Inner Mongolia Dazhong Mining Co.Ltd(001203) : contents of annual audit report in 2021
Page 1. Audit report 1-6 2. Financial statements 7-19 (I) consolidated balance sheet 7-8 (II) consolidated income statement 9
（3） Consolidated Cash Flow Statement 10 (IV) consolidated statement of changes in owner’s equity 11-12 (V) balance sheet of parent company 13-14 (VI) profit statement of parent company 15 (VII) Cash flow statement of the parent company 16 (VIII) statement of changes in owner’s equity of the parent company 17-18 III. notes to financial statements 19-130
Audit report
Zhonghui kuaishan [2022] No. 0526 Inner Mongolia Dazhong Mining Co.Ltd(001203) all shareholders:
1、 Audit opinion
We have audited the financial statements of Inner Mongolia Dazhong Mining Co.Ltd(001203) (hereinafter referred to as Inner Mongolia Dazhong Mining Co.Ltd(001203) company), including the consolidated and parent company’s balance sheet as of December 31, 2021, the consolidated and parent company’s income statement, consolidated and parent company’s cash flow statement, consolidated and parent company’s statement of changes in owner’s equity and notes to financial statements in 2021.
In our opinion, the attached financial statements are prepared in accordance with the provisions of the accounting standards for business enterprises in all material aspects and fairly reflect the consolidated and parent company’s financial position of Inner Mongolia Dazhong Mining Co.Ltd(001203) company as of December 31, 2021 and the consolidated and parent company’s operating results and cash flow in 2021.
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 Inner Mongolia Dazhong Mining Co.Ltd(001203) 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 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. We determine that the following matters are the key matters that need to be communicated in the audit report
Count items.
The key audit matters identified in our audit are summarized as follows:
（1） Recognition of income
1. Event description
As shown in note V (38) to the consolidated financial statements of Inner Mongolia Dazhong Mining Co.Ltd(001203) company, the operating income of Inner Mongolia Dazhong Mining Co.Ltd(001203) company in 2021 was 48948858 million yuan, which was an important component of Inner Mongolia Dazhong Mining Co.Ltd(001203) company’s consolidated income statement. As operating revenue is one of the key financial indicators of Inner Mongolia Dazhong Mining Co.Ltd(001203) company and there is inherent risk that the management of Inner Mongolia Dazhong Mining Co.Ltd(001203) company (hereinafter referred to as the management) manipulates revenue recognition in order to whitewash the company’s performance, we regard revenue recognition as a key audit item.
2. Audit response
(1) Understand the internal control cycle of sales and collection, evaluate and test the effectiveness of the design and implementation of internal control related to revenue recognition;
(2) According to the category of products sold and the actual development of Inner Mongolia Dazhong Mining Co.Ltd(001203) company, implement analytical review procedures to judge the rationality of changes in sales revenue and gross profit;
(3) Carry out detail test, sample and check sales related contracts, orders, weighing orders, collection records and settlement documents;
(4) Select major customers to carry out letter confirmation and field visit procedures for the sales revenue in the reporting period in combination with accounts receivable; (5) Perform the cut-off test on the operating revenue to confirm whether the revenue recognition of Inner Mongolia Dazhong Mining Co.Ltd(001203) company is recorded in the correct accounting period.
（2） Authenticity and accuracy of cost
1. Event description
As shown in note V (38) to the consolidated financial statements of Inner Mongolia Dazhong Mining Co.Ltd(001203) company, the operating cost of Inner Mongolia Dazhong Mining Co.Ltd(001203) company in 2021 is RMB 2226642800, and the total profit of Inner Mongolia Dazhong Mining Co.Ltd(001203) company in 2021 is RMB 1910706000, mainly from operating income. The operating cost of the company increased year by year during the reporting period. Therefore, we regard the authenticity and accuracy of the cost of Inner Mongolia Dazhong Mining Co.Ltd(001203) company as the key audit matters.
2. Audit response
(1) Understand the internal control cycle related to procurement and production process, evaluate and test the rationality and implementation effectiveness of internal control design related to procurement payment and production process;
(2) Analyze the purchase price and change trend of main raw materials and compare with the market;
(3) Carry out pricing test on main raw materials;
(4) Implement the analytical review procedure for the production cost, compare the proportion of direct materials, direct labor and manufacturing expenses in the production cost in each period, and evaluate the rationality of the fluctuation of materials, labor and expenses; Analyze whether there are abnormal fluctuations in the unit cost of products;
(5) Understand the production process and cost accounting method of Inner Mongolia Dazhong Mining Co.Ltd(001203) and check whether the production cost accounting method matches the production process and whether the previous and subsequent periods are consistent; Check whether the allocation of direct materials, direct labor and manufacturing expenses is correct, whether the accounting of by-products is correct, and whether the cost carry forward matches the income;
(6) Spot check purchase contracts, invoices and warehouse receipts, and implement letter confirmation procedures for major suppliers;
(7) Implement the supervision procedure for the inventory, and check whether the inventory is damaged or scrapped
4、 Other information
Inner Mongolia Dazhong Mining Co.Ltd(001203) the management of the company (hereinafter referred to as the management) is responsible for other information.
Other information includes the information covered in the 2021 annual report, but does not include the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information, and we will not issue any form of assurance conclusion on other information.
In combination with our audit of the financial statements, our responsibility is to read other information and consider whether other information is materially inconsistent with the financial statements or the information we have learned in the audit process, or there seems to be material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement in other information, we should report that fact. In this regard, we have nothing to report.
5、 Responsibilities of management and governance for financial statements
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 evaluating the going concern ability of Inner Mongolia Dazhong Mining Co.Ltd(001203) company, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Inner Mongolia Dazhong Mining Co.Ltd(001203) company, terminate operation or have no other realistic choice.
Inner Mongolia Dazhong Mining Co.Ltd(001203) corporate governance (hereinafter referred to as governance) is responsible for supervising the financial reporting process of Inner Mongolia Dazhong Mining Co.Ltd(001203) company.
6、 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 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.
（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 Inner Mongolia Dazhong Mining Co.Ltd(001203) 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 Inner Mongolia Dazhong Mining Co.Ltd(001203) company to be unable to continue its business.
（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 Inner Mongolia Dazhong Mining Co.Ltd(001203) company to express audit opinions 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 current financial statements, 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.
(no text on this page) Zhonghui Certified Public Accountants (special general partnership) Chinese certified public accountant: Lin Pengfei
(project partner)
Hangzhou, China Certified Public Accountant: Tang Gu
Report date: March 3, 2022
Consolidated balance sheet
December 31, 2021
Huihe form 01-1 prepared by: Inner Mongolia Dazhong Mining Co.Ltd(001203) amount unit: RMB
Project note No. Line No.: December 31, 2021 December 31, 2020
Current assets:
Monetary capital V (I) 16607736366827992100547
Trading financial assets V (II) 237715589606
