About Hangzhou Century Co.Ltd(300078)
Issuing non-standard audit opinions on the financial statements of 2021
Special description
TJH [2022] No. 665
Hangzhou Century Co.Ltd(300078) all shareholders:
We have accepted the entrustment to audit the 2021 financial statements of Hangzhou Century Co.Ltd(300078) (hereinafter referred to as Hangzhou Century Co.Ltd(300078) company or the company) and issued the qualified audit report (TJs [2022] No. 5068). 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 (revised in 2020) and the guidelines for the application of regulatory rules - Audit No. 1, the relevant information of Hangzhou Century Co.Ltd(300078) company is hereby stated as follows:
1、 Matters involved in the qualified opinion in the audit report
In 2020, Hangzhou Century Co.Ltd(300078) company and some of its subsidiaries' counterparties, such as Hangzhou Yijie Medical Devices Co., Ltd. and Hangzhou wenran Information Technology Co., Ltd., had 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. occupied 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.
In 2021 Hangzhou Century Co.Ltd(300078) company found that some of the revenue recognition basis of the previous period was insufficient, corrected the error of relevant revenue, and reduced the operating revenue of RMB 16.090 million and operating cost of RMB 3.6254 million in 2020 by retrospective restatement method.
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 from Hangzhou Yijie Medical Instrument Co., Ltd., Zhejiang daoyixun Information Technology Co., Ltd. and Hangzhou feishiao Medical Technology Co., Ltd., and purchased 278143 million yuan (excluding tax) of other software and hardware and related services 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.
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 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.
2、 Detailed reasons and basis for issuing qualified audit report
（1） Overall importance level of consolidated financial statements
During the audit of the 2021 financial statements of Hangzhou Century Co.Ltd(300078) company, we determined that the overall importance level of the consolidated financial statements was 460743 million yuan Hangzhou Century Co.Ltd(300078) company is a profit-making entity. We take the total profit of this year (taking the absolute value) of 7679045 million yuan as the benchmark, multiply the benchmark by 6%, and the overall importance level of the consolidated financial statements is 460743 million yuan. The calculation method of importance level in this period is basically the same as that in the previous period.
（2） Reasons and basis for issuing qualified audit report
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: (1) after obtaining sufficient and appropriate audit evidence, certified public accountants believe that the misstatement alone or combined has a significant impact on the financial statements, but it is not extensive; (2) 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.
As mentioned in "I. matters covered by qualified opinions in the audit report", we failed to implement necessary audit procedures for the above matters to obtain sufficient and appropriate audit evidence, and could not 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 believe that the above misstatement, if any, will have a significant impact on the financial statements of 2021, but it is only limited to accounts receivable, inventories, fixed assets, intangible assets, operating revenue, operating costs, credit impairment losses and other items. Such misstatement will not lead to changes in the nature of profits and losses of Hangzhou Century Co.Ltd(300078) company, so it is not extensive. In accordance with the audit standards, we have expressed reservations on these matters.
3、 The qualified opinion refers to the possible impact of matters on the financial position, operating results and cash flow during the reporting period
The possible impact of the matters involved in the qualified opinion on the financial position, operating results and cash flow during the reporting period is detailed in note II.
4、 Elimination or change of matters involved in non-standard audit opinions in the previous audit report in the current period
Hangzhou Century Co.Ltd(300078) company's 2020 financial statements have been audited by the bourse, and the bourse has issued the qualified audit report (TJs [2021] No. 3958) (hereinafter referred to as the previous audit report).
（1） Matters involved in non-standard audit opinions in the previous audit report
As mentioned in the paragraph "basis for forming qualified opinions" in the previous audit report, Hangzhou Century Co.Ltd(300078) company and its subsidiaries and Hangzhou wenran Information Technology Co., Ltd., Hangzhou Qihu Network Technology Co., Ltd., Hangzhou Bozhong Information Technology Co., Ltd., Hangzhou Yingwang Technology Co., Ltd., Suzhou Zhikang Information Technology Co., Ltd., Hangzhou Zhongwei Information Technology Co., Ltd., Hangzhou Yijie medical device Co., Ltd Hangzhou Shizhi Software Co., Ltd., Zhejiang daoyixun Information Technology Co., Ltd., Beijing Yishi Technology Co., Ltd., Hangzhou mailian Electronic Technology Co., Ltd., Hangzhou Zhihui Health Management Co., Ltd., Hangzhou Meiwen Advertising Co., Ltd., Hangzhou cognitive network technology Co., Ltd. and other suppliers had procurement transactions of 1638138 million yuan in 2020, and part of the purchase price was paid before 2020, After the proposed purchase with the above-mentioned subsidiaries of million yuan; In February 2020, Hangzhou Century Co.Ltd(300078) company acquired 4.3103% equity of Hangzhou Yingwang Technology Co., Ltd. and 18% equity of Hangzhou Yijie medical device Co., Ltd. from huirui investment management partnership (limited partnership) of Ningbo Meishan free trade port area, and paid 64.78 million yuan for equity acquisition. After that, Hangzhou Century Co.Ltd(300078) company plans to cancel the above equity transfer transaction with huirui investment management partnership (limited partnership) of Ningbo Meishan free trade port area; Some of the above suppliers and huirui investment management partnership (limited partnership) in Ningbo Meishan free trade port area have direct or indirect capital exchanges with Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd., the 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 the listed company. Due to the lack of relevant materials and the defects of internal control 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 capital occupation of the major shareholder Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd. and its related parties.
（2） Elimination or change of non-standard audit opinions in the previous audit report in the current period in 2021, Hangzhou Century Co.Ltd(300078) company further sorted out the capital occupation of major shareholders, and provided the account books and bank receipts of Hangzhou wenran Information Technology Co., Ltd., Hangzhou Qihu Network Technology Co., Ltd., Hangzhou Bozhong Information Technology Co., Ltd, At the same time, we have provided the relevant contracts, logistics documents, signing receipts, settlement documents and subsequent sales materials of purchased products between Hangzhou Century Co.Ltd(300078) company and the above-mentioned units, and assisted us in the implementation of supervision, interview and other procedures. After the implementation of these procedures, we still cannot obtain sufficient and appropriate audit evidence for the authenticity and fairness of some transactions between Hangzhou Century Co.Ltd(300078) company and the above-mentioned companies, so we still express reservations.
It is hereby explained. Tianjian Certified Public Accountants (special general partnership) Chinese certified public accountant:
Hangzhou, China Certified Public Accountant:
April 27, 2002
