China Securities Co.Ltd(601066)
About Yingkou Fengguang New Material Co., Ltd
Verification opinions of internal control evaluation report in 2021
China Securities Co.Ltd(601066) (hereinafter referred to as ” China Securities Co.Ltd(601066) securities” or “the sponsor”) is the sponsor of Yingkou Fengguang new materials Co., Ltd. (hereinafter referred to as “Fengguang” or “the company”) for the initial public offering of shares, In accordance with the measures for the administration of securities issuance and listing recommendation business (revised in 2020), Shenzhen Stock Exchange GEM Listing Rules (revised in 2020), Shenzhen Stock Exchange self regulatory guidelines for listed companies No. 2 – standardized operation of GEM listed companies and other relevant provisions, the internal control evaluation report of Fengguang Co., Ltd. in 2021 was carefully verified, and the following verification opinions were issued:
1、 Verification work carried out by the recommendation institution
The sponsor has carefully verified the integrity, rationality and effectiveness of the company’s internal control by reviewing the company’s relevant systems, consulting the minutes of the third meeting, the articles of association and other documents, as well as the company’s internal audit report, the opinions of independent directors and the report of intermediaries.
2、 Internal control evaluation
(I) basis of internal control evaluation
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and the company’s internal control management system and evaluation methods.
(II) principles of internal control evaluation
1. Principle of comprehensiveness
Internal control shall run through the whole process of decision-making, implementation and supervision, and cover various businesses and matters of the enterprise and its subordinate units.
2. Principle of importance
Internal control should pay attention to important business matters and high-risk areas on the basis of comprehensive control.
3. Adaptability principle
The internal control manual shall adapt to the requirements of business scale, business scope, competition status, risk level and environment, and shall be adjusted in time with the changes of the situation.
4. Cost benefit principle
Relationship to ensure more effective control at a reasonable cost.
5. Principle of balance
Internal control shall form mutual restriction and supervision in the aspects of governance structure, institutional setting, distribution of rights and responsibilities, business process, etc., and take into account the operation efficiency.
(III) evaluation scope of internal control
The main units included in the evaluation scope include the company and its wholly-owned subsidiaries and holding subsidiaries. The total assets of the units included in the evaluation scope account for 99.99% 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: corporate governance, strategic planning, budget management, production management, technology and R & D, equipment management, safety and environment management, sales management, investment management, fund management, expense management, procurement and payment management, fixed assets management, financial report and settlement, contract and authorization management, personnel and salary management Information and technology management and control of subsidiaries.
The high-risk areas of focus mainly include: capital activities, procurement business, asset management, sales business, equity investment, safety and environmental protection, 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.
(IV) internal control evaluation basis and internal control defect identification standard
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system.
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 factors such as the company’s scale, industry characteristics, risk preference and risk tolerance, the board of directors of the company studied and determined the specific identification standards of internal control defects applicable to the company for internal control over financial reports and internal control over non-financial reports. The identification standards of internal control defects determined by the company are as follows:
1. Identification standard of internal control defects in financial reporting
The quantitative and qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
The quantitative standard takes the operating income and total assets as the measurement indicators. If the misstatement that may be caused or caused by the defect of internal control is related to the profit statement, it shall be measured by the operating revenue index. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than 1% of the operating revenue, it is recognized as a general defect; If it is greater than or equal to 1% but less than 2% of the operating revenue, it is an important defect; If it is greater than or equal to 2% of the operating revenue, it is recognized as a major defect.
Quantity. If the amount of financial report misstatement that may be caused by the defect alone or in combination with other defects is less than 1% of the total assets, it is recognized as a general defect; If it is greater than or equal to 1% but less than 2% of the total assets, it is recognized as an important defect; If it is greater than or equal to 2% of the total assets, it is recognized as a major defect.
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
(1) Major defects
① Fraud by directors, supervisors and senior managers;
② Serious violation of laws and regulations;
③ Make misstatement correction for major errors in the announced financial report;
④ The audit and risk control committee and the audit department have ineffective supervision on the internal control of financial reporting;
⑤ The certified public accountant found that there was a material misstatement in the financial report, but the internal control failed to find the misstatement in the operation process.
(2) Important defects
① Failure to select and apply accounting policies in accordance with GAAP;
② Failure to establish anti fraud procedures and control measures;
③ No corresponding control mechanism has been established or implemented for the accounting treatment of unconventional or special transactions, and there is no corresponding compensatory control;
④ 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.
(3) General defect
Other control defects other than the above major defects and important defects.
2. Identification standard of internal control defects in non-financial reporting
The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
The quantitative standard takes the amount of direct property loss as the measurement index. If the direct property loss caused by the defect alone or in combination with other defects is less than 1 million, it shall be recognized as a general defect; If it is greater than or equal to 1 million but less than 5 million, it is an important defect; If it is greater than or equal to 5 million, it is recognized as a major defect.
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
(1) Major defects
① Major mistakes caused by the company’s decision-making procedures;
② Negative news frequently appears in the media, involving a wide range, and the negative impact has not been eliminated;
③ The company’s important business lacks system control or the system fails;
④ The company’s business activities seriously violate national laws and regulations;
⑤ Serious loss of middle and senior managers, core technicians and business personnel;
⑥ The company is punished by the CSRC or warned by the stock exchange.
(2) Important defects
① General mistakes caused by the company’s decision-making procedures;
② Negative news appears in the media, but it can be eliminated in time;
③ There are defects in the company’s important business system or system;
④ Important or general defects in the company’s internal control have not been rectified;
⑤ The company’s personnel violate the internal rules and regulations of the enterprise, resulting in losses.
(3) General defect
In addition to the above major defects and important defects, other control defects that have a general impact or cause minor losses.
3、 Identification and rectification of internal control defects
(I) 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.
(II) 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、 Internal control evaluation conclusion
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.
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.
5、 Verification opinions of the recommendation institution
After verification, the sponsor believes that Fengguang Co., Ltd. has established a relatively sound corporate governance structure, and the current internal control system and implementation comply with the provisions of relevant laws and regulations such as the company law, the securities law, the guidelines for self discipline supervision of listed companies on Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM; The company has maintained effective internal control related to business operation and management in all major aspects; The 2021 internal control evaluation report issued by the board of directors of the company truly and objectively 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 and seal page of China Securities Co.Ltd(601066) on the verification opinions on the 2021 annual internal control evaluation report of Yingkou Fengguang new materials Co., Ltd.) signature of the sponsor representative:
Qiu Yong, Chen Zhankun
China Securities Co.Ltd(601066) mm / DD / yyyy
