2012 Annual Report - ZTE

ZTE CORPORATIONInternal Control(2) The Company has established relevant control regimes and mechanisms for each of the five aspects ofenvironment for control, risk assessment, business controls, information and communications and supervision.The internal control system in force is sound, reasonable and effective and provides reasonable assurancefor legal compliance of the Company’s operations and management, asset security and true and completefinancial reporting and information disclosure.(3) The self-assessment of the Company’s internal control duly reflects the status of the Company’s internalcontrol.5. Internal control audit report furnished by the audit firmIn accordance with relevant requirements under the Corporate Internal Control Audit Guidelines and the China Codeof Ethics for Certified Public Accountants, Ernst & Young Hua Ming LLP conducted an audit on the effectivenessof internal control in relation to the financial reporting of the Company for the year ended 31 December 2012and furnished an opinion as follows:Ernst & Young Hua Ming LLP is of the view that ZTE Corporation has maintained effective internal control infinancial reporting in all material aspects in accordance with the Basic Rules for Corporate Internal Control andpertinent provisions.For the internal control audit report of the Company, please refer to the “Internal Control Audit Report of ZTECorporation” published by the Company on 28 March 2013 on http://www.cninfo.com.cn.(III)BASIS, IMPROVEMENT AND OPERATION OF THE FINANCIAL REPORTING INTERNAL CONTROLSYSTEMThe Company has formulated a range of administrative systems in connection with financial management, etc inaccordance with laws and regulations including the Accounting Law, ASBEs, Basic Rules for Corporate InternalControl and its Supplementary Guidelines and the Shenzhen Stock Exchange Guidelines for Internal Control ofListed Companies, and has effectively implemented and executed such systems in actual operation, and thefunctions of and delegations in accounting and financial management have been improved and enhanced in termsof rules and regulations. In connection with job positions, staff deployment and key accounting practices, theCompany has established an independent accounting department and members of such accounting departmenthave diligently complied with national financial policies and laws and regulations and deal with accounting mattersin strict accordance with the Accounting Law, ASBEs and other pertinent regulations.During the year, the Company did not identify any significant deficiencies in its financial reporting internal control.(IV)ESTABLISHMENT AND IMPLEMENTATION OF THE SYSTEM OF ACCOUNTABILITY FOR SIGNIFICANTERRORS IN INFORMATION DISCLOSURE OF ANNUAL REPORTSThe Company has established the ZTE Corporation System of Accountability for Significant Errors in InformationDisclosure of Annual Reports in accordance with the Company Law, Securities Law, Accounting Law, Measuresfor the Administration of Information Disclosure by Listed Companies and other pertinent laws, regulations andregulatory documents, which expressly provides for the identification and handling of significant accountingerrors and significant errors in other information disclosures of annual reports, as well as accountability for suchsignificant errors in information disclosures of annual reports. The system was considered and approved at theSecond Meeting of the Fifth Session of the Board of Directors of the Company held on 8 April 2010 and becameeffective on the same date.The Company has diligently implemented the system. There was no correction of significant accounting errors,remedy of significant omission of information and revision of business projections during the year.148