Changchai Company Limited(000570)
Financial accounting report of 2021
1、 Audit report
Unqualified opinion of audit opinion type standard
Signing date of audit report: April 11, 2022
Name of audit institution: Notary Tianye Certified Public Accountants (special general partnership)
Audit Report No.: Sugong w [2022] A315
Name of certified public accountant: Wang Wenkai, Qin Zhijun
Body of audit report
Changchai Company Limited(000570) all shareholders:
1、 Audit opinion
We have audited the financial statements of Changchai Company Limited(000570) (hereinafter referred to as Changchai shares), 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 consolidated and parent company's financial position of Changchai shares as of December 31, 2021, as well as 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. 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 Changchai 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) revenue recognition
1. Item description
For details and analysis of the accounting policies for revenue recognition, please refer to the accounting policies described in "III. 30. Revenue" and "v. 37. Operating revenue and operating cost" in the notes to the financial statements. In 2021, the operating income of Changchai Co., Ltd. was 24524305 million yuan.
As the operating revenue is one of the key performance indicators of Changchai, there is an inherent risk that the management manipulates the revenue recognition time point in order to achieve specific goals or expectations. We recognize the revenue recognition of Changchai as a key audit matter.
2. Audit response
(1) Understand the key internal control related to revenue recognition, evaluate whether its design and implementation are effective, and test the effectiveness of relevant internal control operation;
(2) Interview the management to understand the revenue recognition policy of Changchai; Obtain and check the contracts or agreements signed between Changchai and customers, identify the contract terms related to the recognition of product sales revenue, and evaluate whether the recognition of revenue of Changchai meets the requirements of accounting standards for business enterprises; (3) Sample test was conducted for sales revenue, check the supporting documents related to revenue recognition, and check the supporting documents in the sales contract (including but not limited to sales contract, order, sales invoice, shipment note and export declaration form) related to the transfer of commodity control and the documents collected and confirmed to be received by the supporting manufacturer;
(4) Check the operating income recognized before and after the balance sheet date with supporting documents such as delivery note and customs declaration by sampling, and evaluate whether the operating income is recognized in an appropriate period;
(5) According to the characteristics and nature of customer transactions, samples are taken to implement the letter confirmation procedure to confirm the balance of accounts receivable and the amount of sales revenue.
(II) provision for bad debts of accounts receivable
1. Item description
As stated in the accounting policies described in "III. 10. Impairment of financial instruments" and "v. 4. Accounts receivable" in the notes to the financial statements. On December 31, 2021, the book balance of accounts receivable of Changchai Co., Ltd. was 554530200 yuan, the bad debt provision was 179321100 yuan, and the book value was 375209100 yuan, accounting for 7.72% of the total assets at the end of the period. As the balance of accounts receivable is significant and the provision for bad debts of accounts receivable involves the judgment of the management, we determine it as a key audit event.
2. Audit response
(1) Obtain the internal control system related to the sales of Changchai shares and the management of accounts receivable, understand and evaluate the design of internal control and implement walk through test to check whether the relevant internal control system has been effectively implemented;
(2) Analyze and confirm the rationality of the accounting estimation of bad debt provision for accounts receivable of Changchai Co., Ltd., including the basis for determining the combination of accounts receivable, the expected credit loss rate and the judgment of impairment test of individually evaluated accounts receivable;
(3) Review whether the basis for determining the combination of accounts receivable is accurate and whether the judgment of individual provision for bad debts is reasonable in combination with the provision policy for bad debts of accounts receivable;
(4) Obtain and check the detailed statement of accounts receivable, aging analysis table and withdrawal table of bad debt reserves, and confirm the rationality of withdrawal of bad debt reserves of accounts receivable in combination with letters of accounts receivable and subsequent collection inspection;
(5) For accounts receivable classified as single withdrawal of bad debt reserves, consult the corresponding contracts and other materials to understand their sales and collection, and judge whether the withdrawal of bad debt reserves is sufficient;
(6) The accounts receivable shall be confirmed by letter, and the authenticity and accuracy of the amount of accounts receivable on the balance sheet date shall be confirmed in combination with post period inspection and other procedures.
4、 Other information
The management of Changchai Co., Ltd. (hereinafter referred to as the management) is responsible for other information. Other information includes the information covered in the 2021 annual report of Changchai shares, 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 sustainable operation ability of Changchai shares, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless the management plans to liquidate Changchai shares, terminate operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Changchai.
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 to design appropriate audit procedures.
(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 the sustainable operation ability of Changchai shares. 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 Changchai shares to be unable to continue to operate.
(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 Changchai shares 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.
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 Wang Wenkai, Chinese certified public accountant
(special general partnership) (project partner)
Chinese certified public accountant Qin Zhijun
Wuxi, China April 11, 2022
2、 The unit of the statement in the financial notes to the financial statements is: yuan 1. The preparation unit of the consolidated balance sheet: Changchai Company Limited(000570)
December 31, 2021
Unit: Yuan
December 31, 2021 December 31, 2020
Current assets:
Monetary capital 7079666787476072822285
Provision for settlement
Lending funds
Trading financial assets 404053261571150027200
Derivative financial assets
Notes receivable 3343112367860014093805
Accounts receivable 3752091264839715401649
Receivables financing 49738882602
Prepayment 819741839935784075
receivable premium
accounts receivable reinsurance
Reinsurance contract reserve receivable
Other receivables 1951535052621206280
Including: interest receivable
Dividends receivable
Purchase of resale financial assets
Inventory 6510837581860668034055
Contract assets
Assets held for sale
Non current assets due within one year
Other current assets 44060822572729936272
Total current assets
