Audit report
Hxsz [2022] No. 22000180069 Fspg Hi-Tech Co.Ltd(000973) all shareholders:
1、 Audit opinion
We have audited the financial statements of Fspg Hi-Tech Co.Ltd(000973) (hereinafter referred to as " Fspg Hi-Tech Co.Ltd(000973) "), 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 Fspg Hi-Tech Co.Ltd(000973) financial statements have been prepared in accordance with the accounting standards for business enterprises in all major aspects, and fairly reflect the financial position of Fspg Hi-Tech Co.Ltd(000973) as of December 31, 2021 and the operating results and cash flows of Fspg Hi-Tech Co.Ltd(000973) and the 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 Fspg Hi-Tech Co.Ltd(000973) , 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) revenue recognition
1. Item description
As shown in the accounting policy described in note III (XXVIII) "revenue" and note V (XXXVIII) "operating revenue and operating cost" of the financial statements, the company and its subsidiaries are mainly engaged in plastic products sales, commercial housing sales, logistics services, etc. Due to the differences in revenue recognition time points under different revenue segments and domestic and overseas sales modes, improper determination of the completion time point of performance obligations may lead to significant misstatement of revenue recognition. Moreover, operating income is an important component of the consolidated income statement and one of the key performance indicators, which has a significant impact on the current financial statements. Therefore, we regard the recognition of income as a key audit matter. 2. Audit response
For revenue recognition, our main audit procedures include:
(1) Test the design and implementation of internal control related to revenue cycle to confirm the effectiveness of internal control;
(2) Analyze the changes of product price and gross profit by month, and analyze the changes of product price and gross profit by year;
(3) Check the main contracts of various businesses and interviews with the management, conduct a "five step" analysis of the contracts, judge the composition of performance obligations and the time point of control transfer, and then evaluate whether the company's revenue recognition policies and recognition time point meet the requirements of the new revenue standard;
(4) Check the industrial and commercial registration data of major customers through open channels to confirm whether there is an association relationship between major customers and the company and major related parties;
(5) Confirm the balance of funds and current sales to customers;
(6) Check the contracts, delivery orders, logistics documents, reconciliation records and bank receipts of major transactions, and verify whether the company's revenue recognition is consistent with the disclosed accounting policies;
(7) Perform a cut-off test on operating revenue to confirm whether the revenue is recorded in the correct accounting period. (II) bad debt provision for accounts receivable
1. Event description
The accounting policies described in note III (x) - 6 "impairment of financial assets" of the financial statements and the balance of receivables and bad debt reserves described in note V (III) "accounts receivable", V (IV) "accounts receivable financing" and V (VI) "other receivables".
Based on the expected credit loss of the entire duration of receivables, the company conducts impairment accounting treatment for notes receivable, accounts receivable and accounts receivable financing and confirms the loss provision. The management needs to refer to the experience of historical credit loss and calculate the expected credit loss of notes receivable, accounts receivable and accounts receivable financing in combination with the current situation and the prediction of future economic conditions; For other receivables, the expected credit loss is determined according to historical experience data and forward-looking information. The management needs to measure the impairment loss by using the amount equivalent to the expected credit loss in the next 12 months or the whole duration according to whether the credit risk of other receivables has increased significantly since initial recognition. The above involves the use of significant accounting estimates and judgments by the management, and the provision for bad debts of receivables is important to the financial statements. Therefore, we determine the provision for bad debts of receivables as a key audit event.
2. Audit response
Our main audit procedures for the impairment of receivables are as follows:
(1) Understand the company's credit policy, evaluate and test the design and operation effectiveness of internal control related to accounts receivable management;
(2) Review the judgment and estimation of the management in assessing the recoverability of receivables, and pay attention to whether the management has fully identified the items that have been impaired;
(3) Compare the accounting estimate of the bad debt provision in the previous period with the actual bad debt loss, reversal of bad debt provision and withdrawal of bad debt provision in the current period, so as to evaluate the reliability and historical accuracy of the collectability of receivables of the management;
(4) Analyze the aging of accounts receivable and customer reputation, implement the accounts receivable confirmation procedure and the collection after the inspection period, and evaluate the rationality of the provision for bad debts of accounts receivable;
(5) For receivables subject to separate impairment test, obtain and check the management's prediction of the present value of future cash flow, evaluate the rationality of key assumptions used in the prediction and the accuracy of data, and check with the obtained external evidence;
(6) For accounts receivable with bad debt reserves withdrawn according to the combination of credit risk characteristics, review the rationality of combination division, review whether the historical loss rate and forward-looking adjustment calculated based on the migration rate model are reasonable, and check the accuracy of bad debt reserves withdrawal;
(III) provision for impairment of long-term assets
1. Item description
As shown in the accounting policies described in note III (XXI) "impairment of long-term assets" of the financial statements and note V (IX) "long-term equity investment" and V (XVI) "goodwill". We identified the impairment of long-term equity investment and goodwill as key audit matters, mainly due to the significant estimation and judgment of the management when estimating the recoverable amount of relevant long-term assets.
Our main audit procedures for impairment of long-term equity investment are as follows:
(1) We understand, evaluate and test the design and operation effectiveness of the company's internal control related to long-term equity investment evaluation;
(2) We have obtained and reviewed the data on which the management evaluates whether there are signs of impairment of equity investment, and considered the appropriateness and completeness of the management's evaluation of the signs of impairment;
(3) For the equity investment with signs of impairment, obtain the relevant data of the management on the calculation of the recoverable amount, and check the accuracy of the calculation of the recoverable amount;
(4) Discussed with the management and Governance on the basis and results of the provision for impairment, and checked the presentation and disclosure of information related to asset impairment in the financial statements.
Our main audit procedures for goodwill impairment are as follows:
(1) We understand, evaluate and test the design and operation effectiveness of the company's internal control related to goodwill evaluation;
(2) Evaluate the reliability of the management's prediction process in combination with the growth of income, profit and cash flow of the asset group over the years;
(3) For the discounted cash flow model, we compare the key input values such as income growth rate and sustainable growth rate with the past performance, management budget and forecast, and carefully evaluate the key assumptions and judgments used in preparing the discounted cash flow forecast;
(4) Recalculate the recoverable amount of the asset group related to the goodwill impairment test and compare it with the book value of the asset group including goodwill to judge whether it is necessary to withdraw the provision for goodwill impairment.
(5) Discussed with the management and Governance on the basis and results of the provision for impairment, and checked the presentation and disclosure of information related to goodwill impairment in the financial statements.
4、 Other information
Fspg Hi-Tech Co.Ltd(000973) Management (hereinafter referred to as "management") is responsible for other information. Other information includes the information covered in Fspg Hi-Tech Co.Ltd(000973) 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 evaluating the going concern ability of Fspg Hi-Tech Co.Ltd(000973) and disclosing the matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Fspg Hi-Tech Co.Ltd(000973) , terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Fspg Hi-Tech Co.Ltd(000973) .
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 risk of material misstatement of financial statements due to fraud or error; The audit evidence shall be taken as the basis for the audit, and the audit opinions shall be adequately designed and implemented to deal with these audit risks. 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 Fspg Hi-Tech Co.Ltd(000973) 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 Fspg Hi-Tech Co.Ltd(000973) 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 the entity or business activities in Fspg Hi-Tech Co.Ltd(000973) to express an audit opinion on the 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 on our compliance with the professional ethics requirements related to independence, and communicate with the management on 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 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 we should not communicate the matter in the audit report.
Huaxing certified public accountants: Guo Xiaojun
(special general partnership) (project partner)
Chinese certified public accountant: Ning Yuni
Fuzhou, China March 24, 2002
Consolidated balance sheet
December 31, 2021
Prepared by: Fspg Hi-Tech Co.Ltd(000973) unit: RMB currency: RMB
Closing balance of project notes closing balance of last year
