Rianlon Corporation(300596) : tszz [2022] No. 5789 audit report of Jinzhou Kangtai 21 annual financial statements audit report of Jinzhou Kangtai lubricating oil additives Co., Ltd. tszz [2022] No. 5789
catalogue
Audit report 1 financial statements from January 1, 2020 to December 31, 2021 6
Note 18 to financial statements from January 1, 2020 to December 31, 2021
audit report
Tianshiye Zi [2022] No. 5789 all shareholders of Jinzhou Kangtai Lubricating Oil Additive Co., Ltd.:
1、 Audit opinion
We have audited the financial statements of Jinzhou Kangtai lubricating oil additives Co., Ltd. (hereinafter referred to as "Kangtai"), including the consolidated and parent company's balance sheets as of December 31, 2021 and 2020, the consolidated and parent company's income statements, consolidated and parent company's cash flow statements for 2021 and 2020 Consolidated and parent company's statement of changes in shareholders' equity and notes to 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 parent company's financial position of Kangtai shares as of December 31, 2021 and 2020, as well as the consolidated and parent company's operating results and cash flow in 2021 and 2020.
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 Kangtai shares 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 current financial statements 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.
Audit report (Continued)
Tian Zhi Ye Zi [2022] No. 5789
Key audit matters how to deal with them in the audit
(I) recognition of operating income
Kangtai Co., Ltd. is mainly engaged in the R & D and production of lubricating oil additives. For the above business income matters, we have implemented audit production, sales and services. The business closing procedures in 2020 and 2021 include but are not limited to:
The income was 445 million yuan and 526 million yuan respectively; 1) Understand and test the occurrence of operating revenue related to the revenue recognition of the company's management, identify that it is the focus of the audit, and the key internal control of products, and evaluate whether the reasonable sales revenue designed by the internal control system is included in the appropriate accounting period, which may have potential and the effectiveness of implementation;
At the same time, the main business income is the key industry of Kangtai Co., Ltd. 2) check the terms of the standard sales contract to evaluate one of the company's performance indicators. The impact of income recognition on the financial statements is more important, and whether the recognition policy meets the requirements of relevant accounting standards; Therefore, we regard revenue recognition as a key audit matter. Check the company's sales contract, identify the performance obligations, and verify the rationality of the revenue recognition time point in combination with the specific operating revenue policies and data disclosure of the performance, see the performance of financial obligations respectively;
Substantive analysis procedures shall be implemented in notes 3, (35), 6 and (34) of the financial statements, focusing on the description of products by type. Analyze the sales situation, compare the sales structure and gross profit changes in the first two years, analyze the rationality of the overall gross profit changes in the current period, and compare with the gross profit margin of the same industry;
4) For the sales business in China, we conducted a walk through test on the revenue, and checked the sales contract, sales order, delivery note, transportation invoice, acceptance note, bank receipt and other vouchers related to revenue recognition by sampling, To check the authenticity of operating income;
5) For overseas sales business, the sales contract, delivery note, customs declaration, bill of lading and other vouchers related to revenue recognition are checked by sampling, and the direct export and E-port Information are compared and analyzed, To check the authenticity of operating income; 6) For the revenue transactions recorded before and after the balance sheet date, select samples to check the supporting vouchers for revenue recognition, and evaluate whether the revenue recognition is recorded in the appropriate accounting period;
7) Carry out letter confirmation procedures for important customers, including sales amount, current balance, etc. visit or video interview with major customers to understand their cooperation mode with Kangtai Co., Ltd, Evaluate the authenticity of business income.
Audit report (Continued)
Tian Zhi Ye Zi [2022] No. 5789 IV. responsibilities of management and governance for financial statements
The management of Kangtai Co., Ltd. (hereinafter referred to as the management) is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises 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.
When preparing the financial statements, the management is responsible for assessing the sustainable operation ability of Kangtai shares, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless it plans to liquidate, terminate operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Kangtai Co., Ltd.
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 the audit performed in accordance with the audit standards will 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. Since fraud may involve collusion, forgery, intentional omission, misrepresentation or override of internal control, the risk of failing to find major misstatement caused by fraud is higher than that caused by error.
(2) Understand the internal control related to audit in order to design appropriate audit procedures, but the purpose is not to express an opinion on the effectiveness of internal control.
(3) Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
(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 Kangtai shares. 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 prevent Kangtai from holding the audit report (Continued)
Tian Zhi Ye Zi [2022] No. 5789 continued operation.
(5) Evaluate the overall presentation, 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 Kangtai shares 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 most important for the audit of financial statements in 2021 and 2020, 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.
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Audit report (Continued)
Tzzz [2022] No. 5789 [no text on this page]
Chinese certified public accountant
Beijing, China (project partner):
February 25, 2002
Chinese certified public accountant:
Consolidated balance sheet
Prepared by: Jinzhou Kangtai Lubricating Oil Additive Co., Ltd. monetary unit: Yuan
Project December 31, 2021 January 2020
