Lonkey Industrial Co.Ltd.Guangzhou(000523) board of directors
Matters stated in the negative opinion of the internal control audit report in 2020
Special description of eliminated impacts
Lonkey Industrial Co.Ltd.Guangzhou(000523) (hereinafter referred to as "the company") the effectiveness of internal control over financial reporting on December 31, 2020 was audited by Zhongshen Zhonghuan Certified Public Accountants (special general partnership) (hereinafter referred to as "Zhongshen Zhonghuan") and issued a negative opinion of [Zhonghuan Shenzi (2021) 0500136] internal control audit report. The board of directors of the company hereby makes a special explanation on the situation that the impact of the matters mentioned in the negative comments on the internal control audit report in 2020 has been eliminated.
1、 Matters stated in the negative opinion
According to the company's 2020 internal control audit report "IV. matters leading to negative opinions" issued by Zhongshen Zhonghuan, the negative opinions are as follows:
Some former directors, senior managers and middle managers of the company are suspected of taking advantage of their positions to seek illegal interests with enterprises controlled by some external personnel by carrying out bulk trade business, colluding internally and externally to obtain company funds, resulting in huge economic losses and large losses in 2020. As the former management is suspected of fraud and benefit transfer, which is above the internal control, the company failed to timely identify the risks related to trade business in the early stage, and there are major defects in the internal control of financial reporting.
2、 Statement that the influence of the matters mentioned in the negative opinion has been eliminated
In view of the internal control defects described in the negative opinion, the company has made the following rectification to the internal control:
(1) Completely stop the bulk trade business of the company and its original subsidiaries involved;
(2) Sort out and improve relevant evidence materials, and actively cooperate with the investigation work of supervision organs, public security organs and Guangdong Securities Regulatory Bureau;
(3) Improve the internal control system, formulate and revise a number of internal control systems, including compliance management measures (for Trial Implementation), detailed rules for investigating and dealing with clues of illegal operation and investment, regulations on the use of seals, regulations on the management of Guangzhou Longqi's internal authorization and contract management measures, and strengthen the management of internal authorization and the use of seals;
(4) Strengthen the internal audit work, give full play to the supervision function of the company's internal audit department, strengthen the supervision of the internal audit department on the preparation of the company's financial statements and the implementation of the internal control system, and timely identify financial risks. At the same time, implement the reporting system of major events, and timely feed back relevant important events and major risks to the board of directors and management, so as to minimize the operation risk of the company;
(5) According to the investigation results of the CSRC, the company conducted a comprehensive self-examination and made early error correction according to the investigation and self-examination results.
Based on the above rectification, the board of directors of the company believes that the impact of the matters mentioned in the negative opinion of Guangzhou Longqi's 2020 internal control audit report has been eliminated.
Lonkey Industrial Co.Ltd.Guangzhou(000523) board of directors
April 29, 2002
