Audit report
Dxsz [2022] No. 500015
Daxin certified public accountants LLP
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668 No.1 Zhichun Road, Haidian dist, 22nd floor, College International Building. Website: Internet: www.daxincpa com. cn. Postal Code: Beijing, China 100083
audit report
Dxsz [2022] No. 500015 Ife Elevators Co.Ltd(002774) all shareholders:
1、 Audit opinion
We have audited the financial statements of Ife Elevators Co.Ltd(002774) (hereinafter referred to as “the company”), 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 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 your company as of December 31, 2021 and the operating results and cash flows of your company and the 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 your company 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
We believe that the audit matters are the most important ones for the current period. 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） Book value of inventories
1. Event description
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668 No.1 Zhichun Road, Haidian dist, 22nd floor, College International Building. Website: Internet: www.daxincpa com. cn. Postal Code: Beijing, China 100083
As stated in notes V and VII to the financial statements, as of December 31, 2021, the book balance of your company’s inventory was 327979200 yuan, the provision for falling price was 2524400 yuan, and the book value was 325454700 yuan. The authenticity of the ending inventory and the accuracy of inventory valuation have a significant impact on the financial statements, so we identify them as key audit matters.
2. Audit response
(1) Understand and evaluate the internal control of production and storage, procurement and payment related to the company’s inventory, and test the effectiveness of the implementation of key controls;
(2) Review the collection and allocation of costs and expenses, and compare and analyze the cost flow and the change of product unit cost with the previous period, so as to identify the rationality of the change of key indicators and the reasons for the change;
(3) Test the delivery pricing of inventory to determine whether the delivery pricing method of inventory is consistent with the disclosed accounting policies and whether the delivery pricing amount is accurate;
(4) Combined with the main business cost, prepare the main business cost back-up table, and analyze the reasons and rationality of the difference;
(5) Implement inventory supervision procedures for inventory, and spot check the quantity and status of inventory; Implement the letter confirmation procedure for the goods delivered to the customer to confirm whether the ending balance is correct;
(6) Obtain and evaluate whether the management’s provision method for inventory falling price reserves is reasonable, and review whether the management’s judgment assumptions on the selling price of inventory and the amount of costs, selling expenses and relevant taxes to be incurred by the time of completion are reasonable; (7) Review the company’s provision process for inventory falling price reserves, check the reasons for the long-term aging of items with long aging of goods issued by the company, and judge whether there is falling price risk for products with long aging of goods issued by the company in combination with the amount of customers’ money received in advance.
(II) recognition of operating income
1. Item description
During the reporting period, your company mainly engaged in elevator production and marketing, installation, repair, transformation, maintenance and other businesses, and achieved an operating revenue of 1984244700 yuan in 2021, an increase of 111.24% compared with the same period of last year. Elevator products are special equipment products customized for special customers, and the company adopts order production. Combine the characteristics of the elevator industry with the sales mode of the company, and confirm the income related to the elevator installation industry.
As operating revenue is one of the key performance indicators of your company, there is an inherent risk that the management manipulates the time point of revenue recognition in order to achieve specific goals or expectations. We recognize your company’s revenue recognition as a key audit matter.
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668 No.1 Zhichun Road, Haidian dist, 22nd floor, College International Building. Website: Internet: www.daxincpa com. cn. Postal Code: Beijing, China 100083
2. Audit response
(1) Conduct control test on the internal control cycle of the company’s sales and collection, evaluate the design effectiveness of the control, and implement the test procedure to determine whether the relevant control has been effectively implemented;
(2) Understand the company’s sales pricing policies and customer credit verification standards, and understand and evaluate the appropriateness of revenue recognition accounting policies by checking major sales contracts, understanding the policies of goods receipt and return, and communicating with management;
(3) Check the company’s operating revenue and conduct substantive analysis, implement analytical review procedures according to the sales category and in combination with contract orders, and analyze the rationality of changes in sales revenue and gross profit through comparison and calculation;
(4) Combined with the audit of accounts receivable, select the main customers to implement the independent letter confirmation procedure for the sales volume in the reporting period, and analyze its authenticity in combination with the collection after the reporting period;
(5) The sampling test method is adopted to select the inspection samples, calculate the sampling scale according to the sampling population, the importance level of actual implementation, the guarantee coefficient, etc., sample and inspect the internal and external evidence such as the contract, product waybill, customer self bill of lading, delivery confirmation, installation acceptance report of the competent quality inspection department, customs declaration and invoice, and carry out detailed test on the authenticity and integrity of business income;
(6) Through the cut-off test on the sales revenue recognized before and after the balance sheet date, to determine whether there is a cross period phenomenon in the operating revenue.
4、 Other information
The management of your company (hereinafter referred to as the management) is responsible for other information. Other information includes the information covered in your 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 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.
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668 No.1 Zhichun Road, Haidian dist, 22nd floor, College International Building. Website: Internet: www.daxincpa com. cn. Postal Code: Beijing, China 100083
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.
In preparing the financial statements, the management is responsible for assessing the company’s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate the company, terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of your company.
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:
(I) 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.
(II) understand the internal control related to audit to design appropriate audit procedures.
(III) evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
(IV) draw a conclusion on the appropriateness of the management’s use of the going concern assumption. 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 the sustainable operation ability of your company. 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 insufficient, we should express a non unqualified opinion. Knot us
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, No. 1, Zhichun Road, Haidian District, Beijing, Xueyuan International Tower Fax: + 86 (10) 82327668 no.1zh, 22nd floor, College International Building
