Management Measures on Financial Report Preparation and Disclosure
Chapter I General Provisions
Article 1 In order to regulate the preparation and disclosure of financial reports of Guangdong Mingzhu Group Co.Ltd(600382) (hereinafter referred to as “the Company”), to prevent improper preparation and disclosure of the Company may have a significant impact on financial reporting, to ensure the truthfulness and integrity of accounting information, according to relevant state laws and regulations and the “Basic Standards for Internal Control of Companies” “Enterprise Internal Control Application Guideline No. 14 – Financial Reporting” and in accordance with the actual situation of the Company, these measures are formulated.
Article 2 The financial report referred to in these measures refers to the document provided by the company to reflect the financial position of the company on a specific date and the accounting information such as operating results and cash flow for a certain accounting period. The financial report mainly includes accounting statements, notes to the accounting statements, financial statements and other relevant information and materials that need to be disclosed in the financial report.
Article 3 All directors, supervisors and senior management of the Company shall be responsible for the truthfulness and completeness of the financial report.
Article 4 The preparation and disclosure of financial reports involves the following risks.
(I) The preparation and disclosure of financial reports violate national laws and regulations and may suffer external penalties, economic losses and loss of reputation.
(Ⅱ) The preparation and disclosure of financial reports are not properly reviewed or approved beyond authorization, which may lead to losses due to material errors, fraud, and fraud.
(III) Inadequate preparations for the preparation of financial reports, which may result in the failure to detect accounting errors in a timely manner before the closing of the accounts.
(Ⅳ) Inaccurate inclusion in the scope of consolidated statements of income, adjustments or incomplete consolidation adjustments, which may result in untrue and incomplete financial reporting information.
(V) Improper financial report disclosure procedures may lead to losses due to false entries, misleading statements, material omissions and failure to disclose in a timely manner as required.
Article V The preparation and disclosure of financial reports follow the following principles.
(I) The division of responsibilities, scope of authority and approval procedures are clear and standardized, and the establishment and staffing of institutions are scientific and reasonable.
(Ⅱ) Clear and standardized processes regarding reconciliation, reconciliation, error correction and closure of accounts.
(Ⅲ) The processes of drafting financial reports, verification, preparation of notes to financial statements, review and approval are scientific and strict; (Ⅳ) The processes of reporting and disclosure of financial reports are in accordance with relevant regulations.
Article 6 These Measures shall apply to the Company’s head office, its holding subsidiaries and other entities under their control.
Chapter II Division of Jobs and Responsibility Arrangement
Article 7 The Finance Department of the Company is the focal management department for the preparation of financial reports and is responsible for organizing the preparation, external provision and analysis and utilization of financial reports. Its responsibilities include: collecting and summarizing relevant accounting information; formulating the annual financial report preparation plan; preparing annual, semi-annual, quarterly and monthly financial reports, etc.
Other departments of the Company shall provide the Finance Department with the information required for the preparation of financial reports in a timely manner and shall be responsible for the authenticity and completeness of the information provided.
Article 8 The Finance Department of the Company establishes a position for the preparation of financial reports and designates a person to review them.
Article 9 The company and its own subsidiaries which still have subsidiaries (hereinafter referred to as consolidated reporting units) shall prepare consolidated financial statements at the same time. It is also responsible for supervising the preparation of financial statements of subsidiaries at all levels (including all subsidiaries of the enterprise, as well as all kinds of independently-accounted branches and infrastructure projects), and organizing verification of the authenticity and completeness of the financial account reports of subsidiaries at all levels.
Article 10 The relevant personnel of the company shall have the right to refuse and report to the relevant departments and personnel in a timely manner if they authorize, instruct or force the preparation of false or concealed financial reports of important facts.
Article 11 A complaint and reporting system shall be established to report financial fraud or falsification to the Board of Directors and the Audit Committee in a timely manner while ensuring the protection of the rights and interests of the reporting personnel.
Chapter III Preparatory work before the preparation of financial reports
Article 12 Preparation of financial report preparation program
The Finance Department is responsible for drawing up the annual financial report preparation plan, which includes the preparation method, preparation procedure, division of responsibilities and time requirements.
The annual financial report preparation plan shall be drafted by the Finance Department, approved by the chief financial officer (or the person in charge of accounting work, hereinafter the same), the president and the chairman of the board of directors, and then issued to each participating preparation department and its holding subsidiaries at all levels.
Article 13 Handling of material accounting matters
The Finance Department shall draft special instructions and propose treatment for transactions or events identified that may have a significant impact on the accounting statements.
After being reviewed by the manager of the Finance Department, it shall be submitted to the chief financial officer, the president and the chairman of the board of directors for approval, and for matters with an impact beyond the scope authorized by the board of directors, it shall be submitted to the board of directors and the audit committee for consideration.
Article 14 Adjustment of Accounting Policies and Change of Accounting Estimates
The finance department shall not change accounting policies and adjust accounting estimates at will. For matters involving changes in accounting policies and adjustments in accounting estimates, the Finance Department is required to draft a special report and submit it to the Board of Directors/Shareholders’ Meeting for consideration after review by the Manager of Finance Department, the Chief Financial Officer, and approval by the President and the Chairman.
Article 15 Comprehensive Property Inventory and Impairment Test
Before preparing the annual financial report, a comprehensive property inventory and impairment test shall be conducted. The content of the property inventory includes.
(I) Reconciliation of statements with banks, inventory of cash on hand and reconciliation of notes.
(Ⅱ) Verify the existence of settlement amounts, including receivables, payables, taxes payable, etc., and the consistency with the corresponding amounts of claims and debts of credit and debt units.
(Ⅲ) Verify whether the actual quantity of each inventory of raw materials, work-in-progress, self-made semi-finished products, inventory goods, etc. is consistent with the book quantity, and whether there are scrapping losses and backlog materials, etc.
(Ⅳ) Verify whether the book investment exists and whether the investment income is recognized and measured in accordance with the ASBE and related regulations.
(V) To verify whether the actual quantity of each fixed asset, such as buildings, machinery and equipment, transportation means, is consistent with the book quantity, and to inventory the proof of ownership of land and buildings to determine the attribution of assets.
(VI) Verify whether the actual amount of construction in progress is consistent with the book records, etc.
After the completion of the property inventory, the lead department of property inventory, the Audit Department, in coordination with the Finance Department, will draft a summary report of the property inventory, summarizing the organization and leadership of the inventory, the implementation process, the results of the inventory, and the existing problems, etc., and bind and file them together with the property inventory form.
For the physical inventory surplus, loss, destruction, obsolescence and claims (debts) found in the property inventory that really cannot be recovered (paid), the Administrative and Human Resources Department of the asset management department needs to prepare relevant materials and perform the approval procedures in accordance with the provisions of the “Measures for the Management of Asset Losses”, and the Finance Department carries out relevant account processing according to the approval opinions.
Article 16 Closing of accounts
The annual closing date of the company is December 31 of each year of the calendar year; the semi-annual, quarterly and monthly closing dates are the last day of each half-year, quarter and month of the calendar year respectively. In order to rush the financial report and close the accounts in advance, or postpone the economic transactions that occurred in the current period to the next period, or close the accounts after the financial report is compiled.
Before preparing financial reports, finance staff should complete reconciliation, reconciliation, error correction and other operations on the basis of regular daily reconciliation of information, and use the “Monthly and Annual Closing Checklist” (see Annex 1) to check whether all the responsible work is completed within the specified time. After all the items listed in the “Monthly and Annual Closing Checklist” are signed and reviewed by the Finance Department Manager, the closing operation can be carried out.
Once the bookset is closed, in principle, it is not allowed to be opened again, except when major bookkeeping errors or omission errors are found after the closing of the accounts and must be adjusted in the current period, the corresponding accounting staff will fill out a written application for counter-closing and submit it to the finance manager for approval, and then the finance manager will notify the closing staff to open the current period bookset and make adjustments. After the adjustment is completed and confirmed by the financial manager, the book closing personnel are notified to close the accounting set again and the report preparers to prepare the financial statements again.
Chapter IV Preparation of Financial Reports
Article 17 Preparation Requirements
(I) The accounting statements shall be prepared in accordance with the format and content of the accounting statements stipulated in the ASBE, based on the accounting book records and other relevant information that are fully registered and checked, and no omission or arbitrary trade-offs shall be made.
(II) The amounts of assets, liabilities and owners’ equity presented are true and reliable.
(Ⅲ) The income, expenses and profit for the period are presented truthfully.
(Ⅳ) The various cash flows presented consist of cash flows from operating activities, investing activities and financing activities, and the cash flow boundaries of various types of transactions and events are delineated in accordance with the regulations.
Article 18 Types and contents of accounting statements
(I) According to the preparation period, they are divided into monthly, quarterly, semi-annual and annual reports.
(Ⅱ) Divided into external accounting statements and internal accounting statements according to the format of the statements, with the style of external accounting statements prepared in accordance with the provisions of the ASBE and the style of internal accounting statements prepared in accordance with the internal management needs of the Company.
(Ⅲ) Divided into single accounting statement, parent company accounting statement and consolidated accounting statement according to the accounting subject; (Ⅳ) The main statements of external accounting statements provided to investors, creditors and government departments include balance sheet, income statement, cash flow statement and statement of changes in shareholders’ equity.
Article 19 Notes to the Accounting Statements
Notes to the accounting statements shall be provided together with the half-yearly and annual reports; in addition, the regulator may prepare notes to the accounting statements for other accounting periods if required or according to the needs of capital operation.
The notes to the accounting statements shall be prepared in accordance with the ASBE and the disclosure rules issued by the China Securities Regulatory Commission (hereinafter referred to as “CSRC”), and shall include at least but not limited to the following contents.
(I) Basic information about the company.
(II) The Company’s major accounting policies, accounting estimates and corrections of prior period errors.
(Ⅳ) A description of the business combination and consolidated statements.
(V) Notes to the statement items.
(VI) A description of related parties and their transactions.
(Ⅶ) Share-based payments, contingencies, commitments, post-balance sheet events and other important matters requiring disclosure.
(VIII) Other information required to be disclosed by the SEC and other competent authorities.
Article 20 Financial Analysis Report
The financial situation analysis report shall be prepared on a quarterly basis and shall include at least but not limited to the following contents.
(I) Basic information of production and operation.
(II) Analysis of the financial position, operating results and cash flow.
(III) Analysis of changes in key indicators.
(Ⅳ) Profit realization and distribution.
(V) Suggestions for improvement of the financial position.
(VI) Other matters that have significant impact on the financial position, results of operations and cash flows.
Article 21 After the preparation of the first draft of the statements, check the correctness of the correlation between the accounting statements and between the items of the accounting statements by manual analysis or automatically using the computer information system, focusing on the following items for verification.
(I) the correspondence of relevant items within the accounting statements; ……