Internal Control Audit Report
Beijing Chengyu Certified Public Accountants LLP
Address: 11/F, Jujie Financial Building, 16 Lize Road, Fengtai District, Beijing, PR China
Postal Code: 100073
Phone: (010) 63357658
Fax: (010) 63357658
Internal Control Audit Report
Chengyu Audit No. (2024) 0092
To all shareholders of Meishang Ecological Landscape Co., Ltd.:
In accordance with the "Guidelines for Internal Control Audits" and relevant requirements of the Chinese Certified Public Accountant Practice Standards, we audited the effectiveness of internal controls over the financial report of Meishang Ecological Landscape Co., Ltd. (hereinafter referred to as "Meishang Ecological") as of December 31, 2023.
1. Responsibility of Meishang Ecological for Internal Control
According to the "Basic Norms for Enterprise Internal Control," "Application Guidelines for Enterprise Internal Control," and "Guidelines for Internal Control Evaluation," it is the responsibility of the board of directors of Meishang Ecological to establish, implement, and evaluate the effectiveness of internal controls.
2. Responsibility of the Certified Public Accountant
Our responsibility is to express an audit opinion on the effectiveness of internal controls over the financial report based on the audit work performed and to disclose any significant deficiencies in non-financial reporting internal controls that we have noted.
3. Inherent Limitations of Internal Control
Internal control has inherent limitations and may not prevent or detect misstatements. Additionally, changes in circumstances may render internal controls inappropriate or reduce adherence to control policies and procedures, making it risky to infer future effectiveness based on the results of the internal control audit.
4. Matters Leading to Adverse Opinions
Significant deficiencies are combinations of one or more control deficiencies in internal controls that may lead to the inability to timely prevent or detect and correct significant misstatements in financial statements, potentially causing serious deviations from control objectives.
- There are inaccuracies in project progress confirmations. According to the company's "Internal Control System for Engineering Construction Business" and "Safety Production Acceptance System," the company should compile project completion statistics at the end of each month. For projects meeting acceptance conditions, the project manager is fully responsible for all preparatory work before project delivery and acceptance, and for checking the execution status. Monthly progress reports should be timely prepared and confirmed with the construction or supervision units, with the business department transmitting the monthly progress reports to the financial center as the basis for revenue recognition. During the annual audit, we found significant deficiencies in the recognition of engineering quantities and document flow, leading to the failure of related financial reporting internal controls.
- There is a significant deficiency in failing to effectively identify the financial accounting compliance of Changning Keka Ecological Governance Investment Development Co., Ltd. The foundation of financial accounting management is weak. Effective internal controls can provide reasonable assurance for the authenticity and completeness of financial reports and related information, while the aforementioned significant deficiencies have caused Meishang Ecological's internal controls to lose this function.
5. Audit Opinion on Financial Reporting Internal Controls
We believe that due to the aforementioned significant deficiencies and their impact on achieving control objectives, Meishang Ecological failed to maintain effective financial reporting internal controls in all material aspects as of December 31, 2023, in accordance with the "Basic Norms for Enterprise Internal Control" and related regulations. We caution users of this report about the associated risks. It should be noted that we do not express an opinion or provide assurance on Meishang Ecological's non-financial reporting internal controls. This section does not affect the audit opinion on the effectiveness of financial reporting internal controls.