audit report
Dhsz [2022] 006902
Dahua Certified Public Accountants (special general partnership)
DaHuaCertifiedPublicAccountants（SpecialGeneralPartnership）
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 1-86
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
Dhsz [2022] 006902 Nanjing Baose Co.Ltd(300402) all shareholders:
1、 Audit opinion
We have audited the financial statements of Nanjing Baose Co.Ltd(300402) (hereinafter referred to as Nanjing Baose Co.Ltd(300402) ), 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 Nanjing Baose Co.Ltd(300402) the consolidated and parent company as of December 31, 2021 and 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 Nanjing Baose Co.Ltd(300402) , 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. 1. Recoverability of accounts receivable
2. Recognition of income
（1） Recoverability of accounts receivable
1. Event description
As stated in note VI and note 3 of the financial statements, as of December 31, 2021, the balance of accounts receivable of baose shares was 60526599772 yuan, the amount of bad debt reserves was 10827513060 yuan, and the book value of accounts receivable of Nanjing Baose Co.Ltd(300402) accounted for 26.63% of the total assets, which was relatively high. If the accounts receivable cannot be recovered on schedule or cannot be recovered and bad debts occur, it will have a significant impact on the financial statements. Therefore, we determine the bad debt provision of accounts receivable as the key audit matter.
2. Audit response
During the audit, the audit procedures we implemented mainly include:
(1) Understand the judgment and considerations of the management when evaluating the bad debt provision of accounts receivable, and consider whether there is any impact on the recoverability of accounts receivable; Obtain Nanjing Baose Co.Ltd(300402) bad debt provision accrual table and check whether the accrual method is consistent with the bad debt policy;
(2) Evaluate the adequacy of the provision for bad debts of accounts receivable by comparing the provision for bad debts in the previous period with the actual amount, and in combination with the inspection of the collection after the period;
(3) For accounts receivable with bad debt provision withdrawn by aging analysis method, select samples to test the aging accuracy, and recalculate whether the bad debt provision amount is correct according to the bad debt policy;
(4) Discuss the recoverability of important accounts receivable with management and implement independent letter confirmation procedures.
Based on the audit work performed, we believe that the relevant judgments and estimates of the management on the recoverability of accounts receivable are reasonable.
（2） Revenue recognition
1. Event description
As shown in note VI and note 34 of the financial statements, Nanjing Baose Co.Ltd(300402) 2021 achieved an operating income of 125664222829 yuan, an increase of 15.07% over 2020 Nanjing Baose Co.Ltd(300402) revenue recognition policies are detailed in note IV to the financial statements. The amount of operating revenue is significant and is a key performance indicator, which may have risks related to revenue recognition. Therefore, we regard the company’s revenue recognition as a key audit matter.
2. Audit response
Our important audit procedures for revenue recognition include:
(1) Understand and evaluate the design of management’s internal control related to revenue recognition, and conduct control tests to evaluate whether the internal control of revenue recognition is compliant and effective;
(2) Select samples to check sales contracts, identify contract terms and conditions related to the transfer of risks and rewards on commodity ownership, and evaluate whether the time point of revenue recognition of the company meets the requirements of accounting standards for business enterprises;
(3) Select samples of transactions recorded in this year, check sales contracts, delivery orders, transportation documents, invoices, customer acceptance documents, collection vouchers, etc., and evaluate whether relevant revenue recognition complies with the accounting policies of the company for revenue recognition;
(4) For export goods, check whether the product name, quantity and amount recorded in the customs declaration and bill of lading are consistent with those recorded in the book;
(5) Implement letter confirmation procedures to important customers to verify the sales amount and current account balance in the current period;
(6) For the revenue transactions recorded before and after the balance sheet date, select samples and check the customer acceptance form and other supporting documents to evaluate whether the revenue is recorded in the appropriate accounting period.
Based on the audit work performed, we believe that the relevant judgments and estimates of the management on the recognition of revenue are reasonable.
4、 Other information
Nanjing Baose Co.Ltd(300402) 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
Nanjing Baose Co.Ltd(300402) 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, Nanjing Baose Co.Ltd(300402) management is responsible for assessing Nanjing Baose Co.Ltd(300402) ‘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 Nanjing Baose Co.Ltd(300402) , terminate the operation or has no other realistic choice. The management is responsible for supervising the financial reporting process of Nanjing Baose Co.Ltd(300402) .
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 Nanjing Baose Co.Ltd(300402) 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, future events or circumstances may cause Nanjing Baose Co.Ltd(300402) unable to continue its business.
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 entities or business activities in Nanjing Baose Co.Ltd(300402) to express an opinion on the financial statements. We are responsible for guiding, supervising and executing the group audit. We are fully responsible for the audit opinion.
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. Dahua Certified Public Accountants (special general partnership) Chinese certified public accountant:
(project partner) Zhang Lifang, Beijing, China Certified Public Accountant:
He aiya March 30, 2002
Notes to financial statements of year Nanjing Baose Co.Ltd(300402) 2021
Nanjing Baose Co.Ltd(300402)
Notes to financial statements of 2021
1、 Basic information of the company
（1） Place of registration, organizational form and headquarters address of the company
Nanjing Baose Co.Ltd(300402) (hereinafter referred to as “the company” and “the company”) is owned by Nanjing baose titanium industry
