annual profit
Important defects: annual profit 2.5% ≤ misstatement ＜ annual profit 5%
General defects: misstatement ＜ 2.5% of annual profit 2. Identification standard of internal control defects in non-financial reporting
(1) Qualitative criteria
Defects with any of the following characteristics shall be recognized as major defects:
1) Serious violation of national laws, administrative regulations and normative documents;
2) “Three important and one major” issues have not gone through the collective decision-making process;
3) The important business involving the production and operation of the company lacks system control or the system fails;
4) Failure of internal control over information disclosure, resulting in the company being publicly condemned by the regulatory authorities;
5) Major defects in the internal control evaluation results have not been rectified.
Other situations are identified as important defects or general defects according to the degree of influence.
(2) Quantitative standard
With reference to the quantitative standard of internal control defects in financial reports, the quantitative standard for determining the importance of internal control defects in non-financial reports of listed companies is as follows:
Major defect: possible direct loss ≥ 0.1% of net assets
Important defect: 0.05% of net assets ≤ possible direct loss ＜ 0.1% of net assets
General defect: possible direct loss 0.05% of net assets
The quantitative identification standard of internal control defects is based on the company’s 2021 financial statement data. The company will dynamically adjust the quantitative identification standard of internal control defects according to the changes of financial statement data. (III) identification and rectification of internal control defects 1. Identification and rectification of internal control defects in financial reports
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. 3. General defects and rectification
For the general defects found by the internal control and audit department in the self-evaluation of internal control, the company has timely completed the rectification of various defects through discussion, research, special meetings, document supplement and other means. 3、 Description of other major matters related to internal control
The company has no other major matters related to internal control that need to be explained. 4、 Overall evaluation of the company’s internal control
According to the identification of major defects in the company’s internal control over financial reporting, there are 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. 5、 Verification opinions of the recommendation institution
After verification, the sponsor believes that in 2021, the current internal control system and implementation of Changchai shares comply with the provisions of relevant laws and regulations such as the basic norms of enterprise internal control, meet the needs of the current actual operation of the company, effectively prevent and control the internal operation risks of the company and ensure the smooth development of all businesses of the company.
The company’s self-evaluation of internal control in 2021 truly and objectively reflects the construction and operation of the company’s internal control system.
(no text below)
(there is no text on this page, which is the signature page of China Industrial Securities Co.Ltd(601377) on the verification opinions of Changchai Company Limited(000570) 2021 annual internal control self-evaluation report) sponsor representative:
Wang Lingxiao, Li Lihong
China Industrial Securities Co.Ltd(601377) (official seal) April 13, 2022 (no text on this page, which is the signature page of the verification opinions of Donghai Securities Co., Ltd. on the self evaluation report of Changchai Company Limited(000570) 2021 annual internal control) sponsor representative:
Wang jiangqin Xu Qin
Donghai Securities Co., Ltd. (official seal) April 13, 2022
