Shanghai Step Electric Corporation(002527)
Audit report
Lixin Zhonglian Shen Zi [2022] d-0533
Lixin Zhonglian Certified Public Accountants (special general partnership)
LixinZhonglian CPAs (SPECIAL GENERAL PARTNERSHIP)
catalogue
1、 Audit report 1-6 II. Financial statements
1. Consolidated balance sheet, parent company balance sheet 1-4 2, consolidated income statement, parent company income statement 5-6 3, consolidated cash flow statement, parent company cash flow statement 7-8 4, consolidated statement of changes in shareholders’ equity, parent company statement of changes in shareholders’ equity 9-12 5 Notes to financial statements 1-155
Lixin Zhonglian Certified Public Accountants (special general partnership)
LixinZhonglian CPAs (SPECIAL GENERAL PARTNERSHIP)
Audit report
Lixin Zhonglian Shen Zi [2022] d-0533
Shanghai Step Electric Corporation(002527) all shareholders:
1、 Audit opinion
We have audited the financial statements of Shanghai Step Electric Corporation(002527) (hereinafter referred to as Shanghai Step Electric Corporation(002527) 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 shareholders’ equity and notes to relevant 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 consolidated and parent company’s financial position of Shanghai Step Electric Corporation(002527) company as of December 31, 2021 and 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 Shanghai Step Electric Corporation(002527) 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. 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.
Key audit matters how to deal with them in the audit
(I) goodwill impairment test the details and analysis of accounting policies for goodwill impairment. Please participate in the audit procedures related to goodwill impairment, including: reading the recognition of asset group or asset group combination described in note 24 of “III. important accounting 1. Evaluation of management’s asset group or asset policy and accounting estimation” in the notes to the consolidated financial statements; Accounting policies and “v. items of consolidated financial statements”
2. Understand note 20 of “historical notes of each asset group or asset group combination”.
Performance and development plan, as well as macro economy, consolidated financial statements and development trend of its industry as of December 31, 2021;
The net book value of goodwill in the table is RMB
113792776968 yuan. 3. Valuation method for evaluating goodwill impairment test; 4. The appropriate management that evaluates the key assumptions of goodwill impairment test evaluates the possible impairment of goodwill every year. The impairment assessment results of goodwill are basically managed by the management; The management shall determine the valuation report based on the rationality of the parameters quoted in 5. Evaluation test prepared by the external appraiser appointed by it. Impairment assessment is to estimate the growth rate of goodwill, the growth rate of stable period, the profit rate and the use value of discount based on the discounted cash flow forecast prepared in the forecast period including the present value of estimated future cash flow. The preparation of discounted cash flow forecast, cash flow rate, forecast period, and its determination basis involve the use of major judgments and estimates, especially accurate information; Fixed income growth rate, sustainable growth rate, interest and tax 6, review the calculation process of goodwill impairment test; Profit margin, determine the applied risk adjustment 7 and evaluate the impact of goodwill impairment test; There are inherent uncertainties and possibilities in the discount rate
Influenced by management preferences. 8. Evaluate whether the impairment of goodwill and the disclosure of key assumptions are sufficient.
Due to the inherent uncertainty involved in the impairment prediction and discounted future cash flow of goodwill, as well as the risk that the management may have a preference when selecting assumptions and estimates, we regard the evaluation of goodwill impairment as a key audit matter of Shanghai Step Electric Corporation(002527) company.
(II) revenue recognition. For details of accounting policies for revenue recognition and analysis of the audit procedures related to the evaluation of revenue recognition, please refer to note 30 of “III. recapture the following procedures: accounting policies and accounting estimates” in the notes to the consolidated financial statements. 1. Understand and evaluate the management’s accounting policies related to revenue recognition and “v. effective design and operation of key internal control of the consolidated financial statements”
“Project notes” note 45. Sex;
In 2021, Shanghai Step Electric Corporation(002527) company confirmed the business income. 2. Select samples to check the sales contract, and the identification and business income was RMB 426421260138. According to the contract terms and conditions related to the transfer of control over new products, Shida company is responsible for the revenue generated from product sales, and evaluates whether the revenue recognition time point meets the requirements recognized by the enterprise when the control over goods is transferred to customers. Requirements of accounting standards; Since revenue is one of the key indicators of Shanghai Step Electric Corporation(002527) company. 3. Considering the revenue and gross profit in combination with the product type, the management manipulates the inherent abnormal fluctuation of the revenue recognition time point in order to achieve the specific purpose and judge whether the current revenue amount is out of the standard or expected; Risk, we will recognize the income of Shanghai Step Electric Corporation(002527) company
Not for key audit matters.
4. Select samples of revenue transactions recorded this year, check invoices, sales contracts, delivery notes, delivery notes, acceptance reports, export declaration forms and other supporting documents, and evaluate whether relevant revenue recognition complies with the company’s accounting policies for revenue recognition;
5. Implement the confirmation procedure and check the confirmation result with the amount recorded in the book;
6. For the revenue transactions recorded before and after the balance sheet date, select samples and check the supporting documents such as delivery note, delivery note, acceptance report and export declaration form to evaluate whether the revenue is recorded in the appropriate accounting period.
4、 Other information
Shanghai Step Electric Corporation(002527) company management (hereinafter referred to as management) is responsible for other information. Other information includes the information contained in the relevant documents constituting 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 evaluating the going concern ability of Shanghai Step Electric Corporation(002527) company, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Shanghai Step Electric Corporation(002527) company, terminate operation or have no other realistic choice.
The management is responsible for supervising the financial reporting process of Shanghai Step Electric Corporation(002527) company.
6、 Responsibilities of certified public accountants for the audit of financial statements
Whether the overall audit report contains material errors due to fraud or assurance, and whether the audit report contains material errors. 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 the sustainable operation ability of Shanghai Step Electric Corporation(002527) 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 Shanghai Step Electric Corporation(002527) company to be unable to continue its business.
(5) 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.
(6) Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Shanghai Step Electric Corporation(002527) 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.
China Certified Public Accountants of Lixin Zhonglian Certified Public Accountants (special general partnership):
(project partner)
Chinese certified public accountant:
Tianjin, China April 23, 2022
Shanghai Step Electric Corporation(002527)
Consolidated balance sheet
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