Jiangxi Selon Industrial Co.Ltd(002748)
Internal control assurance report
Dahuahe Zi [2020082]
Dahua Certified Public Accountants (special general partnership)
DaHuaCertifiedPublicAccountants（SpecialGeneralPartnership）
Jiangxi Selon Industrial Co.Ltd(002748)
Internal control assurance report
(as of December 31, 2021)
Contents page 1. Internal control assurance report 1-3 II. Jiangxi Selon Industrial Co.Ltd(002748) internal control evaluation report 1-8
Dahua Certified Public Accountants (special general partnership) 12 / F, building 7, No. 16 courtyard, Middle West Fourth Ring Road, Haidian District, Beijing [100039] Tel: 86 (10) 58350011 Fax: 86 (10) 58350006 www.dahua-cpa com. Internal control assurance report
Dahuhezi [2022] No. 008526 Jiangxi Selon Industrial Co.Ltd(002748) all shareholders:
We have accepted the entrustment to verify the confirmation of the effectiveness of internal control related to the financial statements on December 31, 2021 involved in the attached internal control evaluation report prepared by the management of Jiangxi Selon Industrial Co.Ltd(002748) (hereinafter referred to as Jiangxi Selon Industrial Co.Ltd(002748) company).
1、 Responsibilities of management
Jiangxi Selon Industrial Co.Ltd(002748) the management of the company is responsible for establishing and improving internal control and maintaining its effectiveness in accordance with the basic norms of enterprise internal control and relevant regulations, and ensuring that the internal control evaluation report truly and completely reflects the internal control related to the financial statements of Jiangxi Selon Industrial Co.Ltd(002748) company on December 31, 2021.
2、 Responsibilities of Certified Public Accountants
Our responsibility is to express assurance opinions on the effectiveness of the internal control related to the financial statements of Jiangxi Selon Industrial Co.Ltd(002748) company as of December 31, 2021. We have carried out the assurance business in accordance with the provisions of other assurance business standards for Chinese certified public accountants No. 3101 – assurance business other than audit or review of historical financial information. The standard requires us to plan and perform assurance work to obtain reasonable assurance on whether Jiangxi Selon Industrial Co.Ltd(002748) company has maintained effective internal control related to financial statements in all material aspects. In the assurance process, we implemented
Dahuhezi [2022] 008526 internal control assurance report
Understand, test and evaluate the integrity, rationality and effectiveness of the internal control system design related to the financial statements, as well as other procedures we deem necessary. We believe that our assurance work provides a reasonable basis for expressing opinions.
3、 Inherent limitations of internal control
Internal control has inherent limitations, and there is the possibility of misstatement and undetected due to error or fraud. In addition, due to the change of circumstances, the internal control may become inappropriate, or the compliance with control policies and procedures may be reduced. According to the internal control evaluation results, it is speculated that there are certain risks in the effectiveness of internal control in the future.
4、 Assurance opinion
We believe that Jiangxi Selon Industrial Co.Ltd(002748) company has maintained effective internal control related to financial statements in all major aspects on December 31, 2021 in accordance with the basic norms of enterprise internal control and relevant regulations.
5、 Restrictions on the users and purposes of the report
This report is only for the use of Jiangxi Selon Industrial Co.Ltd(002748) company when disclosing the annual report, and shall not be used for any other purpose. The consequences caused by improper use have nothing to do with the certified public accountants and accounting firms performing the business. We agree that this report, as a necessary document for the 2021 annual report of Jiangxi Selon Industrial Co.Ltd(002748) company, shall be submitted together with other materials and disclosed to the public. (no text below this page)
Dahuhezi [2022] 008526 internal control assurance report
(there is no text on this page, which is the signature and seal page of dahuahe Zi [2022] 008526 internal control assurance report) Dahua Certified Public Accountants (special general partnership) Chinese certified public accountant:
Teng Zhongzhong, Beijing, China Certified Public Accountant:
Yang Qihu April 26, 2002
Jiangxi Selon Industrial Co.Ltd(002748)
Internal control evaluation report
Jiangxi Selon Industrial Co.Ltd(002748) all shareholders:
According to the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control regulatory requirements (hereinafter referred to as the enterprise internal control normative system), combined with the company’s (hereinafter referred to as the company’s) internal control system and evaluation methods, on the basis of daily and special supervision of internal control, we evaluated the effectiveness of the company’s internal control on December 31, 2021.
1、 Important statement
It is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control, evaluate its effectiveness and truthfully disclose the internal control evaluation report in accordance with the provisions of the enterprise’s internal control standard system. The board of supervisors shall supervise the establishment and implementation of internal control by the board of directors. The management is responsible for organizing and leading the daily operation of the enterprise’s internal control. The board of directors, the board of supervisors and the directors, supervisors and senior managers of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this report, and bear individual and joint legal liabilities for the authenticity, accuracy and completeness of the contents of the report.
The objective of the company’s internal control is to reasonably ensure the legal compliance of operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the realization of development strategy. Due to the inherent limitations of internal control, it can only provide reasonable assurance for the realization of the above objectives. In addition, as changes in circumstances may lead to inappropriate internal control or reduced compliance with control policies and procedures, there is a certain risk to speculate the effectiveness of internal control in the future according to the internal control evaluation results.
2、 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.
3、 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 parent company and five subsidiaries. The subsidiaries are Jiangxi Shilong Supply Chain Management Co., Ltd., Jiangxi Shilong chemical technology R & D Center Co., Ltd., Jiangxi Shilong Environmental Protection Technology Co., Ltd., Jiangxi Shilong new materials Co., Ltd. and Jiangxi Shilong Biotechnology Co., Ltd. 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: governance structure and organizational structure, fund management, procurement and payment business, sales and collection business, financial report, information disclosure, internal supervision, external guarantee, related party transactions, etc. The high-risk areas of focus mainly include fund management, procurement and payment business, sales and collection business, information disclosure, external guarantee and related party transactions.
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 according to the enterprise internal control standard system and various internal control systems 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 criteria for defects in internal control over financial reporting
The quantitative 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 loss that may be caused or caused by the defect of internal control is related to the income 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 2% of the operating revenue, it is recognized as a general defect; If it exceeds 2% but less than 5% of the operating revenue, it is recognized as an important defect; If it exceeds 5% of the operating revenue, it is recognized as a major defect. Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset 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 0.5% of the total assets, it is recognized as a general defect; If it exceeds 0.5% of the total assets and is less than 1%, it is recognized as an important defect; If it exceeds 1% 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:
Signs of significant defects in internal control over financial reporting include: (1) ineffective control environment; (2) Fraud by directors, supervisors and senior managers of the company and causing important losses and adverse effects to the enterprise; (3) Major misstatement in the current financial report found in the external audit but not identified by the company’s internal control; (4) The internal control supervision of the company by the board of directors or its authorized institution and the audit and supervision department is invalid. Signs of significant defects in internal control over financial reporting include: (1) failure to select and apply accounting policies in accordance with generally accepted accounting standards; (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. There are general defects in the internal control of financial reporting, including other internal control defects that do not constitute major defects and important defect standards.
2. Identification criteria for defects in internal control over 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 operating income and total assets as the measurement indicators. If the loss that may be caused or caused by the defect of internal control is related to the income 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 2% of the operating revenue, it is recognized as a general defect. If it exceeds 2% of the operating revenue but less than 5%, it is recognized as an important defect; If it exceeds 5% of the operating revenue, it is recognized as a major defect. Losses that may be caused or caused by internal control defects related to asset management shall be measured by the total asset 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 0.5% of the total assets, it is recognized as a general defect; If it exceeds 0.5% of the total assets and is less than 1%, it is recognized as an important defect; If it exceeds 1% of the total assets, 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.
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
(III) identification and rectification of internal defects
1. Corporate governance structure
According to the company law, securities law and other laws and regulations
