With the example of “Linxia ginseng” of Kangmei pharmaceutical, major accounting firms have become cautious about enterprises with consumable biological assets such as ginseng.
On the evening of March 25, Shandong Sinobioway Biomedicine Co.Ltd(002581) ( Shandong Sinobioway Biomedicine Co.Ltd(002581) , SZ) replied to the letter of concern from the Shenzhen Stock Exchange, saying that due to the particularity of the participation of the wholly-owned subsidiary Jilin Weiming Tianren traditional Chinese Medicine Technology Development Co., Ltd. (hereinafter referred to as Jilin Weiming) in the asset inventory, as well as the risk factors that the company has been issued with qualified audit reports for four consecutive years, no accounting firm has been invited to cooperate with the company’s annual audit.
successively failed to invite more than ten firms
Shandong Sinobioway Biomedicine Co.Ltd(002581) in the reply letter, it is introduced that the main asset of Jilin unnamed is ginseng. Jilin ginseng is a valuable medicinal material, and it is in the frozen soil with snow capped mountains for nearly half a year (November to May of the next year). At this time, ginseng seedlings can not be observed from the surface, nor can they be excavated from the frozen soil, so the audit and inventory work cannot be carried out at this stage. Ginseng seedlings only grow on the ground from June to October every year, which is the most suitable time for stock inventory of ginseng seedlings.
Secondly, ginseng assets can only be counted by seedling checking or digging sampling inspection. The counting method has very high professional requirements. Accounting firms must carry professional equipment in conjunction with professional forestry survey and Research Institute, combined with Ovi software and acgis software, so as to ensure that real and effective audit counting data can be obtained.
In order to hire accounting firms, Shandong Sinobioway Biomedicine Co.Ltd(002581) management has invited more than ten accounting firms and carried out preliminary investigation, business communication, negotiation and commercial due diligence with each accounting firm.
However, in addition to the difficulty in taking inventory of ginseng assets, Shandong Sinobioway Biomedicine Co.Ltd(002581) has been issued with qualified annual audit reports for four consecutive years since 2017. Therefore, the vast majority of invited accounting firms rejected the annual audit invitation of listed companies out of consideration of prudence and risk.
Shandong Sinobioway Biomedicine Co.Ltd(002581) said that on the one hand, the company is still expanding the scope of the invited firms. On the other hand, the company is in-depth communication with the accounting firms that have participated in the on-site audit and inventory of the company’s assets, and expects them to accept the invitation of the company and complete the annual audit of the company.
has been issued with reservations for four consecutive years
The reporter found that the audit reports of Shandong Sinobioway Biomedicine Co.Ltd(002581) 2017-2020 were issued with qualified opinions, and the basis for forming the qualified opinions involved Beijing Kexing Biological Products Co., Ltd. (hereinafter referred to as Beijing Kexing), a joint-stock company of Shandong Sinobioway Biomedicine Co.Ltd(002581) subsidiary.
Shandong Sinobioway Biomedicine Co.Ltd(002581) the board of directors explained in the special explanation on the matters involved in the 2017 qualified opinion audit report that the main shareholders of Beijing Kexing failed to re elect the management on time due to major development problems of the company. On April 17, 2018, abnormal management confusion occurred, and the financial data and financial data were transferred out of the company, When entering the audit, the accountant only obtained the financial statements and some electronic financial data of Beijing Kexing.
Therefore, the accounting firm was unable to obtain sufficient and appropriate audit evidence for the book value of the equity investment and the investment income of Beijing Kexing in 2017 confirmed by Shandong Sinobioway Biomedicine Co.Ltd(002581) and was unable to determine whether it was necessary to adjust these amounts, so it issued a qualified audit report.
In 2018, due to the continuous impact of shareholder contradictions, when the accounting firm entered Beijing Kexing for audit, it only obtained the financial statements and consulted the accounting books of Beijing Kexing. Although we subsequently obtained the 2018 annual audit report of Beijing Kexing, we also failed to obtain sufficient and appropriate audit evidence because we were not allowed to have full access to financial information.
In 2019, Shandong Sinobioway Biomedicine Co.Ltd(002581) continued to be issued with qualified opinion audit report due to not only the influence of Beijing Kexing, but also the illegal occupation of funds by controlling shareholders; The value of debt paying assets of the controlling shareholder; Internal control related to fund management, bill management and related party transactions of subsidiaries; Entrusted development transaction of production technology between subsidiaries and related parties.
In 2020, Shandong Sinobioway Biomedicine Co.Ltd(002581) was also issued with a qualified audit report by the accounting firm due to the influence of Beijing Kexing and the value of the debt paid assets of the controlling shareholder and the legitimacy of the debt paid assets transaction.
