catalogue
1、 Audit report Page 1-6 II. Financial statements Page 7-14
(I) consolidated balance sheet Page 7
(II) balance sheet of the parent company Page 8
(III) consolidated income statement Page 9
(IV) profit statement of the parent company Page 10
(V) consolidated cash flow statement Page 11
(VI) cash flow statement of the parent company Page 12
(VII) consolidated statement of changes in owner's equity Page 13
(VIII) statement of changes in owner's equity of the parent company Page 14 III. notes to financial statements Page 15-107
Audit report
TJS [2022] No. 3508
Zhejiang Huatong Meat Products Co.Ltd(002840) all shareholders:
1、 Audit opinion
We have audited the financial statements of Zhejiang Huatong Meat Products Co.Ltd(002840) (hereinafter referred to as Zhejiang Huatong Meat Products Co.Ltd(002840) 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 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 Zhejiang Huatong Meat Products Co.Ltd(002840) company 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 Zhejiang Huatong Meat Products Co.Ltd(002840) company 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. We shall not express an opinion on these matters based on the overall audit of the financial statements.
（1） Revenue recognition
1. Event description
See notes III (XXV) and V (Ⅱ) 1 to the financial statements for relevant information disclosure.
Zhejiang Huatong Meat Products Co.Ltd(002840) company's operating income mainly comes from livestock and poultry slaughtering and processing, livestock and poultry breeding, feed processing, deep processing of meat products and sales of corresponding products. In 2021, Zhejiang Huatong Meat Products Co.Ltd(002840) company's operating revenue was RMB 8.342 billion, a year-on-year decrease of 5.59%. According to the sales contract between Zhejiang Huatong Meat Products Co.Ltd(002840) company and its customers, Zhejiang Huatong Meat Products Co.Ltd(002840) company generally recognizes the revenue when the control right related to the delivery of goods to customers is transferred.
Since operating revenue is one of the key performance indicators of Zhejiang Huatong Meat Products Co.Ltd(002840) company, there may be inherent risks that the management of Zhejiang Huatong Meat Products Co.Ltd(002840) company (hereinafter referred to as the management) may achieve specific objectives or expectations through inappropriate revenue recognition. Therefore, we determine revenue recognition as a key audit matter.
2. Audit response
(1) Understand the key internal controls related to revenue recognition, evaluate the design of these controls, determine whether they have been implemented, and test the operational effectiveness of relevant internal controls;
(2) Check the main sales contracts, identify the terms related to the customer's acquisition of control over relevant goods, and evaluate whether the revenue recognition policies comply with the provisions of the accounting standards for business enterprises;
(3) Implement substantive analysis procedures for operating revenue and gross profit margin on a monthly basis, products, customers, etc., identify whether there are significant or abnormal fluctuations, and find out the causes of fluctuations;
(4) For domestic sales revenue, check the supporting documents related to revenue recognition by sampling, including sales contracts, orders, delivery notes signed by customers, etc; For export revenue, obtain the information of E-port and check it with the book records, and check the sales contract, export declaration form, freight bill of lading, sales invoice and other supporting documents by sampling;
(5) Combined with the letter of accounts receivable, the current sales volume is confirmed to the main customers by sampling;
(6) Check the operating income recognized before and after the balance sheet date by sampling to the delivery note, freight bill of lading and other supporting documents signed by the customer, and evaluate whether the operating income is recognized in an appropriate period;
(7) Obtain the sales return records after the balance sheet date and check whether there is any situation that does not meet the conditions for revenue recognition on the balance sheet date;
(8) Check whether the information related to operating income has been properly presented in the financial statements.
(II) book value of fixed assets and construction in progress
1. Event description
See notes III (XIV), (XV) and V (Ⅰ) 11 and 12 to the financial statements for relevant information disclosure.
Zhejiang Huatong Meat Products Co.Ltd(002840) in recent years, in order to expand the production scale, the fixed assets investment scale is large. As of December 31, 2021, the book value of fixed assets and projects under construction totaled 4.847 billion yuan, accounting for 67.92% of the total assets. When the construction in progress reaches the expected usable state, it shall be transferred into fixed assets according to the actual cost of the project. Fixed assets are depreciated within the useful life of fixed assets according to the straight-line method.
As for the time point when the construction in progress reaches the expected serviceable state and is transferred into fixed assets, and the useful life of fixed assets involves the important judgment of the management, therefore, we regard the book value of fixed assets and construction in progress as the key audit matters.
2. Audit response
For the book value of fixed assets and construction in progress, our audit procedures mainly include:
(1) Understand the internal control of Zhejiang Huatong Meat Products Co.Ltd(002840) company related to the existence, integrity and accuracy of fixed assets and projects under construction, evaluate whether its design and implementation are effective, and test the operation effectiveness of relevant internal control; (2) Check whether the accounting policies related to fixed assets and construction in progress are correctly and consistently applied;
(3) The ratio of the annual production of fixed assets to that of the previous year is calculated and analyzed; (4) Select the samples of fixed assets and projects under construction added in the current period, and check the supporting documents such as project initiation, contract, invoice, acceptance and payment;
(5) On the basis of sampling, pay attention to the date of the acceptance report, or check the commissioning and production records to judge the accuracy of the time point when the construction in progress is transferred to fixed assets;
(6) Observe the progress of major construction in progress and check important fixed assets near the balance sheet date;
(7) Check whether the information related to fixed assets and construction in progress has been properly presented in the financial statements.
(III) impairment of biological assets
1. Event description
See notes III (x), (XVII), (XIX) and V (I) 6 and 13 to the financial statements for relevant information disclosure.
As of December 31, 2021, the book value of biological assets of Zhejiang Huatong Meat Products Co.Ltd(002840) company was 614 million yuan, accounting for 8.60% of the total assets, including 180 million yuan of depreciation or impairment provision of biological assets.
The market price of the company's biological assets may fluctuate significantly due to the impact of cyclical diseases and market supply and demand. If the market price drops sharply, the company's biological assets are more likely to be impaired. As the impairment of biological assets has a significant impact on the financial statements and the management needs to use significant judgment when determining its net realizable value, we regard the impairment of biological assets as a key audit matter.
2. Audit response
For the impairment of biological assets, our audit procedures mainly include:
(1) Understand and evaluate the design effectiveness of the internal control of the management to review, evaluate and determine the impairment of biological assets, and test the effectiveness of the implementation of key controls, including the control of identifying objective evidence of impairment and calculating impairment reserves;
(2) Carry out sampling and inventory supervision on biological assets, determine the number of stocks at the end of the period, and observe the status of various biological assets;
(3) Communicate with the management to understand and evaluate the preventive measures and risk response strategies for the safety of biological assets in the daily operation process;
(4) Evaluate the important assumptions involved in the net realizable value of biological assets calculated by the management, including checking the sales price, survival rate, unit cost, sales expenses, occurrence and unsealing of local "African swine fever";
(5) Inquire about the price changes of biological assets such as the price of pigs and chickens in recent years, understand the cyclical fluctuation law of the price of products such as pigs and chickens, and check and analyze the impact of these factors considered by the management on the impairment risk of biological assets;
(6) Obtain the calculation table of depreciation reserves and depreciation reserves of biological assets of Zhejiang Huatong Meat Products Co.Ltd(002840) company, check and analyze the rationality of net realizable value, and evaluate the accuracy of depreciation reserves of biological assets;
(7) Select samples, independently query the open market price information, and compare it with the estimated selling price; (8) Check whether the information related to the impairment of biological assets has been properly presented in the financial statements. 4、 Other information
The management is responsible for other information. Other information includes the information covered in the 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 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, whether due to fraud or error.
When preparing the financial statements, the management is responsible for evaluating the sustainable operation ability of Zhejiang Huatong Meat Products Co.Ltd(002840) company, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless liquidation is planned, operation is terminated or there is no other realistic choice.
Zhejiang Huatong Meat Products Co.Ltd(002840) corporate governance (hereinafter referred to as governance) is responsible for supervising the financial reporting process of Zhejiang Huatong Meat Products Co.Ltd(002840) company.
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 Zhejiang Huatong Meat Products Co.Ltd(002840) company. 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 Zhejiang Huatong Meat Products Co.Ltd(002840) company to be 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 Zhejiang Huatong Meat Products Co.Ltd(002840) company to express 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. Tianjian Certified Public Accountants (special general partnership) Chinese certified public accountant:
(project partner)
Hangzhou, China Certified Public Accountant:
April 21, 2002
Consolidated balance sheet
