Xinjiang Daqo New Energy Co.Ltd(688303) financial statements and audit reports for 2020, 2019 and 2018
Financial statements and audit reports
2020, 2019 and 2018
Content page audit report 1 – 3 consolidated balance sheet 4 – 5 company balance sheet 6 consolidated income statement 7 company income statement 8 consolidated cash flow statement 9 company cash flow statement 10 consolidated statement of changes in owner’s equity 11 – 12 statement of changes in owner’s equity 13 – 14 notes to financial statements 15 – 115
audit report
DSB (s) Zi (21) No. s00335 (Page 1 of 3) Xinjiang Daqo New Energy Co.Ltd(688303) all shareholders:
1、 Audit opinion
We have audited the financial statements of Xinjiang Daqo New Energy Co.Ltd(688303) (hereinafter referred to as “Xinjiang Daquan” or “your company”), including the consolidated and company’s balance sheets as of December 31, 2020, December 31, 2019 and December 31, 2018, the consolidated and company’s profit statements, consolidated and company’s cash flow statements for 2020, 2019 and 2018 Consolidated statement of changes in owner’s equity and notes to relevant financial statements. In our opinion, the attached financial statements are prepared in accordance with the accounting standards for business enterprises in all material aspects, and fairly reflect the consolidated and financial position of your company as of December 31, 2020, December 31, 2019 and December 31, 2018, as well as the consolidated and operating results and cash flow of your company in 2020, 2019 and 2018.
2、 Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese certified public accountants. The “responsibilities of certified public accountants for the audit of financial statements” in the audit report further expounds our responsibilities under these standards. In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of your company and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for our audit opinion.
3、 Key audit matters
The key audit matters are the most important matters that we consider to audit the financial statements of 2020, 2019 and 2018 according to our professional judgment. The response to these matters is based on the overall audit of the financial statements and the formation of audit opinions. We will not express separate opinions on these matters. We confirm that the following matters are the key audit matters that need to be communicated in the audit report.
Revenue recognition:
Item description
As shown in notes VII and 34, the polysilicon sales revenue of your company in 2020, 2019 and 2018 were RMB 4632886014.65, RMB 2390918162.71 and RMB 197715726.83 respectively. Polysilicon sales revenue is significant and constitutes a key financial indicator in the financial statements. According to the revenue recognition accounting policies disclosed in notes III, 23 and 24 to the financial statements, the revenue of polysilicon products provided by your company is recognized at the time of signing for receipt after the products are delivered to customers. We regard the recognition of polysilicon sales revenue as a key audit matter.
Audit report (Continued)
DSB (s) Zi (21) No. s00335 (page 2 of 3) III. key audit matters – continued
Revenue recognition: – continued
Audit response
For polysilicon sales revenue, our audit procedures mainly include:
(1) Ask the management of your company to understand the agreement on the rights and obligations of both parties in the polysilicon business contract, consult the terms of the sales contract of important customers, and evaluate whether the polysilicon sales revenue recognition policy of your company complies with the provisions of the accounting standards for business enterprises and whether the relevant revenue recognition policies are consistently applied;
(2) Understand and evaluate the design, implementation and operation effectiveness of your company’s key internal control related to polysilicon sales revenue recognition; (3) Analyze the sales revenue and gross profit during the reporting period, compare with the trend changes of revenue and gross profit in the same industry, identify whether there are abnormal fluctuations in sales revenue during the reporting period, and ask the management to understand the reasons for the changes and evaluate the rationality;
(4) For the sales revenue in the reporting period, select samples to check the supporting documents such as invoices, delivery orders and sign in orders, so as to test the authenticity of sales revenue recognition and the accuracy of measurement;
(5) For the sales revenue recognized before and after the balance sheet date, select samples to conduct cut-off test to verify whether the sales revenue is included in the correct period;
(6) Select samples to implement the letter confirmation procedure for the customer’s accounts receivable, the balance of advance receipts and the sales amount.
4、 Responsibilities of management and governance for financial statements
The management of your company is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises, so as to achieve a fair reflection, and designing, implementing and maintaining necessary internal control so that the financial statements are free from material misstatement caused by fraud or error.
In preparing the financial statements, the management is responsible for assessing the company’s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate the company, terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of your company.
5、 Responsibilities of certified public accountants for the audit of financial statements
Our goal is to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement due to fraud or error, and issue an audit report containing audit opinions. Reasonable assurance is a high-level assurance, but it does not guarantee that an audit performed in accordance with audit standards can always be found when a major misstatement exists. Misstatement may be caused by fraud or error. If it is reasonably expected that the misstatement alone or in summary may affect the economic decisions made by the users of the financial statements based on the financial statements, the misstatement is generally considered to be significant.
In the process of carrying out the audit work in accordance with the audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
(1) Identify and assess the risks of material misstatement of financial statements due to fraud or error, design and implement audit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. As fraud may involve collusion, forgery, intentional omission, misrepresentation or override of internal control, the risk of failing to find material misstatement caused by fraud is higher than that caused by failing to find material misstatement caused by misstatement.
(2) Understand the internal control related to audit to design appropriate audit procedures.
(3) Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
Audit report (Continued)
DSB (s) Zi (21) No. s00335 (page 3 of 3) v. responsibilities of certified public accountants for the audit of financial statements – continued
(4) Draw conclusions on the appropriateness of management’s use of going concern assumptions. At the same time, according to the audit evidence obtained, draw a conclusion on whether there are major uncertainties in the matters or circumstances that may lead to major doubts about the sustainable operation ability of your company. If we conclude that there is significant uncertainty, the auditing standards require us to draw the attention of statement users to the relevant disclosures in the financial statements in the audit report; If the disclosure is insufficient, we should express a non unqualified opinion. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause your company to be unable to continue its business.
(5) Evaluate the overall presentation (including disclosure), structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events. (6) Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in your company to express an audit opinion on the financial statements. We are responsible for guiding, supervising and implementing the group audit, and take full responsibility for the audit opinions.
We communicated with the management on the planned audit scope, schedule and major audit findings, including the internal control defects that we identified in the audit.
We also provide a statement to the management that we have complied with the professional ethics requirements related to independence, and communicate with the management all relationships and other matters that may reasonably be considered to affect our independence, as well as relevant preventive measures (if applicable).
From the matters communicated with the management, we determine which matters are the most important for the audit of the financial statements of this year, thus constituting key audit matters. We describe these matters in the audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if the negative consequences of communicating a matter in the audit report are reasonably expected to exceed the benefits in the public interest, we determine that we should not communicate the matter in the audit report.
Deloitte Touche Tohmatsu (special general partnership) Chinese certified public accountant:
Shanghai, China
Chinese certified public accountant:
May 11, 2021
December 31, 2020, December 31, 2019 and December 31, 2018
Consolidated balance sheet
RMB yuan
Project note VII 2020 2019
