catalogue
1、 Audit report Page 1-5 II. Financial statements Page 6-13
(I) consolidated balance sheet Page 6
(II) balance sheet of the parent company Page 7
(III) consolidated income statement Page 8
(IV) profit statement of the parent company Page 9
(V) consolidated cash flow statement Page 10
(VI) cash flow statement of the parent company Page 11
(VII) consolidated statement of changes in owner’s equity Page 12
(VIII) statement of changes in owner’s equity of the parent company Page 13 III. notes to financial statements Page 14-115
Audit report
TJS [2022] No. 1768
Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) all shareholders:
1、 Audit opinion
We have audited the financial statements of Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) (hereinafter referred to as Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) ), 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 owner’s equity and notes to relevant financial statements in 2021.
In our opinion, the attached financial statements are prepared in accordance with the accounting standards for business enterprises in all material aspects, and fairly reflect the financial position of Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) the consolidated and parent company as of December 31, 2021, as well as the operating results and cash flow 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 Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) , 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.
（1） Revenue recognition
1. Event description
Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) in 2021, the company achieved a sales revenue of 3384106900 yuan, and its main business includes the design, production, sales and installation of electrostatic precipitator, flue gas desulfurization and out of stock, pneumatic conveying and other environmental protection equipment.
According to the sales contract signed with the customer, the company will confirm whether the sales and installation of environmental protection equipment belong to one-way performance obligations. If the company has issued a certificate to the customer that the goods have been delivered according to the contract, the company will confirm that the right to control the goods has been transferred to the customer at the time of performance of the contract; Installation is a performance obligation to be performed within a certain period of time. The company recognizes revenue according to the performance progress during the whole installation period, and the performance progress is determined according to the proportion of cumulative actual costs in the estimated total costs. As operating revenue is one of the key performance indicators, there may be inherent risks that Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) Management (hereinafter referred to as management) achieves specific goals or expectations through inappropriate revenue recognition. Therefore, we identified revenue recognition as a key audit matter.
2. Audit response
(1) Understand the key internal controls related to revenue recognition, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of relevant internal controls;
(2) Take project samples to check the main terms of the sales contract and evaluate whether the revenue recognition method is appropriate; (3) For equipment sales revenue, check shipping records, customer receiving records and other supporting documents; For equipment installation income, interview the project leader to understand the project implementation progress, go to the project site to check the installation progress and interview the owner or supervisor to test whether the management’s calculation of the performance progress and the income confirmed according to the performance progress is accurate;
(4) Implement letter confirmation procedures to important customers, confirm the execution status of contracts and the balance of current accounts, and confirm the authenticity and integrity of business income;
(5) Implement the cut-off test procedure, sample and test the important accounting records of operating income before and after the balance sheet date, and check whether there is any early or delayed recognition of operating income;
(6) Conduct a cut-off test on the equipment installation cost incurred before and after the balance sheet date to evaluate whether the equipment installation cost is recognized in an appropriate period;
(7) Check whether the information related to operating income has been properly presented in the financial statements.
（2） Inventory impairment
1. Event description
As of December 31, 2021, Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) inventory balance is 1545477400 yuan, and inventory falling price reserve is 198380400 yuan. Some projects undertaken by the company are suspended, delayed or cost overrun, and the inventory is subject to impairment risk. Due to the large number of projects under implementation and the large inventory balance, the management needs to make a significant judgment on the inventory impairment, and we determine the inventory impairment as a key audit event.
2. Audit response
(1) Understand the key internal controls related to the net realizable value of inventory, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of relevant internal controls;
(2) Understand the implementation progress of main projects from the project leader, pay attention to whether the project is suspended or delayed, and understand the causes of abnormal projects;
(3) Inquire customer information, visit important customers, and interview the owner’s operation, capital and project construction; Check the implementation of the project on the spot;
(4) Check the relevant documents submitted by the customer to Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) and check whether there is project suspension or termination; (5) Review whether the calculation of net realizable value of inventory and inventory falling price reserves is correct.
4、 Other information
The management is responsible for other information. Other information includes the information covered in the 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 Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) ‘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.
Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) the governance layer (hereinafter referred to as the governance layer) is responsible for supervising the financial reporting process of Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) . 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 Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) 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 not
Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526)
Notes to financial statements
Year 2021
Monetary unit: RMB 1. Basic information of the company
Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) (hereinafter referred to as the company or the company) was approved by zhezhenwei [2000] No. 8 document of the Securities Commission of the people’s Government of Zhejiang Province. It was jointly initiated and established by Feida Group Co., Ltd. (hereinafter referred to as Feida group) and eight sponsors including China International Thermal Engineering Corporation. It was registered with Zhejiang Administration for Industry and Commerce on April 30, 2000 and its headquarters is located in Zhuji City, Zhejiang Province. The company now holds a business license with a unified social credit code of 91330 Shandong Xinneng Taishan Power Generation Co.Ltd(000720) 084441g, with a registered capital of 54740467200 yuan and a total of 547404672 shares (with a par value of 1 yuan per share), all of which are circulating shares A-Shares with unlimited sales conditions. The company’s shares were listed on the Shanghai Stock Exchange on July 22, 2002.
The company belongs to the special equipment manufacturing industry. The main business activities are the production and sales of air pollution control equipment. The products mainly include: dust collector, flue gas desulfurization equipment, waste incineration flue gas treatment equipment and relevant supporting parts.
The financial statements have been approved by the 7th Meeting of the 8th board of directors of the company on March 30, 2022.
The company included 17 subsidiaries including Zhejiang Feida Desulfurization Engineering Co., Ltd. (hereinafter referred to as Feida desulfurization company), Zhejiang Feida Environmental Engineering Co., Ltd. (hereinafter referred to as Feida environmental company) and Zhejiang Feida Electrical Engineering Co., Ltd. (hereinafter referred to as Feida Electrical Company) into the scope of consolidated financial statements for the current period. See notes VI and VII to the financial statements for details.
2、 Preparation basis of financial statements
（1） Preparation basis
The financial statements of the company are prepared on the basis of going concern.
（2） Evaluation of going concern ability
The company has no events or circumstances that cause major doubts about its ability to continue as a going concern within 12 months from the end of the reporting period. 3、 Important accounting policies and accounting estimates
Important note: according to the actual production and operation characteristics, the company has formulated specific accounting policies and accounting estimates for transactions or events such as impairment of financial instruments, depreciation of fixed assets, depreciation of right of use assets, amortization of intangible assets and revenue recognition.
（1） Statement of compliance with accounting standards for business enterprises
The financial statements prepared by the company comply with the requirements of the accounting standards for business enterprises and truly and completely reflect the company’s financial position, operating results, cash flow and other relevant information.
（2） Accounting period
The fiscal year starts on January 1 and ends on December 31 of the Gregorian calendar.
（3） Business cycle
The business cycle of environmental protection engineering business is generally more than 12 months from the commencement of construction to the completion of the project. The specific cycle is determined according to the situation of the project, and the business cycle is used as the liquidity division standard of assets and liabilities. In addition to the environmental protection engineering business, the business cycle of the company’s business is relatively short, and 12 months is taken as the liquidity classification standard of assets and liabilities.
（4） Recording currency
RMB is the currency of the main economic environment in which the company and its domestic subsidiaries operate. The company and its domestic subsidiaries use RMB as the bookkeeping base currency. The overseas subsidiaries fida India Co., Ltd. (hereinafter referred to as fida India) and fida International Power Technology Co., Ltd. (hereinafter referred to as fida international power company) respectively determine the rupee and Singapore dollar as the recording base currency according to the currency in the main economic environment in which they operate. The currency used by the company in preparing the financial statements is RMB.
（5） Accounting treatment methods for business combinations under the same control and not under the same control
1. Accounting treatment method of business combination under the same control
The assets and liabilities obtained by the company in business combination shall be measured according to the book value of the combined party in the consolidated financial statements of the final controller on the combination date. The company adjusts the capital reserve according to the difference between the book value share of the owner’s equity of the merged party in the consolidated financial statements of the final controller and the book value of the merger consideration paid or the total face value of the issued shares; If the capital reserve is insufficient to offset, the retained earnings shall be adjusted.
2. Accounting treatment methods for business combinations not under the same control
On the acquisition date, the company recognizes the difference between the combination cost and the fair value of the identifiable net assets of the acquiree obtained in the combination as goodwill; If the merger cost is less than the fair value of the identifiable net assets of the acquiree obtained in the merger, the fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree obtained and the measurement of the merger cost shall be reviewed first. If the merger cost is still less than the fair value of the identifiable net assets of the acquiree obtained in the merger after review, the difference shall be included in the current profit and loss.
（6） Preparation method of consolidated financial statements
The parent company brings all subsidiaries under its control into the consolidation of the consolidated financial statements
