Audit report
Hxsz [2022] No. 22 Zhang Jia Jie Tourism Group Co.Ltd(000430) 015 Sirio Pharma Co.Ltd(300791) all shareholders:
1、 Audit opinion
We have audited the financial statements of Sirio Pharma Co.Ltd(300791) (hereinafter referred to as " Sirio Pharma Co.Ltd(300791) "), 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 Sirio Pharma Co.Ltd(300791) financial statements have been prepared in accordance with the accounting standards for business enterprises in all major aspects, and fairly reflect the financial position of Sirio Pharma Co.Ltd(300791) as of December 31, 2021 and the operating results and cash flow of Sirio Pharma Co.Ltd(300791) 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. According to the code of professional ethics for Chinese certified public accountants, we are independent of Sirio Pharma Co.Ltd(300791) , 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.
(I) revenue recognition
1. Item description
Sirio Pharma Co.Ltd(300791) revenue recognition principles refer to the accounting policies and specific amounts described in the notes "III. important accounting policies and accounting estimates" (XXXII) to the financial statements. See the notes "v. (XXXVII) operating revenue and operating costs" for details. As the operating revenue of Sirio Pharma Co.Ltd(300791) during the reporting period is significant and one of the company's key performance indicators, there is a risk that the management manipulates the revenue recognition in order to achieve specific goals or expectations. We recognize Sirio Pharma Co.Ltd(300791) operating revenue recognition as a key audit matter.
2. Audit response
Our main audit procedures for the key audit matters are as follows:
(1) Test and evaluate the key internal control related to revenue recognition, and review whether the relevant accounting policies are correctly and consistently applied;
(2) Analyze the changes and reasons of income and gross profit margin during the reporting period;
(3) Check Sirio Pharma Co.Ltd(300791) order details and sales details, spot check sales confirmation, delivery order, invoice, delivery order, export declaration form, bank receipt and other relevant documents signed during the reporting period, and confirm their implementation;
(4) Implement cut-off test, analytical review and other relevant procedures for the details of sales revenue during the Sirio Pharma Co.Ltd(300791) reporting period;
(5) Understand the business background, specific transaction conditions, main order terms and settlement policies of Sirio Pharma Co.Ltd(300791) and major customers, and confirm the transaction amount of customers;
(6) Obtain the monthly tax exemption and refund declaration form during the Sirio Pharma Co.Ltd(300791) reporting period, and check the declared amount of export tax exemption and refund and the confirmation of overseas sales revenue;
(7) Select samples from the inventories that have been delivered at the end of the period but still remain in the customs and have not been cleared, and check the delivery form, customs declaration form and accounting records;
(8) For the inventory that has been delivered at the end of the period but is in transit or has not been accepted and confirmed, select samples from them and check them to the sales contract, accounting records, delivery order and post period confirmation records.
(II) impairment of goodwill
1. Item description
Sirio Pharma Co.Ltd(300791) for the recognition principle and description of goodwill impairment, please refer to "III. important accounting policies and accounting estimates" (XXV) in the notes to the financial statements. For the accounting policies and specific amounts, please refer to "v. (XV) goodwill" Sirio Pharma Co.Ltd(300791) conduct impairment test on goodwill at the end of the year. The impairment test requires to estimate the recoverable amount of relevant asset groups including goodwill. When determining the present value of the estimated future cash flow of the relevant asset group, Sirio Pharma Co.Ltd(300791) management needs to make major judgments and use key assumptions such as income growth rate, gross profit rate and discount rate. Due to the importance of goodwill to the overall financial statements, and considering the subjective judgment and significant estimation of the management involved in the impairment test, we determine the recognition and measurement of goodwill impairment provision as a key audit event.
2. Audit response
Our main audit procedures for the key audit matters are as follows:
(1) Understand, evaluate and test the design and operation effectiveness of the company's internal control related to goodwill evaluation;
(2) Evaluate the reliability of the management's prediction process in combination with the growth of income, profit and cash flow of the asset group over the years;
(3) For the discounted cash flow model, we compare the key input values such as income growth rate and sustainable growth rate with the past performance, management budget and forecast, and carefully evaluate the key assumptions and judgments used in preparing the discounted cash flow forecast;
(4) Recalculate the recoverable amount of the asset group related to the goodwill impairment test and compare it with the book value of the identifiable asset group including goodwill to judge whether it is necessary to withdraw the provision for goodwill impairment.
4、 Other information
Sirio Pharma Co.Ltd(300791) Management (hereinafter referred to as "management") is responsible for other information. Other information includes the information covered in Sirio Pharma Co.Ltd(300791) 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
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 Sirio Pharma Co.Ltd(300791) and disclosing the matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Sirio Pharma Co.Ltd(300791) , terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Sirio Pharma Co.Ltd(300791) .
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 risk 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. Whether there are doubts about the ability of the audit to obtain material evidence, and whether there may be doubts about the ability of the audit to obtain material evidence at the same time. 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 Sirio Pharma Co.Ltd(300791) unable to continue to operate.
(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 the entity or business activities in Sirio Pharma Co.Ltd(300791) to express an audit opinion on the financial statements. We are responsible for guiding, supervising and implementing the group audit, and take full responsibility for the audit opinions.
Identify and communicate with our internal management on the audit plan and the matters worthy of our attention.
We also provide a statement to the management on our compliance with the professional ethics requirements related to independence, and communicate with the management on 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.
Huaxing certified public accountants, Chinese Certified Public Accountants:
(special general partnership) (project partner)
Chinese certified public accountant:
Fuzhou, China April 8, 2002
