Internal Control Self-Assessment Report
To all shareholders of Kairuide Holdings Co., Ltd.:
In accordance with the provisions of the "Basic Norms for Enterprise Internal Control" and its supporting guidelines, as well as other internal control regulatory requirements (hereinafter referred to as the "Enterprise Internal Control Normative System"), and based on the internal control system and evaluation methods of Kairuide Holdings Co., Ltd. (hereinafter referred to as the "Company" or "Kairuide"), we have evaluated the effectiveness of the internal control as of December 31, 2021 (the benchmark date for the internal control evaluation report).
Important Statement
According to the provisions of the Enterprise Internal Control Normative System, it is the responsibility of the Board of Directors to establish, improve, and effectively implement internal controls, evaluate their effectiveness, and truthfully disclose the internal control evaluation report. The Supervisory Board supervises the establishment and implementation of internal controls by the Board of Directors. The management is responsible for organizing and leading the daily operation of internal controls. The Board of Directors, Supervisory Board, and directors, supervisors, and senior management ensure that the content of this report does not contain any false records, misleading statements, or significant omissions, and bear individual and joint legal responsibility for the authenticity, accuracy, and completeness of the report's content.
The goal of the Company's internal control is to reasonably ensure that business management is legal and compliant, assets are secure, financial reports and related information are true and complete, improve operational efficiency and effectiveness, and promote the realization of the Company's development strategy. Due to the inherent limitations of internal controls, they can only provide reasonable assurance of achieving the above objectives. Furthermore, changes in circumstances may render internal controls inappropriate or reduce compliance with control policies and procedures, thus inferring the future effectiveness of internal controls based on evaluation results carries certain risks.
Internal Control Rectification Status and Evaluation Conclusion
(1) Internal Control Rectification Status
The significant internal control deficiencies existing in previous years have all been rectified and eliminated in the 2020-2021 period. The specific situation is as follows:
- Rectification of Significant Internal Control Deficiencies Caused by Previous Issues
To prevent the Company from continuing to face violations related to external guarantees and litigation due to improper seal management, which could lead to equity seizures and bank account freezes, the Company organized the administrative, financial, and legal departments to reorganize the seal usage process. A basic and complete seal approval process has been established, and a seal approval form has been created, with designated personnel managing the Company’s official and financial seals. Additionally, regarding historical equity seizures and bank account freezes, the Company has actively communicated with creditors and various courts during the restructuring process to apply for assistance in lifting these restrictions. As of now, the original equity seizures due to litigation have been largely lifted, and Kairuide's bank accounts have all been unfrozen. The bank accounts that were frozen for a long time due to inactivity are currently being activated or closed by designated personnel. Through the resolution of historical issues and the improvement of existing systems and processes, the Company is gradually getting back on track.