Special note of China Audit Asia Pacific Certified Public Accountants LLP on Issuing non-standard audit opinion report on the audit of financial statements of Lion New Energy Technology (Henan) Co., Ltd. in 2021
Beijing, China
BEIJING CHINA
China Audit Asia Pacific Certified Public Accountants LLP
About Mengshi new energy technology (Henan) Co., Ltd
Issuing non-standard audit opinion and audit report in 2021 financial statement audit
Special description
Zhongshen Asia Pacific Shen Zi (2022) No. 004488 Shenzhen Stock Exchange:
We have accepted the entrustment to audit the financial statements of Lion New Energy Technology (Henan) Co., Ltd. (hereinafter referred to as “lion technology”) in 2021, and issued an audit report with no opinion on April 29, 2022 (Report No.: zsapss Zi (2022) Haima Automobile Co.Ltd(000572) ). In accordance with the relevant requirements of the China Securities Regulatory Commission, such as 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, the guidelines for the application of regulatory rules – Audit No. 1, and the stock listing rules of Shenzhen stock exchange, the relevant matters are explained as follows:
1、 Overall importance level of consolidated financial statements
The overall importance of the 2021 consolidated financial statements used in our audit is as follows: the selected benchmark: operating income
Percentage used: 1%
Selection basis: due to the large fluctuation of lion technology’s pre tax profit, in order to ensure the rationality of the selection of importance level base, we choose the total operating income as the benchmark.
Calculation result: 9.47 million
The above benchmarks and percentages have not changed compared with the previous year.
2、 Main contents involved in non-standard audit opinions
(I) debt forgiveness
As stated in note 6.52 of the financial statements, the investment income from the debt restructuring of lion technology in 2021 was RMB 2140487000, of which the investment income from the debt exemption of creditors to lion technology in December 2021 was RMB 2082521700. Mengshi technology and its subsidiaries received the amount of creditor’s rights involved in the debt exemption notice and creditor’s rights exemption letter issued by the creditor in December 2021 (base date: 2021)
China Audit Asia Pacific Certified Public Accountants LLP
November 30) was 4030278100 yuan, and the total amount of exempted creditor’s rights was 3404198500 yuan, including 1321676800 yuan for creditors as shareholders of listed companies and 2082521700 yuan for other creditors.
Due to the failure to obtain sufficient and appropriate audit evidence for the creditor’s debt exemption of lion technology, we are unable to judge the authenticity and commercial rationality of the debt exemption made by other creditors except the creditor who is a shareholder of the listed company.
(II) it is impossible to judge whether the financial statements prepared by the company on the assumption of going concern are appropriate
As stated in notes 2.2 to the financial statements, continuous operation and 13.2 contingencies, Mengshi technology has suffered operating losses for many years. After deducting non recurring profits and losses, the net profit attributable to the shareholders of the listed company this year was -1117578400 yuan. Of the short-term loans of 1243593600 yuan at the end of the period, 1173493000 yuan was overdue, there were many litigation matters, and some assets were sealed up and frozen by the court, These circumstances indicate that there are significant uncertainties that may lead to major doubts about the going concern ability of lion technology. Lion technology has disclosed the management’s analysis and improvement measures for going concern, but we still cannot judge whether it is appropriate for lion technology’s management to use the assumption of going concern to prepare the financial statements of 2021.
(III) the financial information of durion energy AG, an overseas subsidiary, is incomplete
As of December 31, 2021, durion energy AG, a holding subsidiary with a 55% shareholding ratio of lion Technology (the registered address of the company is Munich, Germany), had net assets equivalent to -7.3421 million yuan and net profit equivalent to -2.1252 million yuan in 2021. As of the date of issuance of this audit report, the overseas intermediary employed by lion technology failed to provide complete financial information and audit reports of durion energy Ag for 2020 and 2021, and we were unable to obtain sufficient and appropriate audit evidence to judge durion energy AG Whether the presentation of the financial statements is correct, so it is impossible to judge the impact of the event on the financial statements. 3、 Reasons and basis for issuing non-standard audit opinions
According to Article 10 of the auditing standards for Chinese certified public accountants No. 1502 – issuing unqualified opinions in audit reports, if sufficient and appropriate audit evidence cannot be obtained as the basis for forming audit opinions, but it is considered that the undetected misstatement (if any) may have a significant and extensive impact on the financial statements, the certified public accountant shall express an unqualified opinion.
The above matters for which opinions cannot be expressed have a significant and extensive impact on the financial statements.
In conclusion, we cannot express our opinion on the financial statements and notes of lion technology in 2021.
4、 Whether there is material misstatement in the matters involved in the opinion cannot be expressed
China Audit Asia Pacific Certified Public Accountants LLP
During the audit, we cannot obtain sufficient and appropriate audit evidence. Based on the audit evidence we have obtained, we cannot determine whether there is material misstatement in the financial statements of lion technology in 2021.
5、 Specific impact of non-standard audit opinions on the company’s financial position, operating results and cash flow during the reporting period
Due to the inability to obtain sufficient and appropriate audit evidence for the matters involved in the inability to express an opinion as the basis for issuing an audit opinion on the financial statements, we are unable to determine the possible impact amount of the relevant matters, nor can we judge whether the relevant matters may lead to changes in the nature of the company’s profits and losses.
6、 Whether the matters involved in non-standard audit opinions are in obvious violation of accounting standards and relevant information disclosure norms
Due to the inability to obtain sufficient and appropriate audit evidence as the basis for the formation of audit opinions, we cannot judge whether the matters involved in the inability to express opinions are in obvious violation of accounting standards and relevant information disclosure regulations.
7、 Other instructions
This special instruction is issued in accordance with the requirements of the securities regulatory authority and shall not be used for other purposes. The consequences caused by improper use have nothing to do with the certified public accountants performing the business and their accounting firms. CPA of China Audit Asia Pacific Certified Public Accountants Co., Ltd.:
(special general partnership)
(seal) Chinese certified public accountant:
Beijing, China April 29, 2022
