Liaoning Sg Automotive Group Co.Ltd(600303) board of directors' special explanation on matters involved in the audit report of negative opinions on internal control of the company
The internal audit report of Dahua Certified Public Accountants (hereinafter referred to as "the internal control report") issued by the general accounting firm denied the effectiveness of the annual audit report. The board of directors of the company made a special explanation on the matters involved in the internal control audit report with negative opinions as follows:
1、 Matters leading to negative opinions
Extracted from Dahua Certified Public Accountants (special general partnership) internal control audit report Dahua No. 20220003
Liaoning Sg Automotive Group Co.Ltd(600303) at the 36th meeting of the ninth board of directors held on September 24, 2021, the company reviewed and approved the related party transaction proposal of the company to acquire the automobile assets of Tianjin Meiya New Energy Vehicle Co., Ltd. (hereinafter referred to as "Tianjin Meiya"), a wholly-owned subsidiary of the controlling shareholder, and signed an asset purchase agreement with Tianjin Meiya with a total price of RMB 132.3 million (hereinafter referred to as "the agreement") on September 26, 2021, It also paid an advance payment of 66.15 million yuan to Tianjin Meiya on September 27, 2021, and signed a supplementary agreement with Tianjin Meiya on December 15, 2021 Liaoning Sg Automotive Group Co.Ltd(600303) did not fully investigate the actual situation of the subject assets before signing the agreement, nor did it hire a professional appraisal institution filed by the securities business to evaluate the value of the subject assets; The agreement does not fully stipulate the possible quality defects, deficiencies, ownership disputes and liabilities for breach of contract of the subject assets; During the execution of the agreement, Liaoning Sg Automotive Group Co.Ltd(600303) found that there were problems such as damage, inventory loss and ownership of assets, and Liaoning Sg Automotive Group Co.Ltd(600303) management did not timely perform sufficient discussion and decision-making procedures on the impact of these matters on the realization of transaction objectives.
The above situation violates the relevant provisions of the basic norms of enterprise internal control, Article 5 of the guidelines for the application of enterprise internal control No. 16 - contract management, article 13.4 of the guidelines for the application of enterprise internal control No. 7 - procurement business, Article 5 of the guidelines for the application of enterprise internal control No. 11 - engineering projects, Article 76 of the standards for the governance of listed companies and the management system of Liaoning Sg Automotive Group Co.Ltd(600303) connected transactions, Constitute major defects in internal control related to financial reporting.
According to the qualitative criteria for the evaluation of internal control defects in financial reporting determined by Liaoning Sg Automotive Group Co.Ltd(600303) the above-mentioned internal control defects, it is comprehensively judged that they belong to major violations of financial system and constitute major defects of internal control (operation defects).
Liaoning Sg Automotive Group Co.Ltd(600303) management has identified the above major defects and included them in the evaluation report of enterprise internal control. These deficiencies are fairly reflected in all material aspects. In the audit of 6 Jiangsu Chuanzhiboke Education Technology Co.Ltd(003032) 021 financial statements, we have considered the impact of the above major defects on the nature, timing and scope of the accounting procedure. This report has no impact on our audit report on 6 Jiangsu Chuanzhiboke Education Technology Co.Ltd(003032) 021 financial statements issued on April 29, 2022.
2、 Opinions of the board of directors of the company and their impact on the effectiveness of the company's internal control
The board of directors of the company disagrees with the above opinions of Accountants in the internal control audit report. The board of Directors believes that the company has established a complete internal control system according to the actual situation and management needs and in accordance with the requirements of the basic norms of enterprise internal control. The management of the company organizes and implements internal control matters in strict accordance with the internal control norms. The internal control system plays a full role in operation and management activities. The implementation of the internal control system of the company is effective and there are no major defects.
The extraordinary general meeting of shareholders convened by some shareholders of the company on May 5, 2022 considered the proposal on terminating the purchase of Tianjin Meiya automobile assets. The accountant believed that there was some uncertainty about whether the asset purchase agreement could be finally performed, and there was uncertainty about the determination of the recoverability of RMB 66.15 million. This transaction took place in 2021. The relevant agreements and supplementary agreements have been approved by the company's internal decision-making procedures and signed by both parties, and have taken effect and been delivered. Even if the termination is approved by the extraordinary general meeting of shareholders, it can not oppose the other party of the contract, and there is no problem of recycling 66.15 million yuan. There is no uncertainty. It is too subjective for accountants to determine that there are major defects in the company's internal control without legal basis.
This transaction has reference as the price standard. In addition, the price of materials used in the purchased assets has been rising in recent two years. Both parties have reasonable judgment on the transaction price. Comparing the agreed price with the assessed value to determine the transaction price is a relatively fair transaction method. Whether it is necessary to hire a professional evaluation institution of the securities industry to evaluate the price of the underlying assets in advance has been specified in the contract; The company has deducted the possible quality defects, deficiencies, ownership disputes and liabilities for breach of contract of the subject assets of the agreement through the reduction fee. The total amount of missing outsourced small part assets is small, and the replication cycle is no more than 3 months, which does not affect the company's car manufacturing and production process.
The company signed a lease contract with Beijing lvneng Financial Leasing Co., Ltd. and Beijing lvneng Financial Leasing Co., Ltd. provided leasing services. The agreement amount was 71700 yuan, which was not identified as a related party transaction. The company will strengthen the internal control and management of related parties to avoid similar events. It is hereby explained.
Liaoning Sg Automotive Group Co.Ltd(600303) board of directors April 29, 2022
