CHINA TAISAN TECH. GROUP HOLDINGS LTD. (Company Registration Number: 200711863D)
RESPONSE TO SGX QUERIES ON THE AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015China Taisan Technology Group Holdings Limited (the "Company") has received the following queries from the Singapore Exchange Securities Trading Limited ("SGX-ST") on its audited financial statements for the Financial Year Ended 31 December 2015:
SGX Query 1
The Company had noted in the compliance checklist for the Annual Report that there are discrepancies between the preliminary final results and the audited accounts in the Annual Report.
Please note that the Company is required to disclose and explain material discrepancies between the preliminary final results and the audited accounts in the Annual Report via an SGXNET announcement under Rule 704(6). Please highlight clearly any material discrepancies.
Company's response
The board of director have assessed the difference of RMB 5million which is only 1.3% of Total comprehensive loss and 0.8% of Total equity and liabilities of the Group's audited accounts, and of the view that is no material discrepancy between the preliminary final results and the audited accounts in the Annual Report. Therefore, no announcement is required under Rule 704(6). However, the difference between preliminary final results and the audited accounts is below:
Consolidated Statement of Comprehensive IncomePreliminary final results (RMB,000) | Audited accounts (RMB,000) | Difference (RMB,000) | Explanation | |
Other operating income | 2,542 | 742 | 1,800 | Due to reclassification of reversal of over accrual of bonus by RMB1.8 million. |
Administrative expenses | (12,596) | (10,796) | (1,800) | Due to reclassification of reversal of over accrual of bonus by RMB1.8 million. |
Other operating expenses | (299,089) | (304,089) | 5,000 | Due to additional impairment of RMB5 million for property, plant and equipment based on valuation report. |
Preliminary final results (RMB,000) | Audited accounts (RMB,000) | Difference (RMB,000) | Explanation | |
Property, plant and equipment | 328,064 | 323,064 | (5,000) | Due to additional impairment of RMB5 million for property, plant and equipment based on valuation report. |
SGX Query 2
Paragraph 11.3 of the Code of Corporate Governance 2012 (the "Code") states that the Board should comment on the adequacy and effectiveness of the internal controls, including financial, operational, compliance and information technology controls, and risk management systems, in the company's Annual Report. The Board's commentary should include information needed by stakeholders to make an informed assessment of the company's internal control and risk management systems.
On page 28 of the Company's Annual Report, we note that the Board has commented on the adequacy of the internal controls, however, there was no commentary on the adequacy and effectiveness of internal controls of information technology controls and risk management systems. In this respect, please disclose or explain the reason(s) for the deviation from the code.
Company's response
The commentary has been disclosed in the annual report, please refer to the paragraphs below: On page 27 of annual report:
"The Board reviews regularly the adequacy and effectiveness of the Company's risk management and internal control systems, including financial, operational, compliance and information technology controls. The Board is of the opinion that the internal controls, including financial, operational, compliance and information technology controls and risk management systems are adequate and effective. "
On page 28 of annual report:
"Based on the internal controls and risk management systems established and maintained by the Group, work performed by the internal and external auditors and reviews performed by Management, AC and the Board, the Board with the concurrence of the AC, is of the opinion that the Group's internal controls and risk management systems, addressing financial, operational, compliance and information technology risks, were adequate as at 31 December 2015."
SGX Query 3
On page 25 of the Company's Annual Report, the Company disclosed that "For FY2015, the aggregate total remuneration paid to the key management personnel (who are not Directors or the CEO) amounted to approximately S$50,000.
Please disclose how the total remuneration can be "approximately S$50,000", when the remuneration to Mr Cai Bing Huang and Mr Liu Yi were already greater than S$50,000 each. Please reconcile and disclose all relevant information.
Company's response
For FY2015, the aggregate total remuneration paid to the key management personnel (who are not Directors or the CEO) amounted to approximately S$200,000 (FY2014: S$150,000).
The different is due to Mr Cai Bing Huang and Mr Liu Yi was missed due to oversight when doing key management calculation.
SGX Query 4
On page 27 of the Company's Annual Report, the Company disclosed that "The AC has commissioned an internal audit department, led by Mr Stanley Lee".
Please provide details of the track record and experience of Mr Stanley Lee. Please also provide details of the Internal Audit function, their experience and their work done.
Company's response
Track record and experience of Stanley Lee:
Period | Company | Duty |
March 2011 - Present | China Taisan Technology Group Holdings Limited | Internal Auditor |
January 2009 - February 2011 | Population Services International (PSI) Inc. | Regional Compliance Officer (Financial Internal Audit Services) |
July 2004 - January 2009 | PricewaterhouseCoopers LLP (Singapore & China, Beijing) | Audit Senior to Audit Manager |
Details of the Internal Audit function:
Internal audit
Assist in developing risk-based annual internal audit plans, as discussed with ACs, detailing the scope, nature and timing of audit activities;
Design internal audit procedures and work programs based on annual internal audit plans;
Conduct process and financial audits to identify control weaknesses and evaluate effectiveness and efficiency of the business processes;
Review the accuracy, timeliness, and relevance of financial information and other disclosures or compliance issues to Senior Management;
Monitor the timely implementation of the management actions recommended in the internal audit reports.
Continuous improvement
Make recommendations to make improvements to financial and operational controls;
Involve in the investigations and reviews as requested by ACs and Senior Management;
Liaise with the external auditors on internal control issues;
Assist management in strengthening the control environment by providing ad-hoc advice and guidance to managers and staff at all levels, sometimes by delivering on site training and sharing sessions.
Reporting
Report on internal control issues and the implementation of the internal audit plan to ACs and Senior Management.
Others
Any ad-hoc duties assigned by ACs and Senior Management. Summary of work done for the year 2015:
Based on the annual internal audit plans approved by the ACs:
Performed reviews and tests of controls key procedures of the Group for selected significant types of transactions, and processes. The types of transactions and processes are typical, and most of these have direct and close linkages to the financial reporting process.
Identified key controls shall be matched with each business risk (that have been identified).
Reviewed the company and group policies and procedures, and practices for each business or financial cycle affected by such risks.
Performed a walk-through of each key cycle, and assessed if the design of the controls in place are effective to mitigate the risks.
Performed tests of controls based on sample transactions. Tests of controls included inquiry with appropriate personnel (i.e. process-owners, reviewers), observation of control procedures, events or tasks by process-owners, inspection/review of evidence, re-performance of controls (including IT-related controls), and examination of output.
The following lists of key cycle objectives are assessed during the year 2015:
Cash validation
Safeguard of capital expenditures and fixed assets
Inventory and warehouse management system
Revenue recognition and accounts receivables system
Procurement
Accounts payable system and cash disbursements system
China Taisan Technology Group Holdings Ltd. issued this content on 20 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 25 April 2016 11:04:05 UTC
Original Document: http://www.china-taisan.com/attachment/201604202115531786471192_en.pdf
