Harbin Dongan Auto Engine Co.Ltd(600178)
Financial statements of 2021
Audit report
Zhongxinghua Certified Public Accountants (special general partnership)
ZHONGXINGHUA CERTIFIED PUBLIC ACCOUNTANTS LLP
Address: 20th floor, sohob tower, Lize, No. 20 Lize Road, Fengtai District, Beijing zip code: 100073 Tel: (010) 51423818 Fax: (010) 51423816
catalogue
1、 Audit report 1-5
2、 Audit report attached
1. Consolidated and parent company balance sheet 1-4
2. Consolidated and parent company income statement 5-6
3. Consolidated and parent company cash flow statement 7-8
4. Consolidated statement of changes in shareholders’ equity 9-10 5 Statement of changes in shareholders’ equity of the parent company 11-12 6 Notes to financial statements 1-122 III. annexes to the audit report
1. Copy of business license of zhongxinghua Certified Public Accountants (special general partnership)
2. Copy of practicing certificate of Xinghua general accounting firm
3. Copy of securities and futures related business license of zhongxinghua Certified Public Accountants (special general partnership)
4. Copy of certified public accountant’s practice certificate
No. 20, F, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, l, Fengtai District, Beijing PR China Tel (t e l): 0 1 0 – 5 1 4 2 3 8 1 8 fax (f a x): 0 1 0 – 5 1 4 2 3 8 1 6 Audit Report
Zths Zi (2022) No. 010838
Harbin Dongan Auto Engine Co.Ltd(600178) all shareholders:
1、 Audit opinion
We have audited the financial statements of Harbin Dongan Auto Engine Co.Ltd(600178) (hereinafter referred to as Harbin Dongan Auto Engine Co.Ltd(600178) ), 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 relevant 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 financial position of Harbin Dongan Auto Engine Co.Ltd(600178) the consolidated and parent company as of December 31, 2021 and the operating results and cash flow of the consolidated and parent company 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 Harbin Dongan Auto Engine Co.Ltd(600178) , 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.
The key audit matters identified in our audit are summarized as follows:
(I) income
Zhongxinghua Certified Public Accountants (special general partnership)
For income accounting policies, please refer to note IV (XXIII), and for income disclosure, please refer to note VI (XXXVI).
In 2021, Harbin Dongan Auto Engine Co.Ltd(600178) financial statements recognized revenue of 658555822813 yuan.
Harbin Dongan Auto Engine Co.Ltd(600178) ‘s sales revenue mainly comes from the sales of automobile engines Harbin Dongan Auto Engine Co.Ltd(600178) the principle of revenue recognition is generally to transport the products to the agreed storage place in accordance with the provisions of the contract, and the vehicle factory will receive the invoice notice issued by the customer after it goes online, that is, the control of the products will be transferred to the buyer to recognize the revenue.
As revenue is one of Harbin Dongan Auto Engine Co.Ltd(600178) key performance indicators, we recognize the recognition of sales revenue as a key audit matter, mainly considering the inherent risk that the management manipulates the time point of revenue recognition in order to achieve specific goals or expectations.
2. Audit response
Our audit procedures for revenue recognition mainly include:
(1) Understand and evaluate the design and operation effectiveness of key internal control systems related to revenue recognition;
(2) Select a sample to check the sales contract and make a “five step” analysis of the contract to judge the composition of performance obligations and the time point of control transfer, and then evaluate whether the Harbin Dongan Auto Engine Co.Ltd(600178) sales revenue recognition policy meets the requirements of the accounting standards for business enterprises and whether the revenue recognition time point meets the requirements of the accounting standards for business enterprises;
(3) Select samples of revenue transactions recorded this year, check supporting documents related to revenue, check evidence such as invoice notice and carrier receipt confirmed by customers, and check the authenticity of confirmed revenue;
(4) Implement analysis procedures for revenue and cost, including: analysis of the fluctuation of revenue, cost and gross profit margin in each month of the current period, comparative analysis of main products with the previous period and the impact of related party customers on the change of revenue in the current period, and check the accuracy of revenue confirmation;
(5) Perform a cut-off test on the revenue transactions recorded before and after the balance sheet date, and check the rationality of the relevant time nodes from the issuance of finished products to the receipt of documents signed by customers, so as to evaluate whether the revenue is recognized in an appropriate period.
(II) capitalization of development expenditure
1. Item description
Harbin Dongan Auto Engine Co.Ltd(600178) in 2021, 18056142309 yuan of the development expenditure of 18818448304 yuan incurred in the research and development of engine and transmission was capitalized and included in the “development expenditure” project. As of December 31, 2021, the closing balance of Harbin Dongan Auto Engine Co.Ltd(600178) development expenditure was 30368728226 yuan. Development expenditure can be capitalized only when all the capitalization conditions listed in note IV (XVIII) of the financial statements are met at the same time.
Zhongxinghua Certified Public Accountants (special general partnership)
As determining whether the development expenditure meets all capitalization conditions requires significant accounting judgment and estimation by the management, this matter is important for our audit.
For the disclosure of capitalization of development expenditure, please refer to financial statement IV (XVIII) and note VI (XVII). 2. Audit response
Our audit procedures for the capitalization of development expenditure mainly include:
Understand and evaluate the design and operation effectiveness of key internal control systems related to the capitalization of development expenditure; Assess whether the capitalization conditions of development expenditure adopted by the management meet the requirements of the accounting standards for business enterprises; Understand internal governance and approval processes by asking key managers responsible for research, development and commercialization; Obtain and check the supporting documents related to the progress of R & D project and the business and feasibility reports related to R & D. We also pay attention to the adequacy of the disclosure of capitalization of development expenditure.
4、 Other information
Harbin Dongan Auto Engine Co.Ltd(600178) management is responsible for other information. Other information includes the information covered in Harbin Dongan Auto Engine Co.Ltd(600178) 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 assessing Harbin Dongan Auto Engine Co.Ltd(600178) ‘s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the assumption of going concern, unless liquidation is planned, operation is terminated or there is no other realistic choice.
The management is responsible for supervising the financial reporting process of Harbin Dongan Auto Engine Co.Ltd(600178) .
Zhongxinghua Certified Public Accountants (special general partnership)
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:
(I) 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.
(II) understand the internal control related to audit to design appropriate audit procedures.
(III) evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
(IV) draw a conclusion on the appropriateness of the management’s use of the going concern assumption. 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 Harbin Dongan Auto Engine Co.Ltd(600178) sustainable operation ability. 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 Harbin Dongan Auto Engine Co.Ltd(600178) unable to continue its business.
(V) 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.
(VI) obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Harbin Dongan Auto Engine Co.Ltd(600178) in order to express an audit opinion on the consolidated 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).
Harbin Dongan Auto Engine Co.Ltd(600178)
Notes I to the financial statements of the year
(unless otherwise specified, the monetary unit is RMB)
1、 Basic information of the company (I) overview of the company
Harbin Dongan Auto Engine Co.Ltd(600178) (hereinafter referred to as “the company” or “the company”) is approved by AVIC aviation Zi Zi [1998] No. 526
