audit report
Zhonghui kuaishan [2022] No. 1675 Sichuan Tianyi Comheart Telecom Co.Ltd(300504) all shareholders:
1、 Audit opinion
We have audited the financial statements of Sichuan Tianyi Comheart Telecom Co.Ltd(300504) (hereinafter referred to as Sichuan Tianyi Comheart Telecom Co.Ltd(300504) or 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 owner’s 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 Sichuan Tianyi Comheart Telecom Co.Ltd(300504) 2021 as of December 31, 2021 and the operating results and cash flows of Sichuan Tianyi Comheart Telecom Co.Ltd(300504) 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 Sichuan Tianyi Comheart Telecom Co.Ltd(300504) , 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.
（1） Bad debt provision for accounts receivable
1. Event description
As of December 31, 2021, the book value of the company’s accounts receivable was 38943481295 yuan, accounting for 12.99% of the total assets in the consolidated statements. According to the relevant provisions of the new standards for financial instruments, the company conducts impairment test on the accounts receivable measured at amortized cost and confirms the bad debt provision based on the expected credit loss. Estimating the recoverability of accounts receivable and conducting impairment test involves significant accounting estimates and judgments of the management. Based on the significant book value of accounts receivable and the uncertainty of management’s estimation and judgment, we regard the provision for bad debts of accounts receivable as a key audit event.
See note III (XIII) for accounting policies and estimates related to bad debt provision of accounts receivable, and see note V (IV) for disclosure related to bad debt provision of accounts receivable.
2. Audit response
(1) Understand and evaluate the design effectiveness of internal control related to accounts receivable, and test the effectiveness of key internal control operation;
(2) Understand the company’s credit policy and analyze the rationality of accounting estimation of bad debt provision for accounts receivable, including the basis for determining the combination of accounts receivable, expected credit loss rate, etc;
(3) Check the accuracy of the accounts receivable aging analysis table prepared by the management and the accuracy of the calculation of bad debt reserves;
(4) Select appropriate samples of accounts receivable to implement letter of confirmation procedures;
(5) Select accounts receivable with significant amount and check relevant supporting evidence, including subsequent collection, customer’s credit history, etc.
（2） Inventory falling price reserves
1. Event description
As of December 31, 2021, the book value of the company’s inventory was 113294014849 yuan, accounting for 37.80% of the total assets in the consolidated statements. Due to the significant amount of inventory, the ending inventory is measured at the lower of cost and net realizable value. The determination of net realizable value requires the management to use significant accounting estimates and judgments. Therefore, we regard the provision for inventory falling price as a key audit matter.
See note III (XV) for relevant accounting policies and estimates of inventory falling price reserves, and note V (VII) for relevant disclosure of inventory falling price reserves.
2. Audit response
(1) Evaluate and test the relevant key internal control of the company’s inventory falling price reserves;
(2) Supervise the inventory count stored in the company, confirm the issued goods and entrusted processing materials, and pay attention to whether the defective and cold backed inventory is identified;
(3) Review the company’s division of inventory age, understand the causes of the formation of inventories with a stock age of more than 1 year and the subsequent settlement, and evaluate whether the estimation of inventory falling price provision is reasonable in combination with historical experience;
(4) Review the estimation and calculation of the company’s inventory falling price reserves, and assess whether the estimation of the provision for inventory falling price reserves is reasonable in combination with the raw materials consumed by similar products in the current period, the costs still to be incurred when the products are completed, and the subsequent sales prices or orders.
4、 Other information
The management 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
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 assessing the going concern ability of Sichuan Tianyi Comheart Telecom Co.Ltd(300504) and disclosing the matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Sichuan Tianyi Comheart Telecom Co.Ltd(300504) , terminate the operation or has no other realistic choice.
Sichuan Tianyi Comheart Telecom Co.Ltd(300504)
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:
（1） 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.
（2） Understand the internal control related to audit in order to design appropriate audit procedures, but the purpose is not to express an opinion on the effectiveness of internal control.
（3） Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
（4） Draw conclusions on the appropriateness of management’s use of going concern assumptions. 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 Sichuan Tianyi Comheart Telecom Co.Ltd(300504) going concern ability. 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 Sichuan Tianyi Comheart Telecom Co.Ltd(300504) unable to continue its business.
（5） Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
（6） Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Sichuan Tianyi Comheart Telecom Co.Ltd(300504) 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 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. (no text on this page)
Zhonghui Certified Public Accountants (special general partnership) Chinese certified public accountant:
(project partner)
Hangzhou, China Certified Public Accountant:
Report date: April 11, 2022
Consolidated balance sheet
December 31, 2021
Huihe form 01-1 prepared by: Sichuan Tianyi Comheart Telecom Co.Ltd(300504) amount unit: RMB
Project note No. Line No.: December 31, 2021 December 31, 2020
Current assets:
Monetary capital V (I) 18987560930671707494669 trading financial assets V (II) 2 – 40173632877 derivative financial assets 3 – notes receivable V (III) 4104309216138967938232 accounts receivable V (IV) 53894348129539780938746 accounts receivable financing 6 – prepayment V (V) 73468210261541893058 other accounts receivable V (VI) 81347567577609894024 including: interest receivable 9 – Dividend Receivable 10 – inventory V (VII) 1111329401484964304115682 contract assets 12 – assets held for sale 13 – non current assets due within one year 14 – other current assets V (VIII) 15105143202531944296530 total current assets 16264752735919229030203818 non current assets:
Debt investment 17-
