Special note on non-standard audit opinion of Modern Avenue Group Co.Ltd(002656) 2021 annual financial report
Zhonghuan zhuanzi (2022) No. 0510091
About Modern Avenue Group Co.Ltd(002656)
Special notes on non-standard audit opinions of 2021 financial report
Zhonghuan zhuanzi (2022) No. 0510091 Shenzhen Stock Exchange:
We have accepted the entrustment to audit the 2021 financial statements of Modern Avenue Group Co.Ltd(002656) (hereinafter referred to as "modern Avenue" or "the company"), and issued a qualified audit report (Report No.: Zhonghuan Shenzi (2022) 0510282) on April 26, 2022. In accordance with the relevant requirements of the rules for the preparation and reporting of information disclosure of companies offering securities to the public No. 14 - handling of non-standard audit opinions and matters involved and the Listing Rules of Shenzhen Stock Exchange on the gem, the relevant matters are explained as follows:
1、 Main contents involved in non-standard audit opinions
Investment in Nanjing Jiayuan New Energy Vehicle Co., Ltd
As described in notes VI and 9 to the financial statements and notes XV, 8 and (6), the company increased the capital of Nanjing Jiayuan New Energy Vehicle Co., Ltd. (hereinafter referred to as the "target company") by RMB 24 million through its subsidiary Foshan Taiyuan No. 1 equity investment partnership (limited partnership), accounting for 16.70% of the equity of the target company.
As we have not obtained the financial report and other relevant financial information of the subject company and the relevant information on the use of funds of RMB 24 million as of the date of issuance of this report, we are unable to judge the impact of the above matters on the changes in the fair value of other equity instrument investments and whether there are other related relationships (except the related relationships disclosed in the notes), and our audit scope is limited.
2、 Reasons and basis for expressing reservations
1. Importance
In the audit of the above financial statements, we calculated the overall materiality level of the consolidated financial statements at 2% of the operating gross profit of modern Avenue in accordance with the auditing standards for Chinese certified public accountants No. 1221 - importance in planning and performing audit work and Its Application guide, and the auditing standards for Chinese certified public accountants No. 8 - importance and evaluation misstatement, with an amount of 4.48 million yuan.
2. The reserved opinion refers to the impact of matters on the financial condition, operating results and cash flow (possible) of modern Avenue during the reporting period
Investment in Nanjing Jiayuan New Energy Vehicle Co., Ltd
As stated in notes VI and 9 to the financial statements and notes XV, 8 and (6), as of December 31, 2021, the description of modern college items is page 1 of 3
The investment amount in other equity instruments of Dao is 250 million yuan, of which the book balance formed by the investment target company is 240 million yuan. Since we failed to obtain the financial report and other relevant financial information of the subject company and the relevant information on the use of funds of RMB 24 million, we cannot judge the impact of the above matters on the changes in the fair value of other equity instrument investments and whether there are other related relationships (except the related relationships disclosed in the notes).
3. The reservations with explanatory notes relate to the specific circumstances of the matter and the accounting treatment of modern Avenue
(1) Amount of possible impact of "restricted" events (related events) on the company's financial position, operating results and cash flow during the reporting period
Since we are unable to obtain sufficient evidence on relevant matters or implement other alternative audit procedures to obtain sufficient and appropriate audit evidence, it is not feasible to provide the possible impact amount of relevant matters. The specific reasons are as follows:
Investment in Nanjing Jiayuan New Energy Vehicle Co., Ltd
As stated in "II. Basis for forming qualified opinions" in Zhonghuan Shenzi (2022) 0510282 audit report, as of the date of issuance of this report, we have failed to obtain the financial report and other relevant financial information of the subject company and the relevant information on the use of funds of RMB 24 million.
We are also unable to implement other alternative audit procedures to obtain sufficient and appropriate audit evidence. Therefore, we are unable to judge the impact of the above matters on the changes in the fair value of other equity instrument investments and whether there are other related relationships (except those disclosed in the notes).
As mentioned above, it is not feasible to provide the amount of possible impact of relevant matters.
(2) Universality
According to Article 8 of the auditing standards for Chinese certified public accountants No. 1502 - issuing non unqualified opinions in audit reports, certified public accountants shall express qualified opinions in case of any of the following circumstances: (I) after obtaining sufficient and appropriate audit evidence, the certified public accountants believe that the misstatement alone or combined has a significant impact on the financial statements, but it is not extensive; (II) certified public accountants are unable to obtain sufficient and appropriate audit evidence as the basis for forming audit opinions, but believe that the undetected misstatement (if any) may have a significant impact on the financial statements, but it is not extensive.
The balance sheet items involved in the above matters include "investment in other equity instruments" and "other comprehensive income"; Items in the income statement include "changes in fair value of other equity instrument investments". Although the changes that affect the fair value of other equity instrument investments of the company, the amount accounts for a small proportion of net assets and only affects specific elements, accounts or items of the financial statements.
The above matters did not change the consolidated profit and loss status and the positive and negative status of consolidated net assets of modern Avenue in the corresponding year, did not trigger financial compulsory delisting indicators, and did not have a significant impact on the appropriateness of the management of modern Avenue in preparing relevant annual financial statements using the going concern assumption.
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In conclusion, we judge that its impact on the 2021 financial statements of modern Avenue is not extensive, so we express reservations.
The above special instructions are only used for the simultaneous disclosure of modern Avenue in Shenzhen Stock Exchange and the 2021 annual report in accordance with relevant regulations, and shall not be used for other purposes.
Zhongshen Zhonghuan Certified Public Accountants (special general partnership) Chinese certified public accountant:
Bing Wang
Chinese certified public accountant:
Wu Xiafei
Wuhan, China April 26, 2022
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