“The authenticity of the annual report cannot be guaranteed!” The independent director of Peking University law professor asked the company to hire or hire an accountant to audit the annual report, but asked to resign without approval… On March 31, the annual report of Shenzhen Laibao High-Tech Co.Ltd(002106) 2021 disclosed “many doubts”. On March 31, the Shenzhen stock exchange quickly issued a letter of concern to inquire about the specific situation.
Shenzhen Laibao High-Tech Co.Ltd(002106) concern letter
Shenzhen Laibao High-Tech Co.Ltd(002106) mainly engaged in the research, development and production of flat panel display materials and touch devices. According to the annual report of 2021, the company achieved a revenue of 7.682 billion yuan, a year-on-year increase of 13.79%; The net profit was 491 million yuan, a year-on-year increase of 12.10%. However, Jiang Daxing, an independent director of the company, cast a “negative vote” on whether to ensure the authenticity, accuracy and integrity of the annual report data. From the perspective of Shenzhen Laibao High-Tech Co.Ltd(002106) announcement, during the review of the annual report, Jiang Daxing tried to “get to the bottom” in various ways, but failed.
Peking University law professor and independent director
questioned the authenticity of financial data in the annual report
According to public data, Jiang Daxing has been a professor and doctoral supervisor of the school of law of Peking University since February 2014, and the director of China enterprise legal risk management research center of Peking University; He has served as the independent director of Shenzhen Laibao High-Tech Co.Ltd(002106) since May 2016. This time, Jiang Daxing cannot guarantee or disagree with the authenticity, accuracy and completeness of the financial data such as operating revenue, accounts receivable, inventory count and profit in the annual report of Shenzhen Laibao High-Tech Co.Ltd(002106) 2021.
Picture source: Shenzhen Laibao High-Tech Co.Ltd(002106) announcement
For the detailed reasons, Jiang Daxing said that in the process of audit communication, the early audit institutions only gave procedural replies to their attention letters, which made him have reasonable doubts about the relevant financial data. Later, when he proposed to hire a new accounting institution to review the financial statements and would vote against the proposal to renew the appointment of the audit institution, he gave a specific reply. Therefore, he has reasonable doubts about the financial report data of Shenzhen Laibao High-Tech Co.Ltd(002106) 2021.
According to the 2021 annual report, except Jiang Daxing, the three independent directors of Shenzhen Laibao High-Tech Co.Ltd(002106) Xiong Chuxiong, Zou Xuecheng and Du Wenjun did not question the financial data of Shenzhen Laibao High-Tech Co.Ltd(002106) .
Picture source: Shenzhen Laibao High-Tech Co.Ltd(002106) announcement
Jiang Daxing said that during the review of Shenzhen Laibao High-Tech Co.Ltd(002106) 2021 annual report, in order to fulfill the obligation of diligence, he took a series of due diligence measures:
I. during the audit communication, send a written concern letter to the audit institution on the matters of concern;
2. The proposal to hire an accounting firm to review the annual report to the company, the company’s audit committee and all independent directors was not approved by all;
III. propose to the company that individuals hire certified public accountants to review the annual report. The company believes that it is not a legal procedure, and especially emphasizes that the annual report data is confidential and shall not be disclosed. Therefore, the request for help could not be implemented;
In addition, Jiang Daxing also sought the judgment on the authenticity of the annual report from Professor Xiong (Professor of the Department of Accounting), the person in charge of the company’s audit committee, and asked how he ensured the authenticity of the company’s annual report and through what investigation methods? Professor Xiong said that he believed that the company’s financial report was true and that there would be no risk for independent directors.
Picture source: Shenzhen Laibao High-Tech Co.Ltd(002106) announcement
However, Jiang Daxing believes that the investigation measures taken by him can not convince him of the accuracy of his judgment by truthfully investigating and looking at the matching relationship between cash flow and operating income. Because the time for each field visit of independent directors is quite limited, and the matching relationship between cash flow and revenue can be falsified.
Picture source: Shenzhen Laibao High-Tech Co.Ltd(002106) announcement
Unable to seek more effective information to ensure the authenticity of the annual report data, Jiang Daxing resigned to Shenzhen Laibao High-Tech Co.Ltd(002106) . However, since the number of independent directors will be less than one-third of the number specified in the articles of association, they need to continue to perform their duties until the new board of directors is re elected.
Shenzhen Laibao High-Tech Co.Ltd(002106) net profit and revenue performance in recent five years
For the financial data such as operating revenue, accounts receivable, inventory count and profit that Jiang Daxing cannot guarantee or disagrees with, Shenzhen Laibao High-Tech Co.Ltd(002106) annual report shows that the accounts receivable and inventory of the company have increased significantly in recent five years, almost doubled or doubled. From 2017 to 2021, Shenzhen Laibao High-Tech Co.Ltd(002106) accounts receivable were rmb1071 million, 1.225 billion, 1.348 billion, 2.081 billion and 1.968 billion respectively; The inventories were 397 million yuan, 550 million yuan, 536 million yuan, 653 million yuan and 832 million yuan respectively.
regulatory inquiry on the details of the “letter of concern” of independent directors and reply
On March 31, the Shenzhen Stock Exchange promptly sent a letter of concern to Shenzhen Laibao High-Tech Co.Ltd(002106) asking about the details of the letter of concern sent by independent director Jiang Daxing to the audit institution and the reply of the audit institution.
The attention letter requires Jiang Daxing to specify the specific contents of the attention letter sent to the audit institution, including but not limited to accounting subjects, accounting treatment and audit problems, and explain the reasons for paying special attention to the above problems. The audit institution is also requested to specify the specific contents of the first and second replies to Jiang Daxing.
At the same time, Jiang Daxing is requested to explain in detail whether there are inconsistencies and the reasons for reasonable doubt in combination with the two replies of the audit institution; Whether to communicate with the audit institution after doubt; If yes, please explain the communication; If not, please specify the specific reasons. In addition, the audit institution is requested to specify the audit procedures for relevant accounting subjects and accounting treatment in combination with Jiang Daxing’s attention letter.
Picture source: Shenzhen Laibao High-Tech Co.Ltd(002106) announcement
According to the Shenzhen Laibao High-Tech Co.Ltd(002106) announcement, both parties hold their own words. On January 24, the certified public accountant received an email sent by Jiang Daxing paying special attention to the accuracy, authenticity and rationality of the company’s operating revenue recognition; On January 25, certified public accountants communicated through on-site video conference; On January 28, the certified public accountant received another email from Jiang Daxing requesting to reply to the matters of special concern on January 24 in the name of Tianjian certified public accountants, and replied on February 3.
Picture source: Shenzhen Laibao High-Tech Co.Ltd(002106) announcement
On March 19, Shenzhen Laibao High-Tech Co.Ltd(002106) Board Secretary received Jiang Daxing’s feedback: Tianjian accounting office did not make substantive reply to his letter of concern, which led to his doubts about the authenticity of the annual accounting report. In the process of reviewing and approving the subsequent financial and accounting report, he may not be able to issue an approval vote. On March 30, the certified public accountant replied to his feedback.
The letter of concern requires Shenzhen Laibao High-Tech Co.Ltd(002106) to make a written explanation on the above issues, submit it to the second Department of management of listed companies of Shenzhen stock exchange for disclosure before April 6, and send a copy to the dispatched office at the same time.
At the same time, the attention letter reminded Shenzhen Laibao High-Tech Co.Ltd(002106) and all directors, supervisors and senior managers to strictly abide by the securities law, the company law and other laws and regulations, as well as the stock listing rules of the exchange, and perform the obligation of information disclosure truthfully, accurately, completely, timely and fairly.
