China Securities Co.Ltd(601066) about
Beijing Jingcheng Machinery Electric Company Limited(600860) issuance of shares and payment of cash to purchase assets and raise supporting funds
Verification opinions of the review report
China Securities Regulatory Commission:
China Securities Co.Ltd(601066) (hereinafter referred to as " China Securities Co.Ltd(601066) securities" or "independent financial consultant") is entrusted by Beijing Jingcheng Machinery Electric Company Limited(600860) (hereinafter referred to as " Beijing Jingcheng Machinery Electric Company Limited(600860) " or "listed company") to act as its independent financial consultant for the project of issuing shares, paying cash to purchase assets and raising supporting funds (hereinafter referred to as "the project"). On December 15, 2021, the project was approved by the 33rd working meeting of the review committee of mergers and acquisitions of listed companies of China Securities Regulatory Commission (hereinafter referred to as "CSRC") in 2021.
As the audit institution of the project, ShineWing Certified Public Accountants (special general partnership) (hereinafter referred to as "ShineWing" or "audit institution") is filed for investigation by the CSRC, according to the relevant provisions of item (III) of paragraph 1, Article 22 of the provisions on the implementation procedures of administrative license of China Securities Regulatory Commission, The CSRC suspended the examination of the application for administrative license of the project on January 26, 2022.
In accordance with the provisions on administrative licensing implementation procedures of China Securities Regulatory Commission and other relevant provisions, ShineWing has assigned independent reviewers to perform the necessary review procedures for relevant reports and materials, It also issued the review report on the audit report and reference review report related to Beijing Jingcheng Machinery Electric Company Limited(600860) purchasing assets from non-public development banks and paying cash to specific objects (hereinafter referred to as the "review report").
According to the requirements of the CSRC and the provisions of relevant laws, regulations and normative documents, China Securities Co.Ltd(601066) securities has verified the relevant matters of the review report issued by ShineWing, and the verification opinions are as follows:
1、 Basic information of audit institutions being filed for investigation
On January 18, 2022, ShineWing received the notice of filing a case (Zheng Jian Li Jian Zi No. 03720220002) issued by the China Securities Regulatory Commission. ShineWing was placed on file for investigation due to suspected violations of laws and regulations in its annual report audit business. As the quality control review partner (independent review partner) of the above filed investigation project, Mr. Ma Chuanjun, a certified public accountant, is not a member of the project team and works independently of the project team according to the internal system of ShineWing quality control review, In the process of project implementation, the company implemented project quality control review and risk monitoring, and did not participate in the specific audit of the above-mentioned filed investigation projects.
2、 Basic information of audit institution review
(I) review personnel
The reviewers of this review mainly include Mr. Li Wencai, partner of quality control review, Ms. Wang Xin, partner in charge of the project, and Ms. Qu Shuangqing, manager in charge of the project.
Mr. Li Wencai, partner of this quality control review, professional qualification: Hong Kong certified public accountant; Working experience: since 1996, he has been engaged in the business of certified public accountants and provided securities services such as annual report audit and major asset restructuring audit for many listed companies. He has the corresponding professional competence. In the past three years, he has signed or reviewed more than 10 audit reports of listed companies.
(II) contents of this review
1. Audit / review report comments;
2. Audit working papers involved in the review;
3. The quality control review partners focus on the accuracy of revenue recognition and the integrity of cost collection, the valuation, allocation and existence of assets, and the integrity of liabilities;
4. Reply to the feedback issued by the regulatory authority and relevant working papers.
3、 Key points of audit institution review
(I) the compliance of the project leader with the requirements of professional ethics and audit independence of the members of the project team
After review, the members of the project team all followed the requirements of professional ethics in the process of project implementation and met the requirements of audit independence.
(II) project leader's appointment of project undertaking and maintenance personnel
After review, the person in charge of the project appoints the personnel who have implemented the quality management system of the Institute to undertake and maintain the project, and the independent reviewers are appointed by the quality management team.
(III) the project leader shall guide, supervise and implement the audit business in accordance with the standards and the provisions of the internal quality management system and process. The audit procedures implemented by the project team comply with the provisions of the auditing standards for Chinese certified public accountants, and the audit evidence obtained is sufficient and appropriate, and the audit opinion is appropriate. The important areas of this review are as follows:
1. Importance level and key audit areas
The reviewers of the Institute reviewed the audit importance level and key audit areas determined by the audit project team for Beiyang Tianqing company: (1) the project team has formulated the overall importance level of the financial statements in the audit strategy formulated for Beiyang Tianqing company in accordance with the audit standards and the requirements of the audit business system specifications of the Institute; (2) The project team has implemented the risk assessment procedures for Beiyang Tianqing in accordance with the requirements of the audit standards and the audit business system specifications of the Institute, determined the key audit areas accordingly, formulated the corresponding audit plan and revised and cut the audit procedures when preparing the audit strategy.
After review, the overall importance level indicators of the financial statements of Beiyang Tianqing company determined by the project team are appropriate, and the key audit areas are consistent with the actual situation of the company.
2. Operating income and accounts receivable
Important audit procedures implemented by the project team: (1) understand and evaluate the effectiveness of the internal control system design related to revenue recognition of Beiyang Tianqing company, and test its implementation; (2) Interview the management of Beiyang Tianqing company to understand the company's revenue recognition, collection accounting period, credit limit and other policies according to industry, sales model, customers and other dimensions; (3) Inquire the industrial and commercial data of major customers through open channels, and compare the consistency between the industry of customers and the product application industry of Beiyang Tianqing company; (4) By obtaining relevant business contracts signed between Beiyang Tianqing company and major customers (including overseas business), check its important terms, such as contract price, corresponding products, delivery requirements and settlement conditions; Check the collection voucher records and the acceptance documents confirmed by the customer. For the overseas business income, obtain the export declaration form and check the date of the declaration form, so as to check whether the income recognition meets the requirements of the accounting standards for business enterprises and the accounting policies for business enterprises; (5) Beiyang Tianqing implemented the letter confirmation procedure for the income amount of major customers (including overseas business) and the balance of accounts receivable at the end of the reporting period, and the letter confirmation coverage rate reached more than 90%; (6) Interview some customers of Beiyang Tianqing company during the reporting period.
After review, the operating income and accounts receivable can be confirmed through audit.
3. Inventories, operating costs and accounts payable
Important audit procedures implemented by the project team: (1) understand the internal control related to production and storage of Beiyang Tianqing company, and evaluate the rationality of the design of internal control system and the effectiveness of implementation; (2) Check the total cost of the project: understand the main cost composition of the project of Beiyang Tianqing company and the daily cost management and accounting process.
Review the cost accounting processes by viewing the accounting data of the total cost of the projects mainly implemented by Beiyang Tianqing company during the reporting period; (3) Implement analytical procedures: analyze the gross profit margin of a single project, discuss with the management for projects with abnormal gross profit margin, and verify the rationality of excessive / low gross profit margin; (4) Spot check the accounting vouchers and original documents for the actual cost of the project, and spot check the original documents such as purchase contracts, purchase warehousing documents and purchase invoices of the main project cost. The relevant documents are true and complete, and the data and information are consistent with the accounting records; (5) By obtaining the relevant technical agreements in the final signed contracts of major engineering projects and cross comparing with the procurement of important materials in the actual costs of Beiyang Tianqing company, no significant differences were found; (6) Understand the salary structure of Beiyang Tianqing company, obtain the working hour statistics table and cost sharing table, review whether the distribution of indirect expenses such as manufacturing expenses is reasonable, and review whether the cost sharing table is consistent with the book records; (7) Check the unfinished projects at the end of the period on the spot, and confirm the rationality and integrity of project cost collection according to the arrival of equipment, installation and commissioning progress, etc; (8) The confirmation procedures have been implemented for the contract amount, ending accounts payable balance and ending prepayment balance of major suppliers of Beiyang Tianqing company during the reporting period, and the reply coverage rate can reach more than 60%.
After review, the audit of inventories, operating costs and accounts payable can be confirmed.
4. Feedback reply
Our reviewers reviewed the reply report of the audit project team to the feedback issued by the regulatory authority. After review, the reply to the feedback issued by the regulatory authority is accurate and complete, and is supported by sufficient and reasonable audit evidence.
(IV) review process of project quality management
After review, Beijing Jingcheng Machinery Electric Company Limited(600860) has implemented the quality management review process of independent review partners for the non-public offering of shares to specific objects and the payment of cash to purchase assets. The special meeting has been applied for according to the internal core system of the Institute, the opinions of the special meeting have been implemented and fed back to the independent reviewers, and there are no differences. Before the audit report date, the project quality control review and approval procedures have been completed according to the internal report issuance process.
4、 Audit institution review process
1. The review partner of project quality control shall determine the key review items on the basis of strict review of the following items:
(1) The risks of material misstatement identified in the audit process and the countermeasures taken;
(2) Judgments made, especially on importance and special risks;
(3) The importance and treatment of corrected and uncorrected misstatements identified in the audit process; (4) Other matters requiring special attention.
2. The review partner of project quality control strictly reviewed the key review items and formed the review conclusion.
5、 Audit conclusion
According to the review report issued by ShineWing, ShineWing has complied with the requirements of quality control standard No. 5101 - quality control of accounting firms on the audit and review of financial statements, other assurance and related services, as well as ShineWing's quality control policies and procedures, The audit / review of Beijing Jingcheng Machinery Electric Company Limited(600860) non-public offering of shares to specific objects and payment of cash to purchase assets and the audit report / review report issued have been reviewed.
After review, the project quality control partner confirmed that:
"(I) the audit evidence obtained by the project team is sufficient and appropriate, which provides a basis for issuing audit / review opinions.
(II) the signatory and the members of the project team have maintained their independence and met the qualification conditions of the relevant public interest entities of the exchange. The signed CPA has a good practice record and has not been punished by industry associations and relevant administrative departments.
(III) the audit opinion is appropriate.
(IV) there are no false records, misleading statements or major omissions in the documents prepared and issued by the exchange for this purpose. "
6、 Verification opinions of independent financial advisor
After verification, China Securities Co.Ltd(601066) Securities believes that ShineWing has performed the review procedures for the relevant audit documents issued in the project and issued the review report, confirming that the audit evidence obtained by ShineWing is sufficient and appropriate, which provides a basis for issuing audit / review opinions; ShineWing certified public accountants and members of the project team have maintained their independence, and the signed certified public accountants have a good practice record and have not been punished by industry associations and relevant administrative departments; The audit opinion issued by ShineWing is appropriate; There are no false records, misleading statements or major omissions in the documents produced and issued by ShineWing for the project. The relevant matters of ShineWing filed for investigation by the CSRC will not affect its qualification to engage in the audit of securities and futures business, and will not have a substantive impact on the effectiveness of the relevant audit documents issued by ShineWing in this project.
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Project sponsor:
He Chengda, Hou Shun
China Securities Co.Ltd(601066) mm / DD / yy
