Special Audit Report on Related Party Occupation of Listed Company Funds
Zhongrui Yuehua Certified Public Accountants Co., Ltd.
To the Board of Directors of Pangang Group Sichuan Changcheng Special Steel Co., Ltd.:
We accept the commission to conduct a special audit of the occupation of funds by related parties of Pangang Group Sichuan Changcheng Special Steel Co., Ltd. (hereinafter referred to as "Changcheng Shares") based on the audited balance sheet as of December 31, 2008, the income statement, statement of changes in shareholders' equity, cash flow statement, and notes to the financial statements for the year 2008.
In accordance with the provisions of the "Notice on Regulating the Fund Transactions between Listed Companies and Related Parties and Certain Issues Regarding External Guarantees" (Zheng Jian Fa [2003] No. 56) issued by the China Securities Regulatory Commission and the State-owned Assets Supervision and Administration Commission of the State Council, it is the responsibility of the management of Changcheng Shares to prepare and disclose the summary table and provide true, legal, and complete audit evidence. Our responsibility is to express a special audit opinion on the summary table based on the implementation of the audit work.
We performed the audit work in accordance with the Chinese Certified Public Accountant Auditing Standards. These standards require us to comply with professional ethics, plan, and implement audit work to obtain reasonable assurance that the summary table is free from material misstatement. During the audit process, we implemented necessary procedures, including checking accounting records and recalculating relevant amounts. We believe that our audit work provides a reasonable basis for expressing our audit opinion.
We believe that the information contained in the attached summary table is consistent with the accounting materials reviewed during our audit of Changcheng Shares' financial statements for the year 2008 in all material respects. To better understand the situation of related party occupation of funds by Changcheng Shares in 2008, the attached summary table should be read in conjunction with the audited financial statements.
Zhongrui Yuehua Certified Public Accountants Co., Ltd.
Certified Public Accountant: Ma Wenjun
Beijing, China
Certified Public Accountant: April 27, 2009
Kuang Xiaochang