Dongguan Securities Co., Ltd
About Guangdong Kitech New Material Holding Co.Ltd(300995)
Verification opinions on self-evaluation report of internal control in 2021
Dongguan Securities Co., Ltd. (hereinafter referred to as “sponsor” or “Dongguan securities”) is the sponsor of initial public offering and listing of Guangdong Kitech New Material Holding Co.Ltd(300995) (hereinafter referred to as ” Guangdong Kitech New Material Holding Co.Ltd(300995) ” or “company”), The self-evaluation report of the company’s internal control in 2021 was verified in accordance with the relevant provisions of the measures for the administration of securities issuance and listing recommendation business, the Listing Rules of Shenzhen Stock Exchange on the gem, and the self regulatory guidelines for listed companies on the Shenzhen Stock Exchange No. 2 – standardized operation of listed companies on the gem. The details are as follows:
1、 Verification work carried out by the recommendation institution
The recommendation representative of the recommendation institution carefully reviewed Guangdong Kitech New Material Holding Co.Ltd(300995) self evaluation report on internal control in 2021, and through communicating with the directors, supervisors, senior managers, internal audit department and other relevant persons of the company, consulting the documents of the general meeting of shareholders, the board of directors, the board of supervisors and other meeting documents of the company, as well as various business and management rules and regulations, from Guangdong Kitech New Material Holding Co.Ltd(300995) internal control environment, the construction of internal control system The integrity, rationality and effectiveness of its internal control and the authenticity and objectivity of the self-evaluation report on internal control in 2021 were verified in terms of the implementation of internal control.
2、 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 subsidiaries. The main businesses and matters included in the evaluation scope include: governance organization, organizational structure, human resource management, corporate culture, internal audit, social responsibility, accounting system, property protection, etc.
The high-risk areas of focus are procurement and a / P control, inventory management control, fixed assets control, import and export business control, raised funds management control, sales and collection control, fund management control, external guarantee internal control, 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.
The company organizes and carries out internal control evaluation in accordance with the relevant provisions of the enterprise’s internal control standard system and its supporting guidelines and in combination with the actual situation of the company. The board of directors of the company distinguished the internal control of financial report from the internal control of non-financial report according to the identification requirements for major defects, important defects and general defects of the enterprise internal control standard system, combined with the factors such as the company’s size, industry characteristics, risk preference and risk tolerance, and studied and determined the specific identification standards of internal control defects applicable to the company, which are consistent with the previous years. 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 criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
If the amount of misstatement in the financial report that may be caused by the defect alone or in combination with other defects does not exceed 5% of the operating profit, it is recognized as a general defect; If it exceeds 5% but not more than 10% of the operating profit, it is an important defect; If it exceeds 10% of the operating profit, 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:
Major defects: major misstatement in the financial report cannot be prevented, discovered and corrected in time due to individual defects or other defects. In case of the following circumstances, it shall be deemed as a major defect:
(1) The company’s directors, supervisors and senior managers commit fraud and cause heavy losses and adverse effects to the enterprise;
(2) The external audit found that there were significant misstatements in the current financial report, and the company failed to find them first;
(3) Major defects that have been found and reported to the management have not been corrected within a reasonable time; (4) The supervision of the company’s audit committee and the company’s audit department on internal control is invalid.
Important defects: the qualitative criteria for important defects in the company’s internal control over financial reporting:
(1) Failure to select and apply accounting policies in accordance with GAAP;
(2) No anti fraud and important checks and balances system and control measures have been established.
General defects: other internal control defects that do not constitute major defects and important defect standards.
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:
If the amount of misstatement in the financial report that may be caused by the defect alone or in combination with other defects does not exceed 5% of the operating profit, it is recognized as a general defect; If it exceeds 5% but not more than 10% of the operating profit, it is an important defect; If it exceeds 10% of the operating profit, 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:
The identification of non-financial report defects is mainly based on the impact of defects on the effectiveness of business processes and the possibility of occurrence. If the possibility of defects is small, it will reduce the work efficiency or effect, or increase the uncertainty of the effect, or make it deviate from the expected goal, which is a general defect; If the possibility of defects is high, it will significantly reduce the work efficiency or effect, or significantly increase the uncertainty of the effect, or make it significantly deviate from the expected goal as an important defect; If the possibility of defects is high, it will seriously reduce the work efficiency or effect, or seriously increase the uncertainty of the effect, or make it seriously deviate from the expected goal, which is a major defect.
According to the above identification standards, combined with daily supervision and special supervision, no important defects and major defects were found in the internal control evaluation during the reporting period.
(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 or 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 or important defects in the company’s internal control over non-financial reports were found during the reporting period.
3、 Verification opinions of the recommendation institution on the self-evaluation of the company’s internal control
Through the verification of the establishment and implementation of the internal control system in Guangdong Kitech New Material Holding Co.Ltd(300995) 2021, the sponsor believes that the corporate governance structure of the company is relatively sound, The existing internal control system and its implementation comply with relevant laws and regulations such as the Listing Rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies on Shenzhen Stock Exchange No. 2 – standardized operation of listed companies on GEM, the guidelines for corporate governance of listed companies and the basic norms of enterprise internal control, as well as the requirements of securities regulatory authorities, The company has maintained effective internal control in all major aspects related to the business operation and management of the enterprise; The self-evaluation report on internal control in 2021 issued by the board of directors of the company 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 the verification opinions of Dongguan Securities Co., Ltd. on the self-evaluation report of Guangdong Kitech New Material Holding Co.Ltd(300995) 2021 annual internal control)
Sponsor representative:
Wen bin, Yang Na
Sponsor: Dongguan Securities Co., Ltd
