Shenzhen Cotran New Material Co.Ltd(300731)
audit report
Content page
1、 Audit report 1-6 II. Audited accounting statements
1. Consolidated balance sheet 7-8 2, consolidated income statement 9 3, Consolidated Cash Flow Statement 10 4, consolidated statement of changes in owner’s equity 11-12 5, parent company balance sheet 13-14 6 Profit statement of the parent company 15 7, cash flow statement of the parent company 16 8, statement of changes in owner’s equity of the parent company 17-18 3, notes to accounting statements 19-108 4, copy of the business license of the exchange 5, copy of the practice certificate of the exchange
Gongzheng Tianye Certified Public Accountants (special general partnership), SGP
Wuxi.jiangsu.china, Jiangsu, Wuxi, China
Switchboard: 86 (510) 68798988 Tel: 86 (510) 68798988
Fax: 86 (510) 68567788 Fax: 86 (510) 68567788
Email: [email protected]. E-mail： [email protected].
audit report
Sugong w [2022] A300 Shenzhen Cotran New Material Co.Ltd(300731) all shareholders:
1、 Audit opinion
We have audited the financial statements of Shenzhen Cotran New Material Co.Ltd(300731) (hereinafter referred to as ” Shenzhen Cotran New Material Co.Ltd(300731) 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 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 Shenzhen Cotran New Material Co.Ltd(300731) company and its parent company as of December 31, 2021, as well as the operating results and cash flow of 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 Shenzhen Cotran New Material Co.Ltd(300731) 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
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.
(I) goodwill impairment test
1. Item description
As stated in notes VI and 15 to the financial statements, as of December 31, 2021, the book value of goodwill in the consolidated financial statements of Shenzhen Cotran New Material Co.Ltd(300731) company was 11846238376 yuan. According to the provisions of the accounting standards for business enterprises, the management needs to conduct impairment test on goodwill every year. The impairment test is based on the recoverable amount of the asset group including goodwill. The recoverable amount of the asset group is determined according to the higher one between the present value of the expected future cash flow of the asset group and the net amount of the fair value of the asset minus the disposal expenses. The expected future cash flow is determined based on the five-year financial budget. As the impairment test process is complex and involves significant judgment, we identify the annual goodwill impairment test as a key audit event.
2. Audit response
Our main audit procedures are as follows:
(1) Check and analyze the resolutions of the board of directors, equity acquisition agreements and project feasibility reports related to the generation of goodwill, and determine the value of goodwill;
(2) Obtain the relevant data of the company’s goodwill impairment test, and judge whether the future sales revenue growth rate, sales gross profit margin, operating expenses and discount rate are reasonable;
(3) For the special evaluation of the company’s major goodwill at the end of the period with the purpose of goodwill impairment test, we communicated with the external evaluation experts to evaluate their competence, professional quality and objectivity and understand their working methods; The internal valuation experts were invited to review the rationality of the value type and evaluation method, as well as the discount rate and other evaluation parameters;
(4) Evaluate whether the relevant tests and disclosures of goodwill impairment comply with the provisions of relevant accounting standards.
(II) recognition of income
1. Item description
As mentioned in notes IV, 27 and VI and 37 of the financial statements, Shenzhen Cotran New Material Co.Ltd(300731) company’s main business income in 2021 was 54390851892 yuan, mainly the sales income of high-performance special rubber sealing materials and heat dissipation metal structures.
As revenue is one of the key performance indicators of the company, there is a risk that the management will manipulate the revenue recognition in order to achieve specific business objectives or expectations. We recognize the revenue recognition of Shenzhen Cotran New Material Co.Ltd(300731) company as a key audit matter. 2. Audit response
Our audit procedures for revenue recognition include but are not limited to:
(1) Evaluate and test the design and operation effectiveness of key internal control related to revenue recognition of Shenzhen Cotran New Material Co.Ltd(300731) company, and evaluate whether the revenue recognition time point of Shenzhen Cotran New Material Co.Ltd(300731) company meets the requirements of accounting standards for business enterprises;
(2) Implement analysis procedures for revenue and cost, including the fluctuation analysis of monthly revenue, cost and gross profit margin of the current period, and the comparative analysis of current revenue, cost and gross profit margin of main products with that of the previous period;
(3) Select samples to check the sales contract, understand the main contract terms or conditions, and evaluate whether the company’s revenue recognition time point meets the requirements of accounting standards for business enterprises;
(4) Sampling tests were carried out for the sales revenue of customers: check the sales contract and order, delivery list, customs declaration, packing list, bill of lading, customer receipt, statement of account, sales invoice, etc; In addition, according to the amount of customers’ transactions, we select samples to implement the letter of confirmation procedure to confirm the balance of accounts receivable and the amount of sales revenue;
(5) Select a sample of revenue transactions recorded before and after the balance sheet date, check the delivery note and other supporting documents, and evaluate whether the revenue is recorded in the appropriate accounting period;
(6) Check whether the information related to income has been properly presented in the financial statements.
4、 Other information
The management of Shenzhen Cotran New Material Co.Ltd(300731) company 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 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
Shenzhen Cotran New Material Co.Ltd(300731) the management of the company (hereinafter referred to as “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 major misstatement caused by fraud or error.
When preparing the financial statements, the management is responsible for evaluating the going concern ability of Shenzhen Cotran New Material Co.Ltd(300731) company, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Shenzhen Cotran New Material Co.Ltd(300731) company, terminate operation or have no other realistic choice.
The management is responsible for supervising the financial reporting process of Shenzhen Cotran New Material Co.Ltd(300731) 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 in order to design appropriate audit procedures, but the purpose is not to express opinions on the effectiveness of internal control.
(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 Shenzhen Cotran New Material Co.Ltd(300731) 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. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause Shenzhen Cotran New Material Co.Ltd(300731) company to be unable to continue its business.
(V) evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
(VI) obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Shenzhen Cotran New Material Co.Ltd(300731) company 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.
Notarized Tianye certified public accountants, Chinese Certified Public Accountants:
(special general partnership) (project partner)
Chinese certified public accountant:
Wuxi, China April 8, 2022
Consolidated balance sheet
December 31, 2021
Prepared by: Shenzhen Cotran New Material Co.Ltd(300731) amount unit: RMB
Project notes December 31, 2021
