China Audit Asia Pacific Certified Public Accountants LLP Mengshi new energy technology (Henan) Co., Ltd
Internal control assurance report
Beijing, China
BEIJING CHINA
catalogue
1、 Internal control assurance report 1-2 II. Evaluation report on internal control 3 of Lion New Energy Technology (Henan) Co., Ltd. in 2021
Internal control assurance report
All shareholders of Lion New Energy Technology (Henan) Co., Ltd. (zsapssz (2022) No. 004487):
We are entrusted to appraise the board of directors of Lion New Energy Technology (Henan) Co., Ltd. (hereinafter referred to as "lion technology") on the effectiveness of internal control over the financial report of lion technology on December 31, 2021.
1、 Responsibilities of the board of directors for internal control
The responsibility of the board of directors of lion technology is to establish, improve and effectively implement internal control in accordance with the relevant provisions of the basic norms of enterprise internal control, evaluate its effectiveness, and truthfully disclose the internal control evaluation report.
2、 Responsibilities of Certified Public Accountants
Our responsibility is to issue assurance conclusions on the effectiveness of internal control over financial reporting based on the implementation of assurance work.
3、 Inherent limitations of internal control
Internal control has inherent limitations, and there is the possibility of undetected misstatement caused by error or fraud. In addition, due to changes in circumstances that may lead to inappropriate internal control or reduce the degree of 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 assurance results. 4、 Matters leading to negative opinions
Major defects refer to the combination of one or more control defects, which may cause the enterprise to seriously deviate from the control objectives.
In 2021, lion technology and its subsidiaries received the debt exemption notice and debt exemption letter issued by creditors in December 2021. The amount of creditor's rights involved in the debt exemption notice and debt exemption letter (base date: November 30, 2021) was 4030278100 yuan, with a total amount of 3404198500 yuan. Among them, the amount of creditor's rights exempted as a shareholder of a listed company was 1321676800 yuan, which was recorded in the title of "capital reserve", The amount of creditor's rights exempted by other creditors is 2082521700 yuan, which is recorded in the title of "investment income".
The above exemption basis recorded in the "investment income" account is insufficient, indicating that lion technology has significant defects in the internal control of financial reporting.
Fierce lion technology failed to provide complete financial data of its holding subsidiary durion energy Ag (with a shareholding ratio of 55% and its registered address in Munich, Germany) for 2020 and 2021, indicating that fierce lion technology has significant defects in the management and internal control of its subsidiaries.
Effective internal control can provide reasonable guarantee for the authenticity and integrity of financial statements and relevant information, and the above major defects make the internal control of lion technology lose this function.
5、 Assurance opinion
We believe that due to the above major defects and their impact on the control objectives, lion technology failed to maintain effective internal control related to financial reporting in all major aspects in accordance with the basic norms of enterprise internal control and relevant regulations on December 31, 2021.
CPA of China Audit Asia Pacific Certified Public Accountants Co., Ltd.:
(special general partnership)
(seal) Chinese certified public accountant:
Beijing, China April 29, 2022
Mengshi new energy technology (Henan) Co., Ltd
Internal control evaluation report in 2021
All shareholders of Lion New Energy Technology (Henan) Co., Ltd.:
In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements (hereinafter referred to as the "enterprise internal control standard system"), combined with the internal control system and evaluation methods of Lion New Energy Technology (Henan) Co., Ltd. (hereinafter referred to as the "company"), 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 (the benchmark date of the internal control evaluation report).
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、 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) scope of internal control evaluation
According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas.
1. The company determines the main units, businesses and matters included in the evaluation scope and high-risk areas according to the risk oriented principle. The units included in the evaluation scope include the company and its subsidiaries. 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.
2. The scope of business and project management, investment management, guarantee, and capital management of the subsidiary includes: business and project management, capital management.
3. The high-risk areas of focus mainly include: industrial policy risk, development strategy positioning risk, price fluctuation risk of main raw materials, market and industry risk, financial risk, investment risk of power lithium battery business, risk of vehicle operation business, operation management risk, talent demand risk, quality of financial report, external guarantee and external investment.
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 in accordance with the requirements of relevant laws, regulations and rules, such as the enterprise internal control standard system, the stock listing rules of Shenzhen Stock Exchange, the basic norms of enterprise internal control, the guidelines for the standardized operation of listed companies of Shenzhen Stock Exchange and so on.
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
(1) The quantitative standard takes the total profit 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 total profit. If the amount of financial report misstatement that may be caused by the defect alone or together with other defects is less than 2% of the total profit, it shall be recognized as a general defect; If it exceeds 2% but less than 4% of the total profit, it is an important defect; If it exceeds 4% of the total profit, it is recognized as a major defect.
If the loss that may be caused or caused by the defect of internal control is related to the total assets, it shall be measured by the total assets. If the amount of financial report misstatement that may be caused by the defect alone or together with other defects is less than 0.5% of the total assets, it shall be recognized as a general defect; If it exceeds 0.5% but less than 2% of the total assets, it is an important defect; If it exceeds 2% of the total assets, it is recognized as a major defect.
(2) The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Signs of significant deficiencies in internal control over financial reporting include:
① Fraud of directors, supervisors and senior managers of the company;
② The company corrects the published financial report;
③ Material misstatement in the current financial report found by the certified public accountant but not identified by the company's internal control;
④ The supervision of the audit committee and the internal audit department on the company's external financial report and internal control over financial report is invalid.
Signs of significant deficiencies in internal control over financial reporting include:
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 true and complete goal.
Signs of general defects in internal control over financial reporting include: control defects other than the above major defects and important defects.
2. Identification standard of internal control defects in non-financial reporting
(1) The quantitative standard for the evaluation of internal control defects in non-financial reports shall be implemented with reference to the quantitative standard for the evaluation of internal control defects in financial reports.
(2) The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are determined by the impact of defects on the effectiveness of business processes and the possibility of occurrence. The recognition criteria are as follows:
① The major defects of internal control over non-financial reporting include: the possibility of defects is high, which 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.
② Important defects of internal control of non-financial reporting include: the possibility of defects is high, which 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. ③ The general defects of non-financial reporting internal control include: the possibility of defects is small, which will reduce work efficiency or effect, or increase the uncertainty of effect, or make it deviate from the expected goal. (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 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, there were no major defects and important defects in the company's internal control over non-financial reports during the reporting period.
4、 Description of other important matters related to internal control
(I) rectification of internal control defects in the previous year
□ applicable √ not applicable
(II) main contents involved in non-standard audit opinions this year
1. Notes on debt forgiveness
The company and its subsidiaries have received the notice of debt exemption and the letter of claim exemption issued by 12 creditors including Huarong (Fujian pilot Free Trade Zone) Investment Co., Ltd. before December 31, 2021. The above creditors irrevocably, irrevocably and irrevocably exempt some / all of their claims against the company and its subsidiaries. The amount of creditor's rights involved above (base date November 30, 2021) is 4030278100 yuan, and the total amount of exempted creditor's rights is 3404198500 yuan. Among them, the amount of exempted creditor's rights as a shareholder of the listed company is 13216768 million yuan, and the amount of exempted creditor's rights of other creditors is 20825217 million yuan.
The annual audit accountant believes that the above-mentioned creditors have failed to obtain sufficient and appropriate evidence for the debt exemption of the company, and the above exemption basis recorded in the "investment income" account is insufficient, so it is impossible to judge the authenticity and commercial rationality of the debt exemption made by other creditors except the creditors who are shareholders of the listed company.
According to the requirements of the regulatory authorities, the company has hired a law firm to conduct special verification and give legal opinions on the above-mentioned creditor's exemption from the company's debt. The first legal opinion issued by Beijing BOC law firm hired by the company has not yet solved the concerns of the regulatory authorities. For the draft of legal opinion after supplementary verification, the regulatory authorities require further verification of some contents
