catalogue
1、 Audit report Page 1-8 II. Financial statements Page 9-16
(I) consolidated balance sheet Page 9
(II) balance sheet of parent company Page 10
(III) consolidated income statement Page 11
(IV) profit statement of the parent company Page 12
(V) consolidated cash flow statement Page 13
(VI) cash flow statement of the parent company Page 14
(VII) consolidated statement of changes in owner's equity Page 15
(VIII) statement of changes in owner's equity of the parent company Page 16
3、 Notes to the financial statements Page 17-132
Audit report
TJS [2022] No. 5068
Hangzhou Century Co.Ltd(300078) all shareholders:
1、 Reservations
We have audited the financial statements of Hangzhou Century Co.Ltd(300078) (hereinafter referred to as Hangzhou Century Co.Ltd(300078) company), including the consolidated and parent company's balance sheet on December 31, 2021 and the consolidated and parent company's balance sheet in 2021
Income statement, consolidated and parent company cash flow statement, consolidated and parent company statement of changes in owner's equity, and notes to relevant financial statements.
In our opinion, in addition to the possible impact of the matters described in the "basis for forming a qualified 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 status of Hangzhou Century Co.Ltd(300078) company as of December 31, 2021, and the consolidated and parent company's financial status of 2021
Operating results and cash flow of the company.
2、 Basis for forming reservations
In 2020, Hangzhou Century Co.Ltd(300078) company and some of its subsidiaries' counterparties Hangzhou Yijie Medical Devices Co., Ltd
Company, Hangzhou wenran Information Technology Co., Ltd. and other units have direct or indirect capital exchanges with Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd., the former major shareholder of Hangzhou Century Co.Ltd(300078) company, and its related parties, and Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd. occupies the funds of listed companies. Due to the lack of relevant materials and the internal control defects of Hangzhou Century Co.Ltd(300078) company, we are unable to obtain sufficient and appropriate audit evidence on the authenticity and fairness of the transactions between Hangzhou Century Co.Ltd(300078) company and the above-mentioned companies and the integrity of the occupation of funds by Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd. and its related parties. We express reservations on the 2020 financial statements of Hangzhou Century Co.Ltd(300078) company.
As stated in note 14 (I) to the financial statements, Hangzhou Century Co.Ltd(300078) company found part of the income of the previous period in 2021
The recognition basis is insufficient, the error of relevant income is corrected, and the operating expenses of 2020 are reduced by retrospective restatement method
The business income is 16.009 million yuan and the operating cost is 3.6254 million yuan.
As mentioned in 8, 16 and 19 of note V (I) to the financial statements, in 2021, Yihui Technology Co., Ltd., a subsidiary of Hangzhou Century Co.Ltd(300078) company, purchased 60.166 million yuan (excluding tax) of quilt cabinet and sleep instrument, 278143 million yuan (excluding tax) of other software and hardware and related services from Hangzhou Yijie medical device Co., Ltd., Zhejiang daoyixun Information Technology Co., Ltd. and Hangzhou fisio Medical Technology Co., Ltd Hangzhou Century Co.Ltd(300078) company has invested in some of the above companies, and some of the above counterparties are related parties of Hangzhou Century Co.Ltd(300078) company. As stated in note V (I) 4 of the financial statements, by the end of 2021, the book balance of accounts receivable of Yihui Technology Co., Ltd. to Shanghai Xifan Technology Service Co., Ltd., Shenzhen Yulin Technology Service Co., Ltd., trickle down Haicheng (Beijing) Technology Co., Ltd. and other companies was 92.044 million yuan, the bad debt provision was 642479 million yuan, and the book value of accounts receivable was 277961 million yuan.
We failed to implement the necessary audit procedures for the above matters to obtain sufficient and appropriate audit evidence, and were unable to judge the commercial essence, authenticity, fairness and rationality of the above transactions and related adjustments of Hangzhou Century Co.Ltd(300078) company, as well as the appropriateness of withdrawing bad debt reserves for the above accounts receivable. These events reflect the defects in the internal control of Hangzhou Century Co.Ltd(300078) company, which may have relevant potential impact on the financial statements.
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 Hangzhou Century Co.Ltd(300078) 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. In addition to the matters described in the "basis for forming qualified opinions", we determine that the following matters are the key audit matters that need to be communicated in the audit report.
（1） Recognition of revenue 1
Item description
See notes III (XXVI), V (Ⅱ) 1 and XIV (Ⅱ) of the financial statements for relevant information disclosure.
Hangzhou Century Co.Ltd(300078) company's operating revenue mainly comes from the sales of business intelligence products and intelligent medical management
Development and service of information and software. In 2021, the amount of operating income items shown in the financial statements of Hangzhou Century Co.Ltd(300078) company was 9615499 million yuan Hangzhou Century Co.Ltd(300078) company's foreign sales of business intelligence business are generally recognized after the goods are declared to the Customs for export and the bill of lading is obtained, and the revenue of Chinese sales is generally recognized after the buyer's acceptance; For the development and service of intelligent medical management information and software, the corresponding revenue is generally recognized when the system online confirmation or acceptance report confirmed by the customer is obtained.
As operating revenue is one of the key performance indicators of Hangzhou Century Co.Ltd(300078) company, there may be inherent risks that the management of Hangzhou Century Co.Ltd(300078) company (hereinafter referred to as 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
Our audit procedures for revenue recognition include but are not limited to:
(1) Understand the key internal control related to revenue recognition, evaluate its design and determine whether it has been implemented, and test the operation effectiveness of relevant internal control;
(2) Check the sales contract, understand the main contract terms or conditions, and evaluate whether the revenue recognition method is appropriate; (3) Implement analysis procedures for income and accounts receivable, including monthly income fluctuation analysis, income change analysis of main customers, end of period balance analysis of accounts receivable, collection progress analysis of important 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 contract, delivery note, goods receipt, system online confirmation or acceptance report; 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) We focus on the implementation and acceptance of important projects, ask the project leader about the implementation of the project, and select some customer interview procedures to verify the implementation, acceptance and payment of the current project;
(6) Combined with the letter of accounts receivable, confirm the current sales volume and the acceptance of large contracts to major customers by sampling;
(7) Check the operating income confirmed before and after the balance sheet date by sampling to the supporting documents such as delivery note, customer receipt, export declaration form, freight bill, system launch confirmation or acceptance report, and evaluate whether the operating income is recognized in an appropriate period;
(8) Obtain the sales return records after the balance sheet date and check whether there is dissatisfaction on the balance sheet date
Sufficient conditions for revenue recognition;
(9) Check whether the information related to operating income has been properly presented and disclosed in the financial statements.
（2） Impairment of accounts receivable
1. Event description
See note III (x) and note V (I) 4 of the financial statements for relevant information disclosure.
As of December 31, 2021, the book balance of accounts receivable items shown in the financial statements of Hangzhou Century Co.Ltd(300078) company is 1250645500 yuan, the bad debt provision is 372437800 yuan, and the book value is 878207700 yuan.
According to the credit risk characteristics of various accounts receivable, the management measures its loss reserves according to the expected credit loss amount equivalent to the whole duration based on individual accounts receivable or combination of accounts receivable. For accounts receivable whose expected credit loss is measured on a single basis, the management comprehensively considers the reasonable and reliable information about past events, current situation and future economic situation forecast, estimates the expected cash flow received, and determines the bad debt provision to be withdrawn accordingly; For the accounts receivable whose expected credit loss is measured on the basis of portfolio, the management divides the portfolio based on the aging, refers to the historical credit loss experience, and adjusts it according to the forward-looking estimation, and prepares the comparison table between the aging of accounts receivable and the expected credit loss rate, so as to determine the accrued bad debt reserves.
As the amount of accounts receivable is significant and the impairment test of accounts receivable involves significant management judgment, we determine the impairment of accounts receivable as a key audit event.
2. Audit response
Our audit procedures for the provision for bad debts of accounts receivable include but are not limited to:
(1) Understand the key internal controls related to the impairment of accounts receivable, evaluate the design of these controls, determine whether they have been implemented, and test the operation effectiveness of relevant internal controls;
(2) Review the subsequent actual write off or recovery of accounts receivable for which bad debt reserves have been accrued in previous years, and evaluate the accuracy of previous forecasts of the management;
(3) 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;
(4) 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;
(5) 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;
(6) Check the sales collection of main customers, check whether there are customers who fail to collect the payment according to the agreement, and analyze these customers separately, including understanding the reasons for exceeding the agreed period of the contract and the operation of customers from the management, querying the information related to the development of customers and their industry through open channels, combined with the recovery of past receivables and the occurrence of bad debts, Evaluate the adequacy of the provision for bad debts of accounts receivable;
(7) Confirm the large amount of accounts receivable at the end of the period by sampling;
(8) Check the post period collection of accounts receivable and evaluate the rationality of the management's provision for bad debts of accounts receivable;
(9) Check whether the information related to the impairment of accounts receivable has been properly presented and disclosed in the financial statements;
（3） Goodwill impairment
Item description
See note III (XX) and note V (Ⅰ) 21 of 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 Hangzhou Century Co.Ltd(300078) company is RMB 744 Beijing Huafeng Test & Control Technology Co.Ltd(688200) , the impairment provision is RMB 325327100, and the book value is RMB 419361100.
When there are signs of impairment in the asset group or combination of asset groups related to goodwill, and at the end of each year, the management shall conduct impairment test on goodwill. 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 management judgment, we determine the impairment of goodwill as a key audit event.
2. Audit response
Our main audit procedures for goodwill impairment include but are not limited to:
(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 employed 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 and the technical parameters used in the evaluation report;
(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 and disclosed 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 results
