Shenzhen Guohua Network Security Technology Co.Ltd(000004) year 2002
audit report
Zhitong Certified Public Accountants (special general partnership)
catalogue
Audit report 1-7
Consolidated and company balance sheet 1-2
Consolidated and corporate income statement 3
Consolidated and company cash flow statement 4
Consolidated and statement of changes in shareholders’ equity 5-6
Notes to financial statements 7-91
Zhitong Certified Public Accountants (special general partnership), 5th floor, set square, No. 22, Jianguomenwai street, Chaoyang District, Beijing, China, 100004
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audit report
Zhi Tong Shen Zi (2022) No. 440a016130 Shenzhen Guohua Network Security Technology Co.Ltd(000004) all shareholders:
1、 Reservations
We have audited the financial statements of Shenzhen Guohua Network Security Technology Co.Ltd(000004) (hereinafter referred to as Shenzhen Guohua Network Security Technology Co.Ltd(000004) company), including the consolidated and company’s balance sheet as of December 31, 2021, the consolidated and company’s income statement, consolidated and company’s cash flow statement, consolidated and company’s statement of changes in shareholders’ equity and notes to relevant financial statements in 2021.
In our opinion, in addition to the impact of the events described in the “basis for forming qualified opinions”, 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 financial position of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company as of December 31, 2021 and the consolidated and operating results and cash flow of the company in 2021.
2、 Basis for forming reservations
1. Capitalization of development expenditure
As stated in notes V and 14 to the financial statements, as of December 31, 2021, the development expenditure of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company was transferred into intangible assets of 1608260046 yuan in the current period, including mobile application security supervision and monitoring platform v2 0. Mobile application privacy compliance automatic detection platform v1 0 and Hongmeng application reinforcement platform v1 0 and other three projects, Shenzhen Guohua Network Security Technology Co.Ltd(000004) company failed to provide relevant supporting evidence including the working hour records of R & D personnel. We were unable to obtain sufficient and appropriate audit evidence on the measurement accuracy of expenditure attributable to the development stage of the intangible asset, and we were unable to determine whether it was necessary to adjust these amounts.
2. Rationality of third-party payment collection
Shandong Hengyu Information Technology Co., Ltd., Shandong yinpeng cloud computing Co., Ltd., Beijing Huaxia Baihui Technology Co., Ltd., Shenzhen Qishan Tourism Technology Co., Ltd., Shenzhen Anjie United Information Technology Co., Ltd., Shanghai taohan information technology center and Beijing LIANHANG Credit Management Service Co., Ltd. paid a total of 2705812500 yuan of accounts receivable of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company through third-party payment this year. The income corresponding to the third-party collection is recognized in previous years. We cannot obtain sufficient and appropriate audit evidence on the rationality of the above third-party collection, the book value of relevant accounts receivable and the corresponding income recognized in previous years, nor can we determine whether it is necessary to adjust these amounts.
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 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 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 expressing qualified opinions.
3、 Other information
Shenzhen Guohua Network Security Technology Co.Ltd(000004) company management (hereinafter referred to as management) is responsible for other information. Other information includes the information covered in the 2021 annual report of Shenzhen Guohua Network Security Technology Co.Ltd(000004) 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.
As mentioned in the above “basis for forming qualified opinions”, we are unable to obtain sufficient and appropriate audit evidence on the capitalization amount of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company’s development expenditure and the rationality of third-party payment collection on December 31, 2021. Therefore, we are unable to determine whether there is any material misstatement in other information related to the matter.
4、 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.
(I) revenue recognition
See Notes “III, 22” and “V, 33” to the financial statements for relevant information disclosure.
1. Item description
Shenzhen Guohua Network Security Technology Co.Ltd(000004) company’s main business is the development, sales and technical service of mobile information security software or system. In 2021, the operating revenue recognized by Shenzhen Guohua Network Security Technology Co.Ltd(000004) company was 28894418162 yuan. As revenue is one of the key performance indicators of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company and this year is the last year of performance gambling period, there is a risk of material misstatement, so we recognize the revenue recognition of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company as a key audit matter.
2. Audit response
Our main audit procedures for revenue recognition include:
(1) Understand and evaluate the effectiveness of internal control design related to revenue recognition and test its implementation;
(2) Introduce it experts to review and evaluate their R & D projects, products and delivery;
(3) Select samples to spot check the main business contracts, check the project bidding information, project implementation data, project acceptance data, bank payment collection, etc. in combination with the main terms agreed in the contract, and focus on checking the authenticity of the income in the last quarter; Select the sample acceptance data of main projects and extend it to the project acceptance data of end customers to check whether the revenue recognition meets the requirements of accounting standards for business enterprises and accounting policies for business enterprises; Investigate the reason and nature of the third party’s payment collection;
(4) Select samples of important bank deposit accounts and non major bank deposit accounts to carry out bank flow verification, check the inflow and outflow of large amount of funds in bank flow, and check the matching between capital flow and sales collection business;
(5) Inquire the industrial and commercial data of major customers through public channels, and ask the relevant personnel of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company to confirm whether there is an association relationship between customers and the company, and conduct customer background investigation on major new or abnormal customers;
(6) Select samples to visit some major customers, verify the authenticity of sales and further investigate whether there are potential related parties;
(7) Confirm the execution and acceptance of major contracts, sales amount and balance of accounts receivable in the current period to major customers;
(8) Check the sales collection after the balance sheet date, check whether the accounts receivable are collected according to the collection conditions agreed in the contract, check whether there are abnormalities and conduct further investigation.
(II) expected credit loss of accounts receivable
See Notes “III, 9” and “V, 3” to the financial statements for relevant information disclosure.
1. Item description
Shenzhen Guohua Network Security Technology Co.Ltd(000004) company’s ending balance of accounts receivable is 44400198852 yuan and the balance of expected credit loss is 7339959643 yuan. As the provision of expected credit loss of accounts receivable involves the judgment and estimation of the management, and the result has a significant impact on the financial statements, we regard the expected credit loss of accounts receivable as a key audit matter.
2. Audit response
Our main audit procedures for the expected credit loss of accounts receivable include:
(1) Review the rationality and consistency of the management’s policies on the accrual of expected credit losses of accounts receivable; (2) Understand the company’s revenue recognition, collection accounting period and credit limit according to industry, sales model, customer and other dimensions;
(3) Select the sample accounts receivable balance and execute the letter confirmation procedure;
(4) Conducted field visits or telephone interviews with some customers with large accounts receivable balances;
(5) Check the accuracy of the accounts receivable aging analysis table prepared by the management, and recalculate according to the expected credit loss accrual policy;
(6) Select accounts receivable with significant amount and independently test their recoverability. When evaluating the recoverability of accounts receivable, check relevant supporting evidence, including interviewing relevant management personnel of the customer, obtaining the analysis and explanation of the recoverability of the management personnel, and querying the customer’s industrial and commercial data and credit background through open channels;
(7) Check the collection after the period and evaluate the rationality of the provision of expected credit loss of accounts receivable.
(III) impairment of goodwill
See Notes “III, 18” and “V, 15” to the financial statements for relevant information disclosure.
1. Item description
The original book value of the goodwill of Guohua Wangan company at the end of the period was 98740364775 yuan, the impairment provision was 55657848837 yuan, and the book value was 43082515938 yuan. As the goodwill test involves significant impairment, the management determines the amount of goodwill as a significant impairment.
2. Audit response
Our main audit procedures for goodwill impairment include:
(1) Review whether the management’s division of the asset group or combination of asset groups where goodwill is located is reasonable;
(2) Understand and evaluate the competence, professional quality and objectivity of external evaluation experts employed by the company’s management;
(3) Hire internal valuation experts to evaluate the goodwill impairment test and review the third-party valuation report;
(4) Review whether the goodwill impairment test method and model are appropriate;
(5) Review whether the basic data on which the goodwill impairment test is based is accurate, whether the selected key parameters are appropriate, and whether the key assumptions adopted, the major estimates and judgments made, and the selected value type are reasonable;
(6) Check whether the presentation and disclosure of goodwill are accurate and appropriate according to the results of goodwill impairment test. 5、 Responsibilities of management and governance for financial statements
Shenzhen Guohua Network Security Technology Co.Ltd(000004) the management of the company 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 due to fraud or error.
When preparing the financial statements, the management is responsible for evaluating the going concern ability of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Shenzhen Guohua Network Security Technology Co.Ltd(000004) company, terminate operation or have no other realistic choice.
The management is responsible for supervising the financial reporting process of Shenzhen Guohua Network Security Technology Co.Ltd(000004) company.
6、 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 carrying out the audit work in accordance with the audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
