Huaxun Fangzhou Co.Ltd(000687)
Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Huaxun Fangzhou Co.Ltd(000687) (hereinafter referred to as "Huaxun shares" or "the company") was established on January 26, 2022
We have received the letter of concern on Huaxun Fangzhou Co.Ltd(000687) from Shenzhen Stock Exchange (company department concern letter [2022] No. 40), and now reply to the relevant questions as follows:
1、 Please explain the evaluation procedures and results adopted by the board of directors, audit committee, independent directors and board of supervisors to evaluate the professional competence, independence, integrity and risk-taking ability of xutai firm in the process of selecting xutai firm, and whether the relevant procedures are sufficient and the conclusions are objective.
[reply of the company]: (I) in the process of selecting xutai firm, the relevant evaluation procedures adopted by the board of directors, audit committee, independent directors and board of supervisors include:
1. Access the basic information and integrity information (including disciplinary and punishment information) of xutai firm and the filing information of securities service business through the websites of China Institute of certified public accountants, financial accounting management network, China Securities Regulatory Commission and the official website of Shenzhen Stock Exchange;
2. Through cninfo.com, National SME share transfer system and other websites, we can learn about xutai firm's audit related businesses of listed companies and listed enterprises;
3. Check the business license of the accounting firm provided by xutai firm and the license of the certified public accountant to be signed; Review the basic information provided by xutai firm;
4. The independent directors and members of the audit committee communicated with the partners of xutai firm and the certified public accountants to be signed on the basic information, professional experience, independence and integrity of the firm, major matters that the certified public accountants think should be concerned about, and the communication between the previous and subsequent audit institutions.
(II) through the above sufficient evaluation procedures, (1) it is verified that xutai firm has filed for securities service business, and the project partner, signing certified public accountant and project quality control reviewer have worked in a firm with securities and futures related business qualification before joining xutai firm, with long years of securities service business experience; (2) Xutai firm has understood the company's situation before undertaking the business, formulated a targeted audit plan, and has equipped sufficient professionals according to the project situation; (3) Xutai office is not found
And the project partner, the signing certified public accountant and the project quality control reviewer violate the independence requirements of the code of professional ethics for Chinese certified public accountants; (4) It is not found that xutai firm, the project partner, the signing certified public accountant and the project quality control reviewer violate the requirements of the code of professional ethics for Chinese Certified Public Accountants on the principle of good faith; No criminal punishment, administrative punishment, supervision and management measures, self-discipline supervision measures and disciplinary sanctions have been found in xutai firm, project partners, signed certified public accountants and project quality control reviewers in the past three years; (5) Xutai office has insured professional liability insurance for the audit business in accordance with the relevant provisions of the Ministry of finance.
The review or deliberation results of the audit committee of the board of directors, independent directors, the board of directors and the board of supervisors of the company are as follows: 1. The audit committee of the board of directors of the company has fully understood and reviewed the professional competence, investor protection ability, independence and integrity of xutai firm, and believes that it has the qualification to engage in securities business and can meet the needs of the company's annual audit, Have the ability to protect investors. The audit committee of the board of directors unanimously agreed to propose to appoint xutai firm as the financial and internal control audit institution of the company in 2021 and submit it to the board of directors and the general meeting of shareholders for deliberation.
2. The independent directors of the company issued their prior approval opinions and independent opinions:
(1) Prior approval opinion: before convening the board of directors to review the relevant proposals on the appointment of audit institutions, we carefully reviewed the relevant qualifications, institutions, personnel, business, practice, integrity records and other information of xutai firm, and inquired and discussed with the board of directors and management of the company on relevant matters. We believe that xutai firm has the qualification to engage in securities business, the ability to provide audit services for listed companies, the ability to protect investors and the ability to provide fair audit services for the company. Therefore, we agree to submit the proposal to the 31st meeting of the eighth board of directors for deliberation. (2) Independent opinion: xutai firm to be employed by the company has the qualification to engage in securities business, the ability to provide audit services for listed companies, the ability to protect investors, and the ability to provide fair audit services for the company. The deliberation procedures of the board of directors comply with the relevant provisions of relevant laws and regulations. Agree to appoint xutai firm as the financial and internal control audit institution of the company in 2021, and agree to submit the proposal to the general meeting of shareholders of the company for deliberation.
3. Deliberation results of the meetings of the board of directors and the board of supervisors of the company
The company held the 31st meeting of the 8th board of directors on January 20, 2022. The proposal on the appointment of financial and internal control audit institution in 2021 was considered and approved by 7 votes in favor, 0 votes against and 0 abstentions. The board of directors agreed to appoint xutai firm as the financial and internal control audit institution of the company in 2021 for one year. The company held the 19th meeting of the 8th board of supervisors on January 20, 2022 to
With 5 affirmative votes, 0 negative votes and 0 abstention votes, the proposal on the appointment of financial and internal control audit institution in 2021 was considered and adopted, and the board of supervisors agreed to appoint xutai firm as the financial and internal control audit institution of the company in 2021 for one year.
The proposal on the company's appointment of xutai firm as the company's financial and internal control audit institution in 2021 needs to be deliberated at the first extraordinary general meeting of shareholders in 2022 held on February 10, 2022.
2、 According to the announcement, xutai firm completed the filing of accounting firm engaged in securities service business in February 2021, with more than 60 employees and 17 certified public accountants at the end of 2020. Xutai firm is requested to explain the audit projects of listed companies undertaken and planned to undertake so far, including but not limited to the name of audit clients, industry, signing accountants and reviewers, fees, and whether it has the ability to undertake and complete your company's audit business in combination with professional staffing and project arrangement, as well as the withdrawn professional risk fund Whether the purchased professional insurance can cover the civil liability caused by possible audit failure.
[accountant's reply]: as of February 8, 2022, except for the audit business of Huaxun ark to be undertaken, the exchange has not undertaken or planned to undertake other audit projects of listed companies.
Customer Name: Huaxun Fangzhou Co.Ltd(000687)
Industry: communication equipment manufacturing
Proposed signing partner: Yin Qing
Certified public accountant to be signed: Wang Pingping
Proposed project quality control reviewer: Ling Hui
Fees: the current audit fee is 600000 yuan for financial report audit and 300000 yuan for internal control audit.
The current audit fee is determined with the company according to the fair and reasonable pricing principle of the market.
As of February 8, 2022, there are 3 partners and 17 certified public accountants, including 10 certified public accountants who have engaged in securities service business and more than 60 full-time employees. They have signed labor contracts and completed entry procedures.
According to the audit needs of Huaxun ark in 2021, in addition to appointing partners with professional competence and signing certified public accountants, the exchange also plans to appoint 6 auditors at all levels with annual report audit experience of listed companies, and has formulated a detailed audit plan.
Brief introduction of the proposed signing partner of the project:
Yin Qing, a Chinese certified public accountant, has been engaged in securities service business for 12 years. He became a certified public accountant on July 25, 2005. He began to engage in securities service business in January 2010, worked in Beijing Xinghua Certified Public Accountants (special general partnership) with business qualification related to securities and futures, and successively served as project manager. He began to practice in Shenzhen xutai Certified Public Accountants (general partnership) in December 2012, and now serves as the Executive partner of Shenzhen xutai Certified Public Accountants (general partnership). During his employment, he has provided securities services such as third board application audit, annual report audit of listed companies and merger and reorganization audit for many enterprises. He has experience in securities services and has corresponding professional competence.
Profile of the certified public accountant to be signed:
Wang Pingping, a Chinese certified public accountant, has been engaged in securities service business for 5 years. In July 2020, he became a certified public accountant. He began to engage in securities service business in May 2016. He once worked in Shenzhen Branch of zhongzhun Certified Public Accountants (special general partnership) and Shenzhen Branch of zhongshenzhonghuan Certified Public Accountants (special general partnership) with business qualification related to securities and futures. He began to practice in xutai firm in May 2020, During his employment, he has provided securities services such as annual report audit of listed companies and merger and reorganization audit for many enterprises.
Brief introduction of project quality control reviewer:
Ling Hui, a Chinese certified public accountant, has been engaged in securities service business for 12 years. He became a certified public accountant on April 27, 2006. He began to engage in the audit of Listed Companies in January 2010, first working in Beijing Xinghua Certified Public Accountants (special general partnership) with business qualification related to securities and futures, and then working as a partner in zhongzhun Certified Public Accountants (special general partnership). He began to practice in xutai certified public accountants in August 2020. During his practice, he provided declaration audit and Securities services such as annual report audit and merger and reorganization audit.
According to the notice of the Ministry of Finance on printing and distributing the measures for the administration of occupational risk funds of accounting firms (CAI Kuai Han [2007] No. 9), the exchange has withdrawn the occupational risk fund based on the audit business income at the end of each year. As of December 31, 2021, the balance of the occupational risk fund was 1691800 yuan. In order to improve the ability to resist professional liability risks, according to the notice of the Ministry of Finance on printing and distributing the Interim Measures for professional liability insurance of accounting firms (CK [2015] No. 13), the exchange purchased the professional liability insurance of Ping An Insurance (Group) Company Of China Ltd(601318) Property Insurance Co., Ltd., with an insured amount of 10 million yuan and a compensation limit of 10 million yuan each time, The purchased practicing insurance is expected to cover the civil liability caused by audit failure.
To sum up, the Institute has experience in dealing with major and complex matters. The partners appointed by the project, the project signing certified public accountants and the project quality control reviewers have all engaged in securities service business and have professional competence. The firm has allocated enough professionals according to the project situation, formulated targeted audit plans, and fully understood the risks faced by the company. Therefore, the firm has the ability to undertake and complete the annual report audit business of Huaxun ark in 2021.
3、 The former annual audit accountant of your company is Zhongxi Certified Public Accountants (special general partnership) (hereinafter referred to as "Zhongxi certified public accountants"). Zhongxi certified public accountants has issued an audit report with no opinion and an internal control audit report with negative opinion on your company's 2020 financial report, The basis for forming an audit opinion that cannot be expressed is that it is impossible to judge your company's going concern ability. Please explain whether xutai firm has fully understood the risks faced by your company, whether it has conducted necessary communication with Zhongxi firm on matters that have a significant impact on the audit in accordance with the relevant requirements of the audit standards before determining to accept the entrustment, and the specific situation of communication. [accountant's reply]: before undertaking the business, the office implemented: (1) discussing with the management the objectives and scope of the audit, the purpose of the audit report, the responsibilities of the management, the applicable basis for the preparation of financial statements, the arrangements for planning and executing the audit work (including the composition of the project team) The expected form and content of the audit report to be issued (and the explanation that the audit report issued under specific circumstances may be different from the expected form and content), the arrangement of communication with the former certified public accountant, the calculation basis and arrangement of fees, and other matters that need to be agreed. (2) Communicate with the former certified public accountant after obtaining the written consent of the auditee. (3) Have a preliminary understanding of the auditee and its environment. (4) Evaluate whether it has the independence and ability required to carry out the audit. (5) Comprehensively evaluate the risk of undertaking the business and draw the conclusion that it can undertake the business.
The opinion type of Huaxun Ark's 2020 annual audit report is unable to express opinions. Zhongxi Certified Public Accountants (special general partnership) (hereinafter referred to as "Zhongxi certified public accountants") issued the audit report zxsz [2021] No. 01184, and the signed certified public accountants are Chen Yuchi and Shen Jianping. The certified public accountant Yin Qing appointed by the firm led the project team to carry out preliminary audit activities, After consulting the public information in recent three years and obtaining the consent of Huaxun ark, he mailed a written communication letter to Zhongxi firm, the audit institution of Huaxun ark in 2020, on January 15, 2022, and obtained a reply from Zhongxi firm on January 17, 2022. Zhongxi firm and the signing certified public accountant expressed their full cooperation with the communication between the former and the latter accountants. After communication, no major matters affecting the undertaking of the business by the exchange were found.
To sum up, we have understood the risks of the project and have conducted necessary communication with Zhongxi firm in accordance with the relevant requirements of the audit standards on the matters that cannot be expressed in the 2020 audit report of Huaxun ark. If the Exchange formally accepts the appointment as the auditor of the financial statements of Huaxun ark in 2021, it will issue appropriate audit opinions according to the results of the implementation of audit procedures with the audit of the annual report in 2021.
4、 On September 15, 2021, your company disclosed the announcement on the reply to the letter of concern of Shenzhen Stock Exchange, which said that your company expects to complete the disclosure of the comprehensive audit report of 2016 and 2017 before December 31, 2021. Up to now, your company and the annual audit accountant have not completed the reply and disclosure of the above comprehensive audit report. Please explain the specific progress of the above comprehensive audit matters up to now and the specific time limit for completing the comprehensive audit in relevant years.
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