Sichuan Kelun Pharmaceutical Co.Ltd(002422)
From January 1, 2021
Financial statements for the year ended December 31, 2021
audit report
KPMG huazhenshen Zi No. 2205186 Sichuan Kelun Pharmaceutical Co.Ltd(002422) all shareholders:
1、 Audit opinion
We have audited the attached financial statements of Sichuan Kelun Pharmaceutical Co.Ltd(002422) (hereinafter referred to as " Sichuan Kelun Pharmaceutical Co.Ltd(002422) "), 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 accounting standards for business enterprises (hereinafter referred to as the "accounting standards for business enterprises") issued by the Ministry of finance of the people's Republic of China in all material aspects, and fairly reflect the consolidated and parent company's financial status as of December 31, 2021 and the consolidated and parent company's operating results and cash flow in 2021.
2、 Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese Certified Public Accountants (hereinafter referred to as the "auditing standards"). 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 Sichuan Kelun Pharmaceutical Co.Ltd(002422) , 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.
Audit report (Continued)
KPMG hzsz No. 2205186 III. 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. For revenue recognition, please refer to the accounting policies described in "III. important accounting policies and accounting estimates of the company" 22 and "v. notes to items of consolidated financial statements" 36.
Key audit matters how to deal with them in the audit
Sichuan Kelun Pharmaceutical Co.Ltd(002422) and its subsidiaries (hereinafter referred to as the audit procedures related to the evaluation of revenue recognition, including the following process " Sichuan Kelun Pharmaceutical Co.Ltd(002422) group") mainly include the following directions: a large number of dealers, hospitals and downstream manufacturers \uf0b7 understand and evaluate the key financial reports related to revenue recognition, the design and operation effectiveness of internal business ("sales customers") sales of infusion, non infusion and department control;
Other products Sichuan Kelun Pharmaceutical Co.Ltd(002422) group signs sales contracts with sales customers and sells products according to the agreed terms \uf0b7 select the sales contracts signed between Sichuan Kelun Pharmaceutical Co.Ltd(002422) group and customers, liquid test, non infusion and other products Sichuan Kelun Pharmaceutical Co.Ltd(002422) group checked the main transaction terms and evaluated whether the accounting policies of Sichuan Kelun Pharmaceutical Co.Ltd(002422) group's revenue recognition and signed sales contracts that do not include allowance and rebate clauses meet the requirements of accounting standards for business enterprises; Payment. According to the agreement, in addition to product quality problems, the Department \uf0b7 checked the income recorded in this year to Lun Pharmaceutical Group on the basis of sampling, and did not accept any form of return. For relevant delivery orders and invoicing documents signed and confirmed by the sales customer, the Sichuan Kelun Pharmaceutical Co.Ltd(002422) Group recognizes the revenue when the customer obtains the relevant commodity application form, sales invoice and other documents to evaluate whether the revenue is in accordance with the control right of. Recognized according to the accounting policies of Sichuan Kelun Pharmaceutical Co.Ltd(002422) group in accordance with the sales contract; Generally, when the products are transported, the balance of accounts receivable on the balance sheet date and the balance of the current year shall be sent to the place designated by the sales customer, and the customer shall accept the sales transaction amount and implement the letter confirmation procedure; After the transfer of product control to customers, Sichuan Kelun Pharmaceutical Co.Ltd(002422) \uf0b7 on the basis of sampling, select the group close to the balance sheet date, and then confirm the operating revenue accordingly. For the sales transaction of the products, check whether the sales before and after the balance sheet date approached by the management through price manipulation is recorded in the inherently accurate accounting period of positive operating revenue to achieve specific objectives or expectations, as the operating revenue is one of the performance indicators of Sichuan Kelun Pharmaceutical Co.Ltd(002422) group's key delivery documents, invoicing application forms and sales invoices; And risks, we identify revenue recognition as a key audit \uf0b7 select revenue accounting entries that meet specific risk characteristics and report to the management. The management inquired about the reasons for making the above accounting entries and checked the relevant supporting documents.
Audit report (Continued)
KPMG huazhenshen Zi No. 2205186 III. for the bad debt reserves of accounts receivable for key audit matters (Continued), please refer to the accounting policies described in "III. important accounting policies and accounting estimates of the company" 9 and "v. notes to items of consolidated financial statements" 3.
Key audit matters how to deal with them in the audit
On December 31, 2021, Sichuan Kelun Pharmaceutical Co.Ltd(002422) group's audit procedures related to the evaluation of bad debt reserves of accounts receivable, the original book value of accounts receivable is RMB, including the following procedures:
5512630642 yuan, the accrued bad debt provision \uf0b7 understanding and credit risk control, fund recovery and expected credit loss balance is 211850774 yuan. Internal control of key financial reports related to loss estimation, and evaluate the design and operation effectiveness of the management's expected credit loss based on accounts receivable;
Loss rate: according to the expected credit equivalent to the whole duration \uf0b7 according to the requirements of relevant accounting standards, evaluate Sichuan Kelun Pharmaceutical Co.Ltd(002422) group and measure the bad debt reserves of accounts receivable with the amount of loss.
Accounting policies for estimating bad debt reserves; The expected credit loss rate considers the aging of accounts receivable, the recovery history of Sichuan Kelun Pharmaceutical Co.Ltd(002422) group customers and the current market \uf0b7 select test items from the aging analysis report of accounts receivable to verify the situation and forward-looking information. The evaluation involves significant supporting documents such as sales invoices to evaluate the judgment and estimation of accounts receivable management. Accuracy of aging interval division in aging analysis report;
As the determination of the bad debt provision for accounts receivable involves \uf0b7 understanding the key and significant management judgment used in the management's expected credit loss model, and there are inherent inaccurate parameters and assumptions, including the management's common credit qualitative based on customers, we identify the bad debt provision for accounts receivable as a risk feature to judge whether the accounts receivable are grouped and key audit matters. And historical credit loss data included in the management's expected credit loss rate;
\uf0b7 evaluate whether the historical loss rate is properly adjusted based on current economic conditions and forward-looking information by checking the information used by the management to make accounting estimates, including testing the accuracy of historical credit loss data, Evaluate the appropriateness of the management's expected credit loss estimation; and
\uf0b7 recalculate the bad debt provision on December 31, 2021 based on the accounting policy of Sichuan Kelun Pharmaceutical Co.Ltd(002422) group's provision for credit loss.
Audit report (Continued)
KPMG huazhenshen Zi No. 2205186 III. for the capitalization of development expenditure of key audit matters (Continued), please refer to the accounting policies described in the notes to the financial statements "III. important accounting policies and accounting estimates of the company" 15 and "v. notes to items in the consolidated financial statements" 13.
Key audit matters how to deal with them in the audit
Sichuan Kelun Pharmaceutical Co.Ltd(002422) in the audit procedures related to the evaluation of the capitalization of development expenditure during the research and development process of the group, the expenditure can be capitalized only when all the capitalization conditions listed in note III and 15 of the financial statements, including the following procedures, are met at the same time. Collen \uf0b7 understand and evaluate the design and operation effectiveness of internal control over financial reporting of key pharmaceutical groups related to the capitalization of development expenditure in 2021; RMB 72867515 is capitalized and included in negative assets
"Development expenditure" in the debt statement. \uf0b7 according to the requirements of accounting standards for business enterprises, evaluate the capitalization accounting policy of development expenditure adopted by the management of Sichuan Kelun Pharmaceutical Co.Ltd(002422) group, and determine whether the development expenditure meets all capitalization policies;
The conditions involve the estimation of the management, especially the completion of the research and development drug process so that it can be used or sold. Select the project in the technology \uf0b7 ask the relevant R & D personnel to understand whether the completion is feasible, which may be affected by the preference of the management, and whether the development drug process can enable its use or sale. We identify the capitalization of development expenditure as a key audit matter, which is technically feasible, At the same time, know whether there are open items. The development project is suspended, so that the project no longer meets the conditions for capitalization of development expenditure; and
\uf0b7 select R & D projects, review and check the relevant approvals or certificates and the commercial and technical feasibility reports related to R & D projects prepared by the management of Sichuan Kelun Pharmaceutical Co.Ltd(002422) group.
Audit report (Continued)
KPMG huazhenshen Zi No. 2205186 IV. other information
Sichuan Kelun Pharmaceutical Co.Ltd(002422) management is responsible for other information. Other information includes the information covered in the annual report of Sichuan Kelun Pharmaceutical Co.Ltd(002422) 2021, 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
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.
When preparing the financial statements, the management is responsible for evaluating the going concern ability of Sichuan Kelun Pharmaceutical Co.Ltd(002422) and disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless Sichuan Kelun Pharmaceutical Co.Ltd(002422) plans to liquidate, terminate operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Sichuan Kelun Pharmaceutical Co.Ltd(002422) .
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 guarantee is a high-level guarantee, but it cannot be guaranteed
