Shenzhen Changfang Group Co.Ltd(300301)
Internal control audit report
Dahuanezi [2022] No. 000294
Dahua Certified Public Accountants (special general partnership)
DaHuaCertifiedPublicAccountants（SpecialGeneralPartnership）
Shenzhen Changfang Group Co.Ltd(300301)
Internal control audit report
(as of December 31, 2021)
Table of contents page I. internal control audit report 1-6
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 audit report
Dahuaneizi [2022] No. 000294 Shenzhen Changfang Group Co.Ltd(300301) all shareholders:
In accordance with the guidelines on audit of internal control of enterprises and the relevant requirements of the practice standards for Certified Public Accountants of China, we have audited the effectiveness of internal control over financial statements of Shenzhen Changfang Group Co.Ltd(300301) (hereinafter referred to as Shenzhen Changfang Group Co.Ltd(300301) ) as of December 31, 2021.
1、 Responsibility of enterprises for internal control
It is the responsibility of the board of directors to establish, improve and effectively implement internal control and evaluate its effectiveness in accordance with the provisions of the basic norms of enterprise internal control, guidelines for the application of enterprise internal control and guidelines for the evaluation of enterprise internal control.
2、 Responsibilities of Certified Public Accountants
Our responsibility is to express audit opinions on the effectiveness of internal control over financial reporting based on the implementation of audit work, and disclose the significant defects of non-financial reporting internal control noted.
3、 Inherent limitations of internal control
Internal control has inherent limitations, and there is the possibility that misstatement can not be prevented and found. 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 audit results.
4、 Matters leading to negative opinions
A material defect is a control defect or a combination of multiple control defects existing in internal control that may lead to the failure to prevent, detect and correct the material misstatement of the financial statements in a timely manner Shenzhen Changfang Group Co.Ltd(300301) financial reporting internal control has the following major defects:
(I) major defects in the control of subsidiaries
Shenzhen Changfang Group Co.Ltd(300301) subsidiary Shenzhen Changfang Group Co.Ltd(300301) kangmingsheng (Shenzhen) Technology Co., Ltd. (hereinafter referred to as kangmingsheng company) said that for the sake of capital security, its daily funds were deposited in the bank account of Shenzhen shiyongcheng Technology Co., Ltd. until the account of shiyongcheng company was cancelled on December 13, 2021. This matter violates the provisions of the company law and the articles of association that the company's funds shall not be deposited in its own name or in the name of others.
On April 22, 2022, kangmingsheng company found that there were unrecorded rebates. The amount involved in this matter is significant and Shenzhen Changfang Group Co.Ltd(300301) failed to find the above unrecorded situation in the daily supervision. The above matters indicate that Shenzhen Changfang Group Co.Ltd(300301) had significant defects in internal control related to the management of subsidiaries during the reporting period.
(II) major defects in inventory management
In the process of annual audit and supervision, the accountant found that kangmingsheng company had a large number of Dead Inventory. As of the date of audit report, kangmingsheng company failed to provide a complete list of dead inventory and information on the formation process of Dead Inventory. The inventory of kangmingsheng company is stored in multiple warehouses, and the warehousing and outgoing of each warehouse are recorded uniformly, which is only distinguished according to the identification of materials. There is no corresponding sub warehouse accounting management, so it is impossible to judge the integrity and accuracy of the differentiation of materials in the warehouse.
The above major defects affect the existence, integrity, valuation and allocation of inventories in the financial statements, and the related internal control over financial reporting is invalid.
(III) major defects in sales and collection
Kangmingsheng company has the situation of third-party payment collection. During the reporting period, the amount of third-party collection accounts for a high proportion of the amount of tax included income. The third party of Kangsheng company failed to properly keep the relevant materials of the third party.
The lack of the above third-party payment collection data indicates that there are significant defects in the implementation of the company's internal control system of sales and collection, and the operation of the internal control of financial reporting is ineffective.
(IV) major defects in information system management
Kangmingsheng company failed to properly save the data of the original system due to system replacement, resulting in the loss of module data such as personnel salary and cost accounting generated by the system. Although manual accounting can make up for the related impact to a certain extent, the related internal control over financial reporting may still fail.
Effective internal control can provide reasonable guarantee for the authenticity and integrity of financial reports and relevant information, and the above major defects make Shenzhen Changfang Group Co.Ltd(300301) internal control lose this function.
The above major defects have not been included in the enterprise internal control evaluation report. In the audit of 3 Guangdong Dongpeng Holdings Co.Ltd(003012) 021 financial statements, we have considered the impact of the above major defects on the nature, timing and scope of audit procedures. This report has no impact on the audit report we issued on the financial statements of 3 Guangdong Dongpeng Holdings Co.Ltd(003012) 021 on the audit report date.
5、 Audit opinion on internal control of financial report
We believe that due to the above major defects and their impact on the realization of control objectives, Shenzhen Changfang Group Co.Ltd(300301) failed to maintain effective internal control over financial reporting in all major aspects in accordance with the basic norms of enterprise internal control and relevant regulations on December 31, 2021.
Dahua Certified Public Accountants (special general partnership) Chinese certified public accountant:
Xie Jiawei, Beijing, China Certified Public Accountant:
Owens, April 28, 2002
