Guangzhou Tinci Materials Technology Co.Ltd(002709) 2021
audit report
Zhitong Certified Public Accountants (special general partnership)
catalogue
Audit report 1-5
Consolidated and company balance sheet 1-2
Consolidated and corporate income statement 3
Consolidated and company cash flow statement 4
Consolidated and statement of changes in shareholders’ equity 5-6
Notes to financial statements 7-100
Zhitong Certified Public Accountants (special general partnership), 5th floor, set square, No. 22, Jianguomenwai street, Chaoyang District, Beijing, China, 100004
Tel. + 86 1085665588
Fax + 86 1085665120
www.grantthornton. cn.
audit report
Zhi Tong Shen Zi (2022) No. 110a003323 Guangzhou Tinci Materials Technology Co.Ltd(002709) all shareholders:
1、 Audit opinion
We have audited the financial statements of Guangzhou Tinci Materials Technology Co.Ltd(002709) (hereinafter referred to as Guangzhou Tinci Materials Technology Co.Ltd(002709) company), including the consolidated and company’s balance sheet as of December 31, 2021, the consolidated and company’s income statement, consolidated and company’s cash flow statement, consolidated and 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 provisions of the accounting standards for business enterprises in all material aspects and fairly reflect the consolidated and financial position of Guangzhou Tinci Materials Technology Co.Ltd(002709) company as of December 31, 2021 and the consolidated and operating results and cash flow of the 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 Guangzhou Tinci Materials Technology Co.Ltd(002709) 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.
(I) provision for bad debts of accounts receivable
See notes III and 10 and notes V and 3 for relevant information disclosure.
1. Event description
As of December 31, 2021, the book balance of accounts receivable of Guangzhou Tinci Materials Technology Co.Ltd(002709) company was 35443472 million yuan, the bad debt provision was 1588172 million yuan, and the expected credit loss rate was 4.48%.
Guangzhou Tinci Materials Technology Co.Ltd(002709) the management of the company (hereinafter referred to as the management) confirms the bad debt provision based on the expected credit loss of accounts receivable. When determining the expected credit loss rate, it is necessary to use the internal historical credit loss experience and other data, and adjust the historical data in combination with the current situation and forward-looking information. Relevant matters need to be estimated and judged by the management.
As the provision for bad debts involves the accounting estimation and judgment of the management, and the amount of accounts receivable is significant, we regard the provision for bad debts of accounts receivable as a key audit event.
2. Audit response
Our main audit procedures include:
(1) Understand, evaluate and test the design and implementation effectiveness of the management’s internal control related to accounts receivable management;
(2) Evaluated the rationality of the management’s division of accounts receivable portfolio according to the characteristics of credit risk, and rechecked the aging of accounts receivable;
(3) The adequacy of the provision for bad debts of accounts receivable of the management is evaluated in combination with the letter of confirmation and return of accounts receivable and the collection after the period;
(4) Reviewed the calculation process of the management’s expected credit loss rate and recalculated the accuracy of the amount of bad debt provision;
(5) The disclosure related to the provision for bad debts of accounts receivable in the notes to the financial statements was examined.
(II) revenue recognition
See notes III, 25 and V, 37 of the financial statements for relevant information disclosure.
1. Item description
Guangzhou Tinci Materials Technology Co.Ltd(002709) the company’s operating revenue in 2021 was 110908017 million yuan, an increase of 169.26% over the previous period.
As the amount of operating revenue is significant and one of the key performance indicators, there is an inherent risk that the management manipulates revenue recognition in order to achieve specific goals or expectations. Therefore, we regard revenue recognition as a key audit matter.
2. Audit response
Our main audit procedures include:
(1) Understand, evaluate and test the design and implementation effectiveness of the management’s internal control related to revenue recognition;
(2) Obtain the contract signed between the company and the customer, check the key terms of the contract, and evaluate whether the revenue recognition policy complies with the provisions of the accounting standards for business enterprises;
(3) Implement analysis procedures, including gross profit margin analysis and verification analysis of production and sales, financial data and business data;
(4) Select samples, check the contracts, orders, shipping documents and invoices related to the sales, and judge the correctness of the revenue recognized by the company in combination with the collection of accounts receivable after the period;
(5) Implement the letter confirmation procedure to important customers to verify the sales amount and current account balance; (6) A cut-off test is conducted on the operating income recognized before and after the balance sheet date to evaluate whether the operating income is recognized in an appropriate period.
4、 Other information
Guangzhou Tinci Materials Technology Co.Ltd(002709) company management (hereinafter referred to as management) is responsible for other information. Other information includes the information covered in the 2021 annual report of Guangzhou Tinci Materials Technology Co.Ltd(002709) company, 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
Guangzhou Tinci Materials Technology Co.Ltd(002709) the management of the company 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 Guangzhou Tinci Materials Technology Co.Ltd(002709) company, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Guangzhou Tinci Materials Technology Co.Ltd(002709) company, terminate operation or have no other realistic choice.
The management is responsible for supervising the financial reporting process of Guangzhou Tinci Materials Technology Co.Ltd(002709) 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 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 Guangzhou Tinci Materials Technology Co.Ltd(002709) 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 lead to the inability of Guangzhou Tinci Materials Technology Co.Ltd(002709) company 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 Guangzhou Tinci Materials Technology Co.Ltd(002709) company to express an opinion on the financial statements. We are responsible for guiding, supervising and implementing the group audit and
Zhitong Certified Public Accountants (special general partnership), 5th floor, set square, No. 22, Jianguomenwai street, Chaoyang District, Beijing, China, 100004
Tel. + 86 1085665588
Fax + 86 1085665120
www.grantthornton. cn.
Take full responsibility for the 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.
From the matters communicated with the management, we determine which matters are important to the current financial statements
