Pengdu Agriculture & Animal Husbandry Co.Ltd(002505)
Financial report for 2021
April 2022
financial reports
1、 Audit report
Unqualified opinion of audit opinion type standard
Signing date of audit report: April 27, 2022
Name of audit institution: zhongxinghua Certified Public Accountants (special general partnership)
Audit Report No.: zths Zi (2022) No. 410075
Name of certified public accountant Ge Sanping and Tan Lifeng
Body of audit report
Audit report
Zhongxing Huashen Zi (2022) No. 410075 Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) Co., Ltd. all shareholders:
1. Audit opinion
We have audited the financial statements of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) (hereinafter referred to as " Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) 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 financial position of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company and its parent company as of December 31, 2021, as well as the operating results and cash flow of the parent company in 2021.
1. 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 Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) 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.
1. 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 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) revenue recognition
1. Item description
See notes IV, 27 and VI, 46 of the financial statements for relevant information disclosure Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company's source of operating income has no significant change compared with 2020, mainly from the trade of agricultural materials, grain and other bulk commodities, the sales of slaughtered meat products, meat sheep, beef cattle, dairy products and other products. In 2021, Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company's operating revenue was 14.304 billion yuan (13.446 billion yuan in 2020), an increase of 6.38% over the same period last year.
The company mainly sells agricultural materials, grain and other bulk commodity trade, slaughtered meat products, meat sheep, beef cattle, dairy products and other products, which belongs to the performance obligation at a certain point in time. According to the agreement in the sales contract, it is recognized when the customer obtains the control right of relevant goods, has received the price or has obtained the right of collection, and the relevant economic benefits are likely to flow in.
As operating revenue is one of the key performance indicators of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company, there may be inherent risks that the management may achieve specific goals or expectations through inappropriate revenue recognition. Therefore, we identified revenue recognition as a key audit matter.
2. Audit response
For revenue recognition, our audit procedures mainly include:
(1) Understand the key internal controls related to revenue recognition, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of relevant internal controls;
(2) Check whether the revenue recognition policy complies with the provisions of the accounting standards for business enterprises in combination with the business model of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company and the terms related to the transfer of main risks and rewards of commodity ownership in the sales contract;
(3) Implement 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) Select samples to implement letter confirmation procedures for the sales amount of major customers and the ending balance of accounts receivable, or perform alternative test procedures for checking supporting documents related to revenue recognition, including checking sales contracts, sales orders, product delivery orders, product transportation documents, customer signing and receiving documents, invoices and payment collection;
(5) Select a sample to conduct a cut-off test on the revenue recognized before and after the balance sheet date, check the delivery order, receipt and other supporting documents, check whether there are abnormal returns and exchanges after the balance sheet date, and evaluate whether the revenue is recognized in an appropriate accounting period;
(6) Check whether the information related to operating income has been properly presented in the financial statements.
(II) impairment of goodwill
1. Item description
See notes IV and 23 and notes VI and 20 to the financial statements for relevant information disclosure.
As of December 31, 2021, the original book value of goodwill items shown in the financial statements of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company was RMB 718 million, the impairment provision was RMB 370 million, and the book value was RMB 348 million.
Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) the management of the company (hereinafter referred to as the management) conducts impairment test on the goodwill formed by business combination at the end of each year. The management shall conduct impairment test on goodwill in combination with its related asset group or asset group combination, and the recoverable amount of relevant asset group or asset group combination shall be calculated and determined according to the present value of estimated future cash flow. The key assumptions used in the impairment test include: income growth rate in the detailed forecast period, growth rate in the sustainable forecast period, gross profit margin, discount rate, etc.
As the amount of goodwill is significant and the goodwill impairment test involves significant judgment of the management, we determine the impairment of goodwill as a key audit event.
2. Audit response
For goodwill impairment, our audit procedures mainly include:
(1) Understand the key internal controls related to goodwill impairment, evaluate the design of these controls, determine whether they are implemented, and test the operational effectiveness of relevant internal controls;
(2) Review the management's forecast of the present value of future cash flow and actual operating results in previous years, and evaluate the accuracy of the management's past forecast;
(3) Understand and evaluate the competence, professional quality and objectivity of external valuation experts hired by the management;
(4) Evaluate the rationality and consistency of the methods used by the management in the impairment test;
(5) Evaluate the rationality of the key assumptions adopted by the management in the impairment test, and review whether the relevant assumptions are consistent with the overall economic environment, industry conditions, business conditions, historical experience, operation plan, approved budget and other assumptions related to the financial statements used by the management;
(6) Test the accuracy, completeness and relevance of the data used by the management in the impairment test, and review the internal consistency of relevant information in the impairment test;
(7) Test whether the management's calculation of the present value of the estimated future cash flow is accurate;
(8) Check whether the information related to goodwill impairment has been properly presented in the financial statements.
(III) deferred income tax assets
1. Item description
See notes IV, 30, V and 22 to the financial statements for relevant information disclosure.
As of December 31, 2021, the amount of deferred income tax assets shown in the financial statements of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company is 5640095771 yuan, and the amount before offsetting with deferred income tax liabilities is 443879956 yuan. When recognizing deferred income tax assets, the management needs to assess whether Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company can obtain sufficient taxable income in the future to offset deductible temporary differences and deductible losses, which involves the management's major judgment. Therefore, we determine the deferred income tax assets as key audit matters.
2. Audit response
For the recognition of deferred income tax assets, our audit procedures mainly include:
(1) Understand the key internal controls related to the recognition of deferred income tax assets, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of relevant internal controls;
(2) Obtain the financial forecast of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company and its main subsidiaries in the future period approved by the management, review the rationality of the key assumptions adopted, and check whether they are consistent with the overall economic environment, industry conditions, operation conditions, historical experience, operation plan, approved budget, etc;
(3) Review whether the deductible temporary difference, the source of deductible loss and the amount are accurate;
(4) Test the accuracy and completeness of the management's calculation in the process of confirming the deferred income tax assets, whether the expected reversibility is reasonable, and whether the confirmation results are accurate;
(5) Check whether the recognition of deferred income tax assets is limited to the deductible taxable income that is likely to be obtained in the future;
(6) Check whether the information related to deferred income tax assets has been properly presented in the financial statements.
1. Other information
Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company management (hereinafter referred to as management) is responsible for other information. Other information includes the information covered in the 2021 annual report of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company, 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.
1. 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 Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company, terminate operation or have no other realistic choice.
The management is responsible for supervising the financial reporting process of Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) company.
1. 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 auditing, we have applied professional judgment and maintained professional judgment. 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 Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) 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 Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) 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 Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) 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 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
