Wuhu Conch Profiles And Science Co.Ltd(000619)
audit report
Dhsz [2022] No. 004928
Dahua Certified Public Accountants (special general partnership)
DaHuaCertifiedPublicAccountants（SpecialGeneralPartnership）
Wuhu Conch Profiles And Science Co.Ltd(000619)
Audit report and financial statements
(from January 1, 2021 to December 31, 2021)
Contents page 1. Audit report 1-6 II. Audited financial statements
Consolidated balance sheet 1-2 consolidated income statement 3 consolidated cash flow statement 4 consolidated statement of changes in shareholders' equity 5-6 parent company balance sheet 7-8 parent company income statement 9 parent company cash flow statement 10. Statement of changes in shareholders' equity of the parent company 11-12 notes to financial statements 1-93
Dahua Certified Public Accountants (special general partnership) 12 / F, building 7, No. 16 courtyard, Middle West Fourth Ring Road, Haidian District, Beijing [100039] Tel: 86 (10) 58350011 Fax: 86 (10) 58350006 www.dahua-cpa com. Audit report
Dahuashen Zi [2022] No. 004928 Wuhu Conch Profiles And Science Co.Ltd(000619) all shareholders:
1、 Audit opinion
We have audited the financial statements of Wuhu Conch Profiles And Science Co.Ltd(000619) (hereinafter referred to as Wuhu Conch Profiles And Science Co.Ltd(000619) ), 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 Wuhu Conch Profiles And Science Co.Ltd(000619) the consolidated and parent 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 Wuhu Conch Profiles And Science Co.Ltd(000619) , 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.
Dhsz [2022] No. 004928 audit report
1. Revenue recognition of plastic profile and aluminum profile;
2. Provision for inventory falling price reserves.
（1） Revenue recognition of plastic profile and aluminum profile
1. Event description
Please refer to "note IV / (XXXIII) revenue" and "note VI / Note 37 operating revenue and operating cost" of the financial statements for the accounting policies and book amount of operating revenue related to revenue recognition of Wuhu Conch Profiles And Science Co.Ltd(000619) company in 2021.
Wuhu Conch Profiles And Science Co.Ltd(000619) company is mainly engaged in the production and sales of plastic profiles and aluminum profiles. In 2021, the recognized operating revenue of plastic profiles, aluminum profiles and other products was 3.653 billion yuan, accounting for more than 75% of the revenue, mainly domestic sales revenue.
Wuhu Conch Profiles And Science Co.Ltd(000619) the company has fulfilled the performance obligations in the contract, that is, when the customer obtains the control of relevant goods, the revenue is recognized. According to the sales contract, the goods are delivered to the designated place by the transportation company, and the revenue is recognized by the delivery list, sales invoice and shipping note.
Since Wuhu Conch Profiles And Science Co.Ltd(000619) company lists the operating revenue as the key performance indicator, there is an inherent risk that the management manipulates the time point and amount of revenue recognition in order to achieve specific goals or expectations. Therefore, we recognize the revenue recognition of plastic and aluminum profiles as a key audit event.
2. Audit response
Our important audit procedures for the revenue recognition of plastic and aluminum profiles include:
(1) Understand and evaluate the effectiveness of the design and operation of key internal controls related to revenue recognition.
(2) For the main sales customers in the reporting period, we obtained and randomly checked the relevant sales contracts, sales delivery orders, shipping notes and other original materials, compared them with the actual sales situation according to the terms of the sales contract or order, and checked the corresponding shipping situation.
(3) Select the sales volume of major customers in the reporting period, send a letter for confirmation, and implement the substitution procedure for the customers who have not replied to the letter to confirm the authenticity of the sales revenue.
(4) Select the revenue transactions in the months before and after the reporting period, select samples, and check the delivery order and delivery order
Dhsz [2022] No. 004928 audit report
The waybill and other supporting documents shall conduct a deadline test on the time point of revenue recognition to evaluate whether there is a cross period of revenue.
(5) In combination with the company's sales contract and return policy, check the return during the reporting period to evaluate whether there is a large amount of return after the reporting period.
(6) Assess whether the management's financial statement disclosure of income is appropriate.
Based on the audit work performed, we believe that the accounting treatment made by the management of Wuhu Conch Profiles And Science Co.Ltd(000619) company on the revenue recognition of plastic profile and aluminum profile is reasonable.
（2） Rationality of provision for inventory falling price reserves
1. Event description
Please refer to "note IV / (XV) inventory" and "note VI / Note 8 inventory" of the consolidated financial statements for the accounting policies related to the provision for inventory depreciation and the carrying amount of inventory depreciation reserves of Wuhu Conch Profiles And Science Co.Ltd(000619) company in 2021.
As of December 31, 2021, the book balance of inventories of Wuhu Conch Profiles And Science Co.Ltd(000619) company was RMB 969 million, accounting for 17.17% of the total assets. The main inventories at the end of the period are various profiles and chemical raw materials. Affected by the market environment in the region where the operation is located and the fluctuation of international bulk chemical raw materials, the management believes that there are signs of decline in the price of relevant inventories, and the book value of inventories may be lower than the net realizable value. The inventory falling price reserves shall be withdrawn according to the relevant accounting policies of inventory accounting, whichever is lower between the book cost and net realizable value of inventories. The recognition of the net realizable value of inventories involves significant management judgment, especially in estimating the future inventory selling price, selling expenses and relevant taxes with uncertainty. Therefore, we recognize the provision for inventory falling price reserves as a key audit event. 2. Audit response
Our important audit procedures for the provision of inventory falling price reserves include: (1) understand and evaluate the effectiveness of the design and operation of key internal controls related to the provision of inventory falling price reserves by the management.
(2) Check whether the amount of inventory provision is consistent with the calculation of profit and loss in the current accounting period.
(3) Compare the ending inventory balance with the existing orders and the write off of the two periods before and after the balance sheet date
Dhsz [2022] No. 004928 audit report
The sales volume is compared with the predicted sales volume of the next year to evaluate the possibility of inventory unsalable and falling price.
(4) Evaluate the hypothetical data used by the management in calculating the provision for falling price, such as estimated selling price, selling expenses and relevant taxes, and consider the possibility of errors or management bias. (5) For the inventory on the balance sheet date, the estimated selling price for which new or further evidence is provided after the acquisition period, taking into account its impact on the net realizable value.
(6) Assess whether the management's financial statement disclosure of inventory falling price reserves is appropriate.
Based on the audit work performed, we believe that the relevant judgments and estimates of the management of Wuhu Conch Profiles And Science Co.Ltd(000619) company on the provision for inventory falling price reserves are reasonable.
4、 Other information
Wuhu Conch Profiles And Science Co.Ltd(000619) management is responsible for other information. Other information includes the information covered in the 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 understand 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
Wuhu Conch Profiles And Science Co.Ltd(000619) 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, Wuhu Conch Profiles And Science Co.Ltd(000619) the management is responsible for assessing Wuhu Conch Profiles And Science Co.Ltd(000619) 's ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the assumption of going concern, unless the management plans to liquidate Wuhu Conch Profiles And Science Co.Ltd(000619) , terminate the operation or has no other realistic choice. The management is responsible for supervising the financial reporting process of Wuhu Conch Profiles And Science Co.Ltd(000619) .
Dhsz [2022] No. 004928 audit report
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 to design appropriate audit procedures.
3. Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
4. Draw a conclusion on the appropriateness of the going concern assumption used by the management. 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 Wuhu Conch Profiles And Science Co.Ltd(000619) going concern ability. If we conclude that there are significant uncertainties, the auditing standards require us to draw the attention of report 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, the future
