Tianma Microelectronics Co.Ltd(000050)
audit report
Dhsz [2022] 003795
Dahua Certified Public Accountants (special general partnership)
DaHuaCertifiedPublicAccountants（SpecialGeneralPartnership）
Tianma Microelectronics Co.Ltd(000050)
Audit report and financial statements
(from January 1, 2021 to December 31, 2021)
Contents page I. audit report 1-8 II. Audited financial statements
Consolidated balance sheet 1-2 consolidated income statement 3 consolidated cash flow statement 4 consolidated statement of changes in shareholders' equity 5-6 parent company balance sheet 7-8 parent company income statement 9 cash flow statement of parent company 10 statement of changes in shareholders' equity of parent company 11-12 notes to financial statements 1-98
Dahua Certified Public Accountants (special general partnership) 12 / F, building 7, yard 16, Middle West Fourth Ring Road, Haidian District, Beijing [100039] Tel: 86 (10) 58350011 Fax: 86 (10) 58350006 www.dahua-cpa. com. Audit report
Dahuashen Zi [2022] 003795 Tianma Microelectronics Co.Ltd(000050) all shareholders:
1、 Audit opinion
We have audited the financial statements of Tianma Microelectronics Co.Ltd(000050) (hereinafter referred to as shentianma), 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 shareholders' equity and notes to relevant financial statements in 2021.
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 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 shentianma 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 confirm that the following matters are the key audit matters that need to be communicated in the audit report.
1. Provision for bad debts of accounts receivable
2. Impairment of goodwill
3. Measurement of capitalized expenses of important projects under construction
（1） Bad debt provision for accounts receivable
See note IV (IX), note IV (XXXI) and note II of note VI for relevant information disclosure.
1. Item description
As of December 31, 2021, the balance of accounts receivable of shentianma was 745561290899 yuan, the amount of bad debt reserves was 7493 Guangdong Fuxin Technology Co.Ltd(688662) 2 yuan, and the proportion of accounts receivable in total assets was 8.34%. The management divides the accounts receivable into several combinations according to the characteristics of credit risk. On the basis of the combination, with reference to the experience of historical credit loss, combined with the current situation and the prediction of forward-looking information, the management calculates the expected credit loss through default risk exposure and expected credit loss rate, and recognizes the bad debt provision. The balance of the above accounts receivable is significant, and the provision for bad debts involves significant accounting estimates and judgments, especially the estimation of expected credit loss rate. Therefore, we identify the provision for bad debts of accounts receivable as a key audit event.
2. Audit response
For the provision for expected credit loss of accounts receivable, our main audit procedures include:
(1) Understand, evaluate and test the company's internal control related to the division of accounts receivable portfolio and the estimation of expected credit loss.
(2) For accounts receivable withdrawn individually, review the basis of the management's evaluation of credit risk and expected credit loss amount, including the management's evaluation of credit risk in combination with customer background, business status, market environment, historical repayment, default records, etc.
(3) For the accounts receivable withdrawn according to the combination, review whether the classification standard of the management for the combination of credit risk characteristics is appropriate, and sample and review the key information such as account period days, historical repayment, default records and overdue aging of each combination. At the same time, based on the combination of credit risk characteristics, review the basis of the management's evaluation of credit risk and the amount of expected credit loss, including the management's evaluation of credit risk in combination with customer background, business status, market environment, historical repayment, default records, etc.
(4) Recalculate the bad debt provision of accounts receivable of the management.
(5) Assess whether the accounting treatment and disclosure of bad debt provision for accounts receivable by the management as of December 31, 2021 are accurate.
Based on the audit work performed, we believe that the relevant judgments and estimates made by the management on the provision for bad debts of accounts receivable using the expected credit loss method are appropriate.
（2） Goodwill impairment
For details, please refer to note XX (XXXI) and note IV (XVI) of financial statements and related information disclosure.
1. Item description
As of December 31, 2021, the original book value of shentianma's goodwill was 3469 Huasu Holdings Co.Ltd(000509) 4 yuan and the provision for goodwill impairment was 7802098582 yuan. As the results of goodwill impairment test largely depend on the estimates and assumptions made by the management, the management involves significant judgment in predicting the future income, long-term income growth rate, gross profit margin and discount rate of relevant asset groups. Therefore, we recognize goodwill impairment as a key audit matter.
2. Audit response
For goodwill impairment, our main audit procedures include:
(1) Understand, evaluate and test the internal control related to goodwill impairment test.
(2) Review the recognition of the asset group and the allocation method of goodwill by the management; Discuss with the management the rationality of the methods, key assumptions and parameters used in the goodwill impairment test.
(3) Discuss the rationality of the methods, key assumptions and parameters used in the goodwill impairment test with the experts hired by the management.
(4) Evaluate the competence, professional quality and objectivity of experts employed by the management. (5) Assess whether the management's disclosure of goodwill and its impairment estimation results and financial statements on December 31, 2021 is appropriate.
Based on the audit procedures implemented, we believe that the assumptions and methods adopted by the management in the goodwill impairment test are acceptable and the relevant judgment and estimation of goodwill impairment are reasonable. （3） Measurement of capitalized expenses of important projects under construction
See note 4 (XV) and note 13 of note 6 to the financial statements for relevant information disclosure.
1. Item description
As of December 31, 2021, the ending balance of important projects under construction of shentianma is Shenzhen Sunway Communication Co.Ltd(300136) 2041724 yuan. The amount of new construction and installation costs and other necessary expenditures meeting the capitalization conditions in this year to make the projects under construction reach the expected usable state is 522437677957 yuan, Including the capitalization amount of 39935421108 yuan of borrowing costs eligible for capitalization this year. Since the amount of capitalized expenses of important construction in progress projects is significant, and assessing whether they meet the capitalization conditions specified in the accounting standards for business enterprises involves significant management judgment, we identify the measurement of capitalized expenses of important construction in progress projects as key audit matters.
2. Audit response
For the measurement of capitalized expenses of important projects under construction, our main audit procedures include:
(1) Understand and evaluate the design and operation effectiveness of key internal controls related to the measurement of capitalized expenses of construction in progress.
(2) Carry out sampling inspection on the newly capitalized expenses of construction in progress this year to judge whether the above capitalized expenses meet the capitalization conditions.
(3) On the basis of sampling, by checking the capitalized expenses with relevant supporting documents, check the capitalized expenses incurred in the reporting period and evaluate whether the capitalized expenses meet the relevant conditions of capitalization. Based on the understanding of the completion schedule of the project, we evaluate the rationality of the starting and stopping capitalization time points adopted by the management in calculating the capitalized borrowing costs, and recalculate the borrowing interest expenses that meet the capitalization conditions in the current period according to the relevant provisions of the loan contract.
(4) Inspect the on-site construction of the project under construction to understand whether the image progress of the project under construction is consistent with the book.
Based on the audit work performed, we believe that the measurement of capitalized expenses of important projects under construction by the management meets the relevant requirements of the accounting standards for business enterprises.
4、 Other information
The management of shentianma is responsible for other information. Other information includes the information covered in shentianma's 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 of shentianma is responsible for preparing the financial statements in accordance with 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 of shentianma is responsible for evaluating the sustainable operation ability of shentianma, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless the management plans to liquidate shentianma, terminate operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of shentianma.
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. Pipe alignment
