Section x financial report
1、 Audit report
Type of audit opinion qualified opinion
Signing date of audit report: April 20, 2022
Name of audit institution: China Securities Tiantong Certified Public Accountants (special general partnership)
Audit Report No.: Zhong Zheng Tian Tong (2022) Zheng Shen Zi No. 010200006
Name of certified public accountant: Suo huansuo, Wu Jinlong
Audit report
Zhong Zheng Tian Tong (2022) Zheng Shen Zi No. 010200006 Xiongan Kerong Environment Technology Co.Ltd(300152) all shareholders:
1、 Reservations
We have audited the financial statements of Xiongan Kerong Environment Technology Co.Ltd(300152) (hereinafter referred to as ” Xiongan Kerong Environment Technology Co.Ltd(300152) “), including the consolidated and company’s balance sheet as of December 31, 2021, the consolidated and company’s income statement, consolidated and company’s cash flow statement, consolidated and company’s statement of changes in shareholders’ equity and notes to relevant financial statements in 2021.
In our opinion, in addition to the impact of the matters described in the “basis for forming a qualified 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 the company as of December 31, 2021 and the operating results and cash flow of the company in 2021.
2、 Basis for forming reservations
As stated in “XVI. Other significant events (III)” in the notes to the consolidated financial statements:
In June 2021, Puyi Shijiazhuang equity investment fund management center (limited partnership) (hereinafter referred to as “Puyi fund”) affiliated to Xiongan Kerong Environment Technology Co.Ltd(300152) signed the equity transfer agreement with Xinjiang limacheng Energy Equipment Co., Ltd. (hereinafter referred to as “Xinjiang limacheng”), It is agreed that Puyi fund will acquire 29.50% equity of Bazhou junchuang Energy Co., Ltd. (hereinafter referred to as “Bazhou junchuang”) held by Xinjiang Lima Cheng in cash. In July 2021, Puyi fund paid 58 million yuan for equity transfer. In January 2022, both parties signed the termination of equity transfer agreement. From January to March 2022, Xinjiang Lima component returned 58 million yuan of equity transfer funds to Puyi fund four times.
We note that in March 2021, Xinjiang junchuang Energy Equipment Co., Ltd. (hereinafter referred to as “Xinjiang junchuang”) under the same control as Xiongan Kerong Environment Technology Co.Ltd(300152) transferred its 100% equity of Bazhou junchuang to Xinjiang Lima Cheng, and its 100% equity transfer price was 40 million yuan. As of December 31, 2021, Xinjiang limacheng has not paid the equity transfer price. We are unable to obtain sufficient and appropriate audit on the commercial essence, commercial rationality and pricing fairness of Puyi fund’s acquisition of 29.50% equity of Bazhou junchuang, and we are unable to judge whether the treatment of Bazhou junchuang’s investment fund of 58 million yuan reported under long-term equity investment on Xiongan Kerong Environment Technology Co.Ltd(300152) balance sheet date is appropriate.
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 Xiongan Kerong Environment Technology Co.Ltd(300152) , 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) impairment test of franchise rights
1. Item description
As described in “note III important accounting policies and accounting estimates (21)” of the financial statements and “note V main items of the consolidated financial statements (16)” of the financial statements, Zhucheng Baoyuan new energy power generation Co., Ltd., a subsidiary of the company, participated in the public infrastructure construction business of domestic waste incineration power generation and landfill in Zhucheng by means of construction and operation transfer, forming intangible assets of franchise rights. As of December 31, 2021, The book value of the franchise right is 547027 million yuan. In 2021, the company made an impairment provision of 1394938 million yuan for the franchise right. As the amount of franchise assets is significant, and the impairment test involves significant judgment and estimation of the management. Therefore, we regard it as a key audit matter.
2. Audit response
Our audit procedures for the impairment test of franchise rights mainly include:
(1) Understand and test whether the design and implementation of internal control related to franchise rights are effective;
(2) Observe and check the operation of the garbage power station of Zhucheng Baoyuan new energy power generation Co., Ltd., check the relevant agreement terms of the franchise project, and evaluate the rationality of the accounting estimates made by the management;
(3) Communicate with the management and the external experts hired by the management, evaluate the professional competence, independence and objectivity of the external experts hired by the management, and understand and evaluate the appropriateness of the relevant supporting evidence used in the implementation of the procedures;
(4) Obtain the evaluation report issued by external evaluation experts, and analyze and review the important judgments made in the impairment test.
(II) revenue recognition
1. Item description
As stated in “note III important accounting policies and accounting estimates (XXVII)” of the financial statements and “note V main items of the consolidated financial statements (XXXIX)”, the consolidated operating income of Xiongan Kerong Environment Technology Co.Ltd(300152) 2021 was RMB 176403500, a decrease of 65.74% compared with 2020. The authenticity and completeness of the recognition of operating revenue and the accuracy of the recognition time point have a significant impact on the operating results. Therefore, we regard the recognition of revenue as a key audit matter.
2. Audit response
Our audit procedures for revenue recognition mainly include:
(1) Understand and test whether the design and implementation of internal control system and financial accounting system related to revenue recognition are effective;
(2) Interview the management to understand the revenue recognition policies, analyze and evaluate whether the revenue recognition principles and specific standards of various businesses or products comply with the relevant provisions of the accounting standards for business enterprises in combination with the main terms of the sales contracts of various businesses or products of the company;
(3) Analyze the monthly and annual changes of operating income and the fluctuation of gross profit margin in combination with the type of business or product;
(4) Check the supporting documents related to revenue recognition, including sales contract, invoice, delivery order, customer receipt, commissioning report, etc., and judge the authenticity of revenue recognition;
(5) Confirm the sales revenue of major customers by letter, and check the authenticity and integrity of sales revenue;
(6) Select major contracts and interview customers;
(7) Perform cut-off test on the revenue recognized before and after the balance sheet date, check the delivery order, customer receipt, commissioning report and other supporting documents, and judge whether the revenue recognition period is appropriate.
4、 Other information
The management is responsible for other information. Other information includes the information covered in Xiongan Kerong Environment Technology Co.Ltd(300152) 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 Xiongan Kerong Environment Technology Co.Ltd(300152) and disclosing the matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Xiongan Kerong Environment Technology Co.Ltd(300152) , terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Xiongan Kerong Environment Technology Co.Ltd(300152) .
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 aggregate 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 auditing in accordance with the auditing standards, we use professional judgment and maintain professional suspicion. 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. 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 Xiongan Kerong Environment Technology Co.Ltd(300152) ‘s ability to continue as a going concern. If we conclude that there are significant uncertainties, the auditing standards require us to draw the attention of report 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 Xiongan Kerong Environment Technology Co.Ltd(300152) unable to continue to operate.
(V) evaluate the overall presentation, structure and content (including disclosure) 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 Xiongan Kerong Environment Technology Co.Ltd(300152) entity or business activities to express an audit opinion on the financial statements. We are responsible for guiding, supervising and executing the group audit, and assume 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 most important to 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.
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 is Xiongan Kerong Environment Technology Co.Ltd(300152)
Unit: Yuan
December 31, 2021 December 31, 2020
Current assets:
Monetary capital 898683097317977588560
Provision for settlement
Lending funds
Trading financial assets
Derivative financial assets
Notes receivable 12336940383155802038
Accounts receivable 163736666910
