Jiangsu Gian Technology Co.Ltd(300709)
Consolidated and parent company financial statements in 2021
Audit report
Zhongxinghua Certified Public Accountants (special general partnership)
Zhongxinghuacitified publicaccountants LLP address: 20 / F, tower sohob, Lize, No. 20, Lize Road, Fengtai District, Beijing zip code: 100073 Tel: (010) 51423818 Fax: (010) 51423816
Jiangsu Gian Technology Co.Ltd(300709)
Audit report and financial statements
(from January 1, 2021 to December 31, 2021)
Contents page I. audit report 1-8 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 1-108
Zhongxinghua Certified Public Accountants (special general partnership) Z ho N G x i n g h u a c e RT i f i e d p u b l i c a c o u n TA n t s l p address: 20 / F, Tower B, Lize SOHO, 20 Lize Road, Fengtai District, No. 20 Lize Road, Fengtai District, Beijing, Beijing PR China Tel (t e l): 0 1 0 – 5 1 4 2 3 8 1 8 fax (f a x): 0 1 0 – 5 1 4 2 3 8 1 6 Audit Report
Zths Zi (2022) No. 02030
Jiangsu Gian Technology Co.Ltd(300709) all shareholders:
1、 Audit opinion
We have audited the financial statements of Jiangsu Gian Technology Co.Ltd(300709) (hereinafter referred to as ” Jiangsu Gian Technology Co.Ltd(300709) “), 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 notes to relevant 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 Jiangsu Gian Technology Co.Ltd(300709) 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 Jiangsu Gian Technology Co.Ltd(300709) 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） Revenue recognition
1. Event description
As shown in note VI and 38, the operating revenue of Jiangsu Gian Technology Co.Ltd(300709) in 2021 was 2404113200 yuan. As revenue is one of the key performance indicators of Jiangsu Gian Technology Co.Ltd(300709) and there is an inherent risk that the management manipulates the time point of revenue recognition in order to achieve specific goals or expectations, we identified the revenue recognition of Jiangsu Gian Technology Co.Ltd(300709) as a key audit matter.
2. Audit response
Our important audit procedures for operating income include:
(1) Through consulting relevant documents, interviewing key personnel and performing walkthrough test, we understood and evaluated Jiangsu Gian Technology Co.Ltd(300709) specific business process and internal control system, assessed the risk of sales and collection business process, and tested the effectiveness of internal control operation related to sales and collection business process;
(2) Select a sample to check the sales contract, identify the contract terms related to the single performance obligation and the transfer of commodity control, and evaluate whether the revenue recognition time point of Jiangsu Gian Technology Co.Ltd(300709) meets the requirements of the accounting standards for business enterprises;
(3) Implement the confirmation procedure for the main customers of Jiangsu Gian Technology Co.Ltd(300709) in the reporting period, and inquire about the current accounts and income amount between Jiangsu Gian Technology Co.Ltd(300709) and customers;
(4) The income detail test is carried out for the amount of significant amount in the current period;
(5) Analyze the income and cost of the current period, focusing on the fluctuation analysis of the income, cost and gross profit margin of each month of the current period, and compare them with the data of the previous period; Judge the rationality of Jiangsu Gian Technology Co.Ltd(300709) gross profit in combination with the actual situation of Jiangsu Gian Technology Co.Ltd(300709) and; Compare the data of Listed Companies in the contract industry;
(6) Taking the accuracy of the sales order and the confirmation of the revenue as the starting point, and taking the accuracy of the sales order and the confirmation of the revenue as well as the accuracy of the delivery contract as the main starting point, and taking the accuracy of the sales invoice and the confirmation of the revenue as the principle of internal control; (7) For export sales, we used the sampling method to check the sales contract (sales order), delivery information, export declaration form, logistics form and other confirmation documents of relevant customers. We checked the data in the online service platform of the State Administration of foreign exchange and verified the occurrence of export revenue;
(8) Perform the cut-off test on the income, and trace the records from the income Sub Ledger to the shipping order, statement and sales order; Trace from the shipping order, statement of account and sales order to the revenue Sub Ledger record to determine whether there is a cross period phenomenon in sales;
(9) Assess whether the management’s financial statement disclosure of income is appropriate.
（2） Inventory falling price reserves
1. Event description
As shown in notes VI and 7, as of December 31, 2021, the balance of Jiangsu Gian Technology Co.Ltd(300709) inventory was 4630703 million yuan, and the amount of inventory falling price reserves was 99.087 million yuan. The book value was high, and the increase of inventory falling price reserves had a significant impact on the financial statements Jiangsu Gian Technology Co.Ltd(300709) the products are mainly the core parts of electronic products customized for customers, with the characteristics of non-standard, high precision and high specialization. The expected sales price of the products does not have the reference price in the open market. When determining the net realizable value of products, the management needs to use significant judgment and consider the historical selling price information and future market trend. According to the historical sales information, Jiangsu Gian Technology Co.Ltd(300709) there is a situation that the self provided products produced under the condition of customer cancellation or no order can not be finally sold. Therefore, Jiangsu Gian Technology Co.Ltd(300709) there is a risk of inventory backlog and unable to realize sales or direct scrapping, and there is a high possibility of inventory falling price. Therefore, we determine that the provision for inventory falling price is a key audit matter.
2. Audit response
Our important audit procedures for inventory falling price reserves include:
(1) Evaluate the design and implementation of internal control related to Jiangsu Gian Technology Co.Ltd(300709) inventory falling price reserves;
(2) Supervise Jiangsu Gian Technology Co.Ltd(300709) inventory, check inventory quantity, status and production date;
(3) Obtain the detailed list of stock age of Jiangsu Gian Technology Co.Ltd(300709) inventory at the end of the period, analyze and review the inventory with long stock age in combination with the actual situation of the product, and analyze whether the provision for inventory falling price is sufficient;
(4) Obtain Jiangsu Gian Technology Co.Ltd(300709) inventory depreciation reserve calculation table, perform inventory impairment test, check whether it is implemented in accordance with Jiangsu Gian Technology Co.Ltd(300709) relevant accounting policies, check the current changes of inventory depreciation reserves accrued in previous years, and analyze whether the inventory depreciation reserves are fully accrued;
(5) Obtain the market analysis data of Jiangsu Gian Technology Co.Ltd(300709) management on the expected sales delivery volume and expected selling price of self provided products, discuss with the management and evaluate the basis and rationality of the conclusion.
（3） Provision for impairment of goodwill
1. Event description
As shown in note VI and 14, as of December 31, 2021, the book value of Jiangsu Gian Technology Co.Ltd(300709) goodwill was 1399532 million yuan and the provision for impairment of goodwill was 839751 million yuan.
The management shall conduct impairment test on goodwill at the end of each year and adjust the book value of goodwill according to the results of impairment test. The results of goodwill impairment test largely depend on the estimates and assumptions made by the management, especially the major judgments of the management involved in predicting the future income and long-term income growth rate, gross profit margin, operating expenses, discount rate and so on. There are significant uncertainties in these estimates. Affected by the management’s judgment on the future market and the economic environment, the adoption of different estimates and assumptions will have a great impact on the recoverable value of the assessed goodwill. As the amount of goodwill is significant and the management needs to make significant judgments, we determine the impairment of goodwill as a key audit event.
2. Audit response
Our important audit procedures for goodwill impairment include:
(1) We understand and evaluate the design and operation effectiveness of Jiangsu Gian Technology Co.Ltd(300709) internal control related to goodwill evaluation;
(2) Review the recognition of the asset group and the allocation method of goodwill by the management;
(3) Discuss with Jiangsu Gian Technology Co.Ltd(300709) management the methods used in goodwill impairment test, the assumptions of key evaluation, the selection of parameters, the rationality of predicting future income and cash flow discount rate, etc;
(4) Discuss with experts from external appraisal institutions hired by Jiangsu Gian Technology Co.Ltd(300709) management on the methods used in the goodwill impairment test, the assumptions of key appraisal, the selection of parameters, the rationality of predicting future income and cash flow discount rate, etc;
(5) Evaluate the independence, objectivity, experience and qualification of the external evaluation organization hired by Jiangsu Gian Technology Co.Ltd(300709) management;
(6) Test whether the calculation of net present value of future cash flow is accurate;
(7) Assess whether the management’s disclosure of goodwill and its impairment estimation results and financial statements on December 31, 2021 is appropriate.
4、 Other information
Jiangsu Gian Technology Co.Ltd(300709) management is responsible for other information. Other information includes the information covered in Jiangsu Gian Technology Co.Ltd(300709) 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
Jiangsu Gian Technology Co.Ltd(300709) 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, Jiangsu Gian Technology Co.Ltd(300709) management is responsible for evaluating Jiangsu Gian Technology Co.Ltd(300709) ‘s ability of going concern, disclosing matters related to going concern (if applicable), and applying the assumption of going concern, unless the management plans to liquidate Jiangsu Gian Technology Co.Ltd(300709) , terminate operation or has no other realistic choice. The management is responsible for supervising the financial reporting process of Jiangsu Gian Technology Co.Ltd(300709) .
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. Due to fraud
