Important Statement
According to the requirements of the enterprise internal control standard system, establishing, improving, and effectively implementing internal controls, evaluating their effectiveness, and truthfully disclosing the internal control evaluation report is the responsibility of the company's board of directors. The board's audit committee supervises the establishment and implementation of internal controls by the board. The management is responsible for organizing and leading the daily operation of internal controls. The board of directors, audit committee, 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 truthfulness, 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, operational efficiency and effectiveness are improved, and the development strategy is promoted. Due to the inherent limitations of internal controls, they can only provide reasonable assurance of achieving the above goals. Furthermore, changes in operating conditions may render internal controls inappropriate or reduce compliance with control policies and procedures, making it risky to infer the future effectiveness of internal controls based on evaluation results.
Conclusion on the Effectiveness of Internal Controls
Based on the identification of significant deficiencies in internal controls over financial reporting, as of the internal control evaluation report benchmark date, there are no significant deficiencies in financial reporting internal controls. The board believes that the company has maintained effective financial reporting internal controls in all material respects in accordance with the requirements of the enterprise internal control standard system and related regulations. Based on the identification of significant deficiencies in non-financial reporting internal controls, as of the internal control evaluation report benchmark date, the company has not identified any significant deficiencies in non-financial reporting internal controls.
No factors affecting the conclusion on the effectiveness of internal controls have occurred between the internal control evaluation report benchmark date and the issuance date of the internal control evaluation report.
Internal Control Evaluation Work Situation
Scope of Internal Control Evaluation
The company determined the main units, businesses, and high-risk areas included in the evaluation scope based on a risk-oriented principle. The scope of this evaluation mainly covers the company, wholly-owned and controlling subsidiaries, and wholly-owned and controlling grand-subsidiaries. The total assets of the units included in the evaluation scope account for 100% of the total assets in the consolidated financial statements, and the total operating income accounts for 100% of the total operating income in the consolidated financial statements. The specific businesses, matters, and high-risk areas included in the annual internal control evaluation scope are as follows:
- Corporate Governance Level: Organizational structure, development strategy, human resources, social responsibility, corporate culture, etc.
- Business Process Level: Fund activities, asset protection, procurement, sales, research and development, engineering projects, financial reporting, performance evaluation, contract management, risk identification, etc.
- Key High-Risk Areas: Management control of subsidiaries, internal control of related party transactions, internal control of external guarantees, internal control of significant investments, internal control of information disclosure, information and communication, internal supervision, etc.