Jiangsu Azure Corporation(002245)
2021 annual audit report
catalogue
1、 Audit report Page 1-7 II. Financial statements Page 8-15
(I) consolidated balance sheet Page 8
(II) balance sheet of the parent company Page 9
(III) consolidated income statement Page 10
(IV) profit statement of the parent company Page 11
(V) consolidated cash flow statement Page 12
(VI) cash flow statement of the parent company Page 13
(VII) consolidated statement of changes in owner's equity Page 14
(VIII) statement of changes in owner's equity of the parent company Page 15 III. notes to financial statements Page 16-104
Audit report
TJS [2022] No. 6-67
Jiangsu Azure Corporation(002245) all shareholders:
1、 Audit opinion
We have audited the financial statements of Jiangsu Azure Corporation(002245) (hereinafter referred to as Jiangsu Azure Corporation(002245) 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 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 parent company's financial position of Jiangsu Azure Corporation(002245) company as of December 31, 2021, as well as 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 Jiangsu Azure Corporation(002245) 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.
（1） Recognition of income
1. Event description
See notes III (XXV), V (II) 1 and XIII (I) 2 to the financial statements for relevant information disclosure.
Jiangsu Azure Corporation(002245) company's operating revenue mainly comes from the sales of metal materials, LED chips and lithium batteries. In 2021, Jiangsu Azure Corporation(002245) company's operating revenue was 66804921 million yuan, of which the operating revenue of metal material sales business was 27142196 million yuan, accounting for 40.63% of the operating revenue; The operating revenue of LED chip sales business is 1282875100 yuan, accounting for 19.20% of the operating revenue; The operating revenue of lithium battery sales business was 26735942 million yuan, accounting for 40.02% of the operating revenue Jiangsu Azure Corporation(002245) company sells metal materials, LED chips, lithium batteries and other products, which belongs to the performance obligation at a certain point in time. Domestic sales revenue is recognized when the company delivers the products to the delivery place agreed in the contract, the customer confirms the acceptance and reconciliation is completed, the price has been received or the right to receive payment has been obtained, and the relevant economic benefits are likely to flow in. Export revenue is recognized when the company has declared the products according to the contract, received the payment for goods or obtained the collection power, and the relevant economic benefits are likely to flow in.
Since operating revenue is one of the key performance indicators of Jiangsu Azure Corporation(002245) company, there may be inherent risks that the management of Jiangsu Azure Corporation(002245) company (hereinafter referred to as the management) may achieve specific goals or expectations through inappropriate revenue recognition. Therefore, we identified revenue recognition as a key audit matter.
2. Audit response
For revenue recognition, our audit procedures mainly include:
(1) Understand the key internal controls related to revenue recognition, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of relevant internal controls;
(2) Check the sales contract, understand the main contract terms or conditions, and evaluate whether the revenue recognition method is appropriate; (3) Implement analysis procedures for operating revenue and gross profit margin on a monthly basis, products, customers, etc., identify whether there are significant or abnormal fluctuations, and find out the causes of fluctuations;
(4) For domestic sales revenue, check the supporting documents related to revenue recognition by sampling, including sales order, sales invoice, delivery document, customer sign in document and reconciliation document; For export revenue, obtain E-port Information and check with book records, and check sales contracts, export declaration forms, sales invoices and other supporting documents by sampling;
(5) Combined with accounts receivable correspondence, implement correspondence and interview procedures to major customers in the form of sampling to confirm the balance of accounts receivable and the amount of sales revenue;
(6) Conduct a cut-off test on the operating income recognized before and after the balance sheet date to evaluate whether the operating income is recognized in an appropriate period;
(7) Check whether the information related to operating income has been properly presented in the financial statements.
（2） Impairment of goodwill
1. Event description
See note III (XIX) and note V (I) 18 of the financial statements for relevant information disclosure.
As of December 31, 2021, the original book value of the goodwill of Jiangsu Azure Corporation(002245) company was RMB 597383800, the impairment provision was RMB 0, and the book value was RMB 597383800.
When there are signs of impairment in the asset group or combination of asset groups related to goodwill, and at the end of each year, the management shall conduct impairment test on goodwill. The management shall conduct impairment test on goodwill in combination with its related asset group or asset group combination, and the recoverable amount of relevant asset group or asset group combination shall be calculated and determined according to the present value of estimated future cash flow. The key assumptions used in the impairment test include: income growth rate in the detailed forecast period, growth rate in the sustainable forecast period, gross profit margin, discount rate, etc.
As the amount of goodwill is significant and the goodwill impairment test involves significant management judgment, we determine the impairment of goodwill as a key audit event.
2. Audit response
For goodwill impairment, our audit procedures mainly include:
(1) Understand the key internal controls related to goodwill impairment, evaluate the design of these controls, determine whether they are implemented, and test the operational effectiveness of relevant internal controls;
(2) Review the management's forecast of the present value of future cash flow and actual operating results in previous years, and evaluate the accuracy of the management's past forecast;
(3) Evaluate the rationality and consistency of the methods used by the management in the impairment test;
(4) Evaluate the rationality of the key assumptions adopted by the management in the impairment test, and review whether the relevant assumptions are consistent with the overall economic environment, industry conditions, business conditions, historical experience, operation plan, approved budget, meeting minutes, other assumptions related to the financial statements used by the management;
(5) Test the accuracy, completeness and relevance of the data used by the management in the impairment test, and review the internal consistency of relevant information in the impairment test;
(6) Test whether the management's calculation of the present value of the estimated future cash flow is accurate;
(7) Check whether the information related to goodwill impairment has been properly presented in the financial statements.
（3） Net realizable value of inventories
1. Event description
See note III (XI) and note V (I) 8 of the financial statements for relevant information disclosure.
As of December 31, 2021, the book balance of inventory of Jiangsu Azure Corporation(002245) company was 1565954900 yuan, the provision for falling price was 32647900 yuan, and the book value was 1533307000 yuan. On the balance sheet date, inventories are measured at the lower of cost and net realizable value, and inventory falling price reserves are withdrawn according to the difference between inventory category cost and net realizable value. On the basis of considering the purpose of holding inventory, the management determines the estimated selling price according to the historical selling price, actual selling price, contract selling price, market selling price of the same or similar products, future market trend, etc., and determines the net realizable value of inventory according to the estimated selling price minus the estimated cost to be incurred at the time of completion, estimated selling expenses and relevant taxes.
Since the amount of inventory is significant and the determination of net realizable value of inventory involves significant management judgment, we determine the net realizable value of inventory as a key audit event.
2. Audit response
For the net realizable value of inventories, our audit procedures mainly include:
(1) Understand the key internal controls related to the net realizable value of inventory, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of relevant internal controls;
(2) Review the management's forecast of net realizable value of inventories and actual operating results in previous years, and evaluate the accuracy of the management's previous forecasts;
(3) Review the management's forecast of the estimated selling price of inventory by sampling, and compare the estimated selling price with historical data, future situation, market information, etc;
(4) Evaluate the rationality of the management's estimation of the costs, selling expenses and relevant taxes to be incurred from the completion of the inventory;
(5) Test whether the management's calculation of the net realizable value of inventory is accurate;
(6) Combined with inventory supervision, check whether there are long stock age, old model, decline in output, fluctuation of production cost or selling price, changes in technology or market demand in the ending inventory, and evaluate whether the management has reasonably estimated the net realizable value;
(7) Check whether the information related to the net realizable value of inventories has been properly presented in the financial statements.
4、 Other information
The management is responsible for other information. Other information includes the information covered in the 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 sustainable operation ability of Jiangsu Azure Corporation(002245) company, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless liquidation is planned, operation is terminated or there is no other realistic choice.
Jiangsu Azure Corporation(002245) corporate governance (hereinafter referred to as governance) is responsible for supervising the financial reporting process of Jiangsu Azure Corporation(002245) 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 Jiangsu Azure Corporation(002245) 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 Jiangsu Azure Corporation(002245) 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 Jiangsu Azure Corporation(002245) company to express an audit opinion on the financial statements. We are fully responsible for the audit, guidance and implementation of the audit opinions of the group.
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 it is reasonably expected
