Ylz Information Technology Co.Ltd(300096)
Annual financial report for 2021
April 2022
1、 Audit report
Unqualified opinion of audit opinion type standard
Signing date of audit report: April 25, 2022
Name of audit institution: Dahua Certified Public Accountants (special general partnership)
Audit Report No. [2022] 0011162
Name of certified public accountant: Wang Qinglian, Feng Jun
Body of audit report
audit report
Dhsz [2022] 0011162 Ylz Information Technology Co.Ltd(300096) all shareholders:
1、 Audit opinion
We have audited the financial statements of Ylz Information Technology Co.Ltd(300096) (hereinafter referred to as " Ylz Information Technology Co.Ltd(300096) "), 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 accounting standards for business enterprises in all material aspects, and fairly reflect the financial position of 3 Ningxia Orient Tantalum Industry Co.Ltd(000962) 021 as of December 31, 2021 and the operating results and cash flows of 3 Ningxia Orient Tantalum Industry Co.Ltd(000962) 021.
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 Ylz Information Technology Co.Ltd(300096) 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.
We confirm that the following matters are the key audit matters that need to be communicated in the audit report.
1. Revenue recognition
2. Measurement of expected credit loss of contract assets and accounts receivable
3. Capitalization of R & D expenses
(I) revenue recognition
1. Event description
See note IV / (XXXI) income and note VI / note 38 operating income and operating costs of the financial statements for relevant information disclosure. In 2021, Ylz Information Technology Co.Ltd(300096) company's operating revenue was 87100800 yuan. As operating revenue is one of the key performance indicators of Ylz Information Technology Co.Ltd(300096) company, there is an inherent risk that the management will achieve specific goals or expectations through inappropriate revenue recognition. Therefore, we determine revenue recognition as a key audit matter.
2. Audit response
Our important audit procedures for this key audit matter include:
(1) Understand, evaluate and test the key internal control design and operation effectiveness of management related to revenue recognition;
(2) In combination with the business model and sales contract of Ylz Information Technology Co.Ltd(300096) company, identify the contract terms and conditions related to the transfer of commodity control and relevant performance obligations, and evaluate whether the revenue recognition policy complies with the provisions of the accounting standards for business enterprises;
(3) Select important items by sampling and check the supporting documents related to revenue recognition, such as sales contract, receipt, formal launch report or preliminary inspection report. The technical service income shall be recalculated according to the key terms such as service period and contract amount agreed in the contract.
(4) Carry out analytical procedures for operating revenue on a monthly basis, products, customers, etc., identify whether there are significant or abnormal fluctuations, and find out the causes of fluctuations.
(5) Combined with the accounts receivable, the contract execution shall be confirmed to the main customers by sampling, including contract amount, project progress, transaction amount, payment collection, closing balance, etc.
(6) A cut-off test is conducted on the operating income recognized before and after the balance sheet to evaluate whether the operating income is recognized in an appropriate period.
(7) Check whether the information related to operating income has been properly presented in the financial statements.
Based on the audit work performed, we believe that the relevant judgment of the management in revenue recognition is reasonable.
(II) measurement of expected credit loss of contract assets and accounts receivable
1. Event description
See note IV / (XIII) accounts receivable and (XVI) contract assets and note VI, note 3 accounts receivable and note 7 contract assets of the financial statements for relevant information disclosure. As of December 31, 2021, the ending balance of accounts receivable and contract assets (including contract assets reported as other non current assets) of Ylz Information Technology Co.Ltd(300096) company was 361566500 yuan and 243618600 yuan respectively, and the impairment provision was 107733600 yuan and 39633500 yuan respectively. The net amount of contract assets and accounts receivable accounted for 27.41% of the total assets in the consolidated financial statements.
When conducting impairment test on accounts receivable on the balance sheet date, the management needs to evaluate the recoverability of accounts receivable and contract assets based on the expected future available cash flow. Since significant accounting estimates and judgments of the management are involved, and the amount of accounts receivable and contract assets of Ylz Information Technology Co.Ltd(300096) company is significant, and their recoverability has a significant impact on the financial statements, we determine the measurement of expected credit loss of contract assets and accounts receivable as a key audit event.
2. Audit response
(1) Understand, evaluate and test the design and operation effectiveness of key internal control related to contract assets and provision for impairment of accounts receivable;
(2) Review the relevant considerations and objective evidence of the management's credit risk assessment of accounts receivable, and evaluate whether the management has properly identified the credit risk characteristics of various accounts receivable;
(3) For accounts receivable that measure the expected credit loss on a single basis, obtain and check the management's prediction of the expected cash flow received, evaluate the rationality of the key assumptions used in the prediction and the accuracy of the data, and check with the obtained external evidence;
(4) For accounts receivable whose expected credit loss is measured on the basis of portfolio, evaluate the rationality of the management's division of portfolio according to the characteristics of credit risk; Evaluate the rationality of the comparison table between the aging of accounts receivable and the expected credit loss rate determined by the management based on historical credit loss experience and forward-looking estimation; Test the accuracy and completeness of the data used by the management (including the aging of accounts receivable) and whether the calculation of bad debt reserves is accurate;
(5) Implement the inspection procedures for letters of confirmation and post period collection of accounts receivable, and evaluate the rationality of the management's provision for bad debts of accounts receivable;
(6) Check whether the information related to the impairment of accounts receivable has been properly presented in the financial statements.
Based on the audit work performed, we believe that the assumptions and methods adopted by the management in the expected credit loss of contract assets and accounts receivable are acceptable, and the relevant judgments and estimates of the management in the expected credit loss of contract assets and accounts receivable are reasonable.
(III) capitalization of R & D expenses
1. Event description
See "note IV / (XXIV) intangible assets and development expenses" and note VI / Note 17 development expenses and note VI / Note 42 R & D expenses of the financial statements for relevant information disclosure. At the end of 2021, Ylz Information Technology Co.Ltd(300096) company's capitalized balance of R & D expenditure was 128152 million yuan, a decrease of 71.20% over the same period of last year. The expensed amount of R & D expenditure was 186305300 yuan, an increase of 16.36% over the same period of last year.
Due to the following conditions:
(1) R & D expenses are the main expenditure areas of software development enterprises, with a large amount of investment, which has the inherent risk of adjusting profits;
(2) The division standard of capitalization and expense of R & D expenses is directly related to the company's business performance and other key indicators, which can be capitalized only when the capitalization conditions are met. To confirm whether the R & D expenses meet the capitalization conditions requires significant accounting judgment and estimation by the management.
Therefore, we determine the accuracy of the capitalization amount of R & D expenses as the key audit matter.
1. Audit response
(1) Understand, evaluate and test the effectiveness of key internal control design and operation related to project R & D;
(2) Check the R & D data of key nodes of the R & D project, determine whether the R & D project is in the research stage or the development stage, and determine whether the start and end time points of capitalization are correct;
(3) Understand the R & D Progress of each R & D project by the end of the period, and pay attention to whether the projects with no or small amount in the current period are stagnant, whether the stagnant projects cannot achieve the expected purpose, and whether there are signs of impairment;
(4) Check the results of R & D projects to determine the real existence of R & D projects.
(5) Check the salary, depreciation and other expenses of R & D personnel by sampling, and check whether they are consistent with relevant subjects;
(6) Carry out cut-off test on R & D expenditure, check the Sub Ledger and vouchers of development expenditure before and after the balance sheet date, and determine whether there is cross period phenomenon;
(7) Check whether the information related to R & D expenditure has been properly presented in the financial statements.
Based on the audit work performed, we believe that the relevant judgments and estimates of the management in the capitalization of R & D expenses are reasonable.
4、 Other information
Ylz Information Technology Co.Ltd(300096) company 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 understand 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
Ylz Information Technology Co.Ltd(300096) the management of the company 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 of Ylz Information Technology Co.Ltd(300096) company is responsible for evaluating the sustainable operation ability of Ylz Information Technology Co.Ltd(300096) company, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless the management plans to liquidate Ylz Information Technology Co.Ltd(300096) company, terminate operation or have no other realistic choice.
The management is responsible for supervising the financial reporting process of Ylz Information Technology Co.Ltd(300096) 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 in order to design appropriate audit procedures, but the purpose is not to express opinions 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 a conclusion on the appropriateness of the going concern assumption used by the management. 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 Ylz Information Technology Co.Ltd(300096) company. 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 Ylz Information Technology Co.Ltd(300096) 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 Ylz Information Technology Co.Ltd(300096) company to express an opinion on the financial statements. We are responsible for guiding, supervising and executing the group audit. We are fully responsible for the audit opinion.
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 to the audit of the current financial statements, thus constituting the key audit
