Dongjiang Environmental Company Limited(002672)
Audit report
Zhsz (2022) No. 0510002
catalogue
Starting page audit report 1
financial statements
Consolidated balance sheet 1
Consolidated income statement 3
Consolidated cash flow statement 4
Consolidated statement of changes in shareholders’ equity 5
Parent company balance sheet 7
Income statement of parent company 9
Cash flow statement of parent company 10
Statement of changes in shareholders’ equity of the parent company 11
Note 13 to the financial statements
Supplementary information to notes to financial statements 138
Audit report
Zhong Huan Shen Zi (2022) No. 0510002 Dongjiang Environmental Company Limited(002672) all shareholders:
1、 Audit opinion
We have audited the financial statements of Dongjiang Environmental Company Limited(002672) (hereinafter referred to as ” Dongjiang Environmental Company Limited(002672) “), 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 provisions of the accounting standards for business enterprises in all material aspects and fairly reflect the financial position of the consolidated and parent company as of December 31, 2021, and the operating results and cash flows 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 Dongjiang Environmental Company Limited(002672) , 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.
Audit report page 1 of 5
(I) revenue recognition
Key audit matters how to deal with them in the audit
See notes IV, 29 and VI to the financial statements. The audit procedures we performed mainly include:
49. As mentioned above, · we evaluated and tested Dongjiang Environmental Company Limited(002672) about industrial waste resources Dongjiang Environmental Company Limited(002672) the total operating revenue in 2021 is 4015230400 yuan, which is the key internal currency in the sales of people’s chemical products and waste treatment and disposal services, including the control procedure of industrial waste resources. Revenue from sales of chemical products and waste treatment and disposal services · combined with market and industry trends and business expansion, we are RMB 1565155000 and RMB 1712163400 for sales of Dongjiang Environmental Company Limited(002672) industrial waste resource chemical products and waste disposal respectively, because the revenue is one of the key performance indicators for Dongjiang Environmental Company Limited(002672) management and disposal services to implement analytical procedures and evaluate the change of revenue, Therefore, the rationality of the management exists. The inherent risk of operating revenue recognition in order to achieve specific goals or expectations, so we identified it as relevant. We sampled and inspected the sales and key audit matters related to industrial waste recycling products. Supporting documents related to the income of waste treatment and disposal services, including contract orders, transportation documents, signing receipts, invoices, etc; For the income recognized before and after the balance sheet date, check the supporting documents such as the customer’s receipt to assess whether the income is recognized in an appropriate period.
(II) estimation of bad debt provision for accounts receivable
Key audit matters how to deal with them in the audit
Refer to notes IV, 10 and VI, 3 of the financial statements. The audit procedures we performed mainly include:
As stated, · we evaluated and tested Dongjiang Environmental Company Limited(002672) the internal control procedures for the measurement of credit loss of Dongjiang Environmental Company Limited(002672) receivables as of December 31, 2021.
The book balance of accounts receivable is RMB 10593327. We checked the measurement model of expected credit loss and evaluated RMB 10000. The accrued bad debt provision is RMB 365687 million, which is the method of RMB credit risk portfolio division and the key parameter in the model.
Rationality of estimation.
In addition to the receivables with objective evidence indicating impairment, we have sampled and checked the contracts, bookkeeping vouchers, invoices and other supporting accounts for impairment test separately, Dongjiang Environmental Company Limited(002672) according to the records and whether the aging in the detailed statement of accounts receivable is accurate. According to the characteristics of credit risk, the accounts receivable are divided into several combinations, and the expected credit loss is calculated on the basis of the combination. We reviewed the basis for the calculation of expected credit loss, including management loss. The management combines the historical credit loss rate and forward-looking considerations to estimate and calculate the expected credit loss for the duration of the expected credit loss recognized by Dongjiang Environmental Company Limited(002672) the portfolio. It not only uses complex models, but also involves major management judgments and assumptions, so we identify them as key audit matters.
Audit report page 2 of 5
(III) evaluation of goodwill impairment
Key audit matters how to deal with them in the audit
As described in notes VI and 21 to the financial statements, the audit procedures we performed mainly include:
As of December 31, 2021, Dongjiang Environmental Company Limited(002672) Shang · we have paid attention to and reviewed the rationality of Dongjiang Environmental Company Limited(002672) judging the book value of goodwill impairment signs as RMB 1182401800 and the rationality of asset group classification of goodwill.
Yuan· We reviewed the assumptions and key parameters adopted by the management to estimate the recoverable amount of goodwill, Dongjiang Environmental Company Limited(002672) which is used to predict future cash flow. In combination with internal and external information, we reasonably judged and identified the decrease of goodwill. We reviewed the management’s use of the future cash flow discount model. When there are specific signs of impairment, the appropriateness of the group and the rationality of using the discount rate. Timely conduct goodwill impairment test and evaluate its impact. At the same time, regardless of whether there are signs of impairment or not, the management · we reviewed the expertise of the external evaluation institution hired by the management to conduct impairment test on goodwill at least at the end of each year, including competence, independence and objectivity.
Try· We reviewed the evaluation of the book value of goodwill related to the goodwill impairment test in the financial statements, involving a large number of management disclosures. Layer judgment and estimation, especially the judgment and estimation of the expected future cash flow and the discount rate used.
4、 Other information
Dongjiang Environmental Company Limited(002672) management is responsible for other information. Other information includes the information contained in the annual report of Dongjiang Environmental Company Limited(002672) 2021, 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
Dongjiang Environmental Company Limited(002672) the management 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 due to fraud or error. When preparing the financial statements, the management is responsible for evaluating the going concern ability of Dongjiang Environmental Company Limited(002672) and disclosing the matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Dongjiang Environmental Company Limited(002672) , terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Dongjiang Environmental Company Limited(002672) .
Audit report page 3 of 5
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 is significant uncertainty in the matters or circumstances that may lead to major doubts about Dongjiang Environmental Company Limited(002672) going concern 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 result in Dongjiang Environmental Company Limited(002672) inability to continue as a going concern.
(V) evaluate the overall presentation, 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 Dongjiang Environmental Company Limited(002672) to express an opinion on the financial statements. We are responsible for guiding, supervising and executing the group audit. We are fully responsible for the audit opinion.
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. Unless the disclosure of these matters in the audit report is prohibited by laws and regulations, page 4 of 5
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 the matter should not be communicated in the audit report.
Zhongshen Zhonghuan Certified Public Accountants (special general partnership) Chinese certified public accountant:
