Hunan Zhongke Electric Co., Ltd. Self-Evaluation Report on Internal Control
Hunan Zhongke Electric Co., Ltd. 2025 Self-Evaluation Report on Internal Control
To the Shareholders of Hunan Zhongke Electric Co., Ltd.:
In accordance with the "Basic Norms for Enterprise Internal Control" and its supporting guidelines issued by the Ministry of Finance, the China Securities Regulatory Commission, and other departments, as well as other internal control regulatory requirements, and combined with the implementation of Hunan Zhongke Electric Co., Ltd.'s (hereinafter referred to as the "Company" or "this Company") internal control system, based on daily and special supervision of internal control, we have evaluated the effectiveness of the Company's internal control as of December 31, 2025 (the base date of the internal control evaluation report).
I. Important Statement
In accordance with the requirements of the enterprise internal control normative system, establishing and improving a sound and effective internal control system, evaluating its effectiveness, and truthfully disclosing the internal control evaluation report are the responsibilities of the Company's Board of Directors. The Audit Committee supervises the establishment and implementation of internal control by the Board of Directors. The management is responsible for organizing and leading the daily operation of the Company's internal control. The Company's Board of Directors, Audit Committee, Directors, and Senior Management guarantee that the content of this report contains no false records, misleading statements, or significant omissions, and shall bear individual and joint legal liability for the authenticity, accuracy, and completeness of the report's content.
The objective of the Company's internal control is to reasonably ensure that business operations are legal and compliant, assets are safe, financial reports and related information are true and complete, operational efficiency and effectiveness are improved, and the Company's development strategies are achieved. Due to the inherent limitations of internal control, it can only provide reasonable assurance for the achievement of these objectives. Furthermore, due to changes in circumstances, internal control may become inappropriate, or the degree of compliance with control policies and procedures may decrease. Predicting the future effectiveness of internal control based on the results of the internal control evaluation carries certain risks.
II. Conclusion of Internal Control Evaluation
Based on the determination of material defects in the Company's financial reporting internal control, as of the base date of the internal control evaluation report, there are no material defects in financial reporting internal control. The Board of Directors believes that the Company has maintained effective financial reporting internal control in all material aspects in accordance with the requirements of the enterprise internal control normative system and relevant regulations.
Based on the determination of material defects in the Company's non-financial reporting internal control, as of the base date of the internal control evaluation report, no material defects in non-financial reporting internal control have been found.
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No factors have occurred between the base date of the internal control evaluation report and the date of issuance of the internal control evaluation report that affect the evaluation conclusion on the effectiveness of internal control.
III. Internal Control System Evaluation Work
(I) Scope of Internal Control Evaluation
The Company determines the main entities, businesses, and matters included in the evaluation scope and high-risk areas based on a risk-oriented approach.
The main entities included in the evaluation scope are the Company and its wholly-owned subsidiaries and controlled subsidiaries. The total assets of the entities included in the evaluation scope account for 100.00% of the Company's total assets in the financial statements, and the total operating income accounts for 100.00% of the Company's total operating income in the financial statements.