Special Explanation from the Board of Directors Regarding the Matters Involved in the Adverse Opinion of the Internal Control Audit Report
Shenzhen Tangtang Accounting Firm (General Partnership) (hereinafter referred to as "Shenzhen Tangtang") issued an adverse opinion audit report (Tangtang Special Audit No. (2021) 010) for Steyr Power Co., Ltd. (hereinafter referred to as "the Company") regarding the internal control audit report for the year 2020. The relevant matters are explained as follows:
I. Basic Situation of the Matters Involved
(1) Significant Deficiencies Leading to Adverse Opinion
Significant deficiencies refer to a combination of one or more control deficiencies that may lead to a serious deviation from control objectives. In this audit, Shenzhen Tangtang identified the following significant deficiencies in the Company's internal controls over financial reporting: the Company is facing tight funding, numerous lawsuits, production and operational stagnation, employee turnover or leave, and frequent changes in key management personnel, which hinder the normal operation of the organizational structure, resulting in significant deficiencies in the internal control environment and a lack of internal supervision. Effective internal controls can provide reasonable assurance of the truthfulness and completeness of financial reports and related information, while the aforementioned significant deficiencies undermine this function.
(2) Audit Opinion on Financial Reporting Internal Controls
Shenzhen Tangtang believes that due to the aforementioned significant deficiencies and their impact on achieving control objectives, the Company failed to maintain effective internal controls over financial reporting in all material respects as of December 31, 2020, in accordance with the "Basic Norms for Enterprise Internal Control" and relevant regulations.