Jiangsu NONGHUA Intelligent Agricultural Technology Co., Ltd
Audit report Tian Zhi Ye Zi [2022] No. 999
catalogue
Audit report 12021 financial statements 72021 notes to financial statements 19
Key audit matters how to deal with them in the audit
Revenue recognition of agricultural machinery sector Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) the operating revenue of the company’s machinery sector in 2021 is for the above revenue matters, the audit procedures we implemented include but not limited to RMB 1.733 billion, accounting for 75.95% of the current operating revenue. Not limited to: the company’s customers include Chinese customers and overseas customers. According to the enterprise 1) understand and test the key accounting standards and company accounting policies related to the revenue recognition of the company’s management, the sales revenue in China is controlled by the goods department, evaluate the rationality of the design of the internal control system and deliver it to the other party, and recognize the revenue after it is signed by the other party; Effectiveness for overseas banks; Sales revenue is recognized in two categories according to the terms of the contract. For the terms of the standard sales contract based on departure 2) inspection, the revenue of the evaluation company is recognized as the CIF settlement, and the revenue is recognized as the goods crossing the ship’s rail; Whether the landing policy meets the requirements of relevant accounting standards; In case of price settlement, it shall be recognized after the goods arrive at the other party and confirmed by the other party. 3) implement substantive analysis procedures, focusing on the revenue of products by category. Sales analysis: compare the sales structure and gross profit changes of the two periods. Due to the relatively large proportion of the company’s machinery revenue in the company’s operating revenue, analyze the rationality of the overall gross profit change in the current period, and compare it with that of the same industry. The occurrence of operating revenue is recognized as the focus of audit, and the gross profit margin of products is analyzed; Whether the sales revenue is included in the appropriate accounting period may have potential problems. 4) for the sales business in China, the misstatement of sales revenue is checked by sampling. Therefore, we regard the revenue recognition of the machinery sector as the key audit matters related to revenue recognition in 2021, such as sales contracts, delivery orders, statements and so on. Certificate;
See “VI. main items of consolidated financial statements” in the notes to the financial statements for details. 5) for overseas sales business, check “(44) operating revenue and operating cost” in the notes to sales by sampling. Sales contract, delivery order, customs declaration, bill of lading and other vouchers related to revenue recognition to check the authenticity of operating revenue;
6) For the revenue transactions recorded before and after the balance sheet date, select samples to check the supporting vouchers for revenue recognition, and evaluate whether the revenue recognition is recorded in the appropriate accounting period;
7) For the new important customers in the current period, check the corresponding audit procedures in the internal control system. For the important transactions of new large customers, judge their business essence in combination with the contract, and focus on checking the corresponding original vouchers to prove the occurrence and identification of income;
8) The industrial and commercial information of new customers and customers with large sales changes and their related parties are checked to assess whether there are unidentified potential related party relationships and transactions.
Key audit matters how to deal with them in the audit
Recognition of equity transfer income
For the above equity transfer, our audit procedures include but are not limited to:
1) Understand and evaluate the effectiveness of the company’s key internal control design and operation related to investment;
2) Obtain the equity transfer agreement, audit report, evaluation report, resolution of the board of directors or the general meeting of shareholders and other materials related to the equity transfer transaction, review the principle and basis of transaction pricing, and identify key terms such as equity transfer payment and equity transfer, Check whether the company has fulfilled the relevant decision-making procedures with an investment income of 414312 million in Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) 2021;
Yuan, of which 248812 million yuan was generated from the disposal of equity. 3) Interview the company’s management and counterparties to understand the situation related to the company’s equity disposal of Mingxin company and the transfer of large amount of equity; Understand the interests of the equity trading party and the company. Due to the authenticity of the equity transfer, the fairness of the transaction price and whether there is an association relationship with its related parties, understanding the accuracy of the income and amount of the equity transfer has a significant impact on the financial statements. Therefore, the background, transaction price and other conditions, judge whether the equity transfer is true, and whether the investment income generated by equity disposal is commercial in 2021 Whether the transaction price is fair;
Key audit matters.
4) Check the collection vouchers and equity transfer hands related to equity transfer. See “(51) investment income” in “VI. continuation of main items of consolidated financial statements, industrial and commercial change registration and other materials in the notes to the financial statements to judge the transfer of control”. To evaluate whether the recognition period of profit and loss on the disposal of long-term equity investment is appropriate; Audit the financial statements of the disposed entity from the beginning of the period to the disposal date, and review whether the amount of investment income is accurate in combination with the valuation of equity transactions and the share of net assets of the disposed entity on the disposal date; Review whether the investment income generated from the disposal of long-term equity investment has been properly presented in the financial statements.
5) Obtain the legal opinions issued by external lawyers on whether there is interest relationship between the two parties to the transaction.
4、 Other information
Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) Management (hereinafter referred to as “management”) is responsible for other information. Other information includes the information covered in Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) 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 assessing Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) ‘s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the assumption of going concern, unless liquidation is planned, operation is terminated or there is no other realistic choice.
The management is responsible for supervising the financial reporting process of Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) .
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 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 Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) 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 cause Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) unable to continue to operate.
(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 the entity or business activities in Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) 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 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 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.
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Chinese certified public accountant
Jian Zhang
Beijing, China (project partner):
March 25, 2002
Chinese certified public accountant: Zhou Yao
