Stock Code: Julong Co.Ltd(300202) stock abbreviation: ST Julong Announcement No.: 2022035 Julong Co.Ltd(300202)
The board of directors’ opinions on the matters involved in the audit report of the company in 2021
Special description
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without falsity
Records, misleading statements or material omissions.
Julong Co.Ltd(300202) hereinafter referred to as “the company” or “Julong shares”), the accounting firm (special general partnership), the audit institution for the year 2021, issued an audit report that could not express an opinion on the company’s financial report for the year 2021. According to the rules for the preparation of information disclosure of companies offering securities to the public No. 14 – handling of non-standard opinions and matters involved The board of directors of the company explained the matters involved in the audit opinion as follows:
1、 Contents that cannot be expressed in the audit report
We are entrusted to audit the financial statements of Julong Co.Ltd(300202) (hereinafter referred to as “Julong 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.
We do not express an audit opinion on the attached financial statements of Julong company. Due to the importance of the matters described in the section “forming the basis of unable to express an opinion”, we are unable to obtain sufficient and appropriate audit evidence as the basis for issuing an audit opinion on the financial statements.
2、 Form a basis on which opinions cannot be expressed
(I) bank deposit letter of credit
As stated in “XIV. Other important matters (V) bank deposit letter matters” in the notes to the financial statements, as of December 31, 2021, the consolidated bank deposit balance of Julong company was 3506559 million yuan. We have implemented the necessary audit procedures such as letter of confirmation. Affected by the epidemic of novel coronavirus, the bank deposit that failed to implement the letter of confirmation procedure was 107062 million yuan, of which the amount involved in Shanghai was 9.7347 million yuan, The amount involved in foreign regions is 971500 yuan; The bank deposit that has sent a letter but has not received a reply is 7.7725 million yuan, of which the amount involved by banks in China is 102.42 million yuan
Million yuan, involving 6.7483 million yuan in foreign regions; By letter to China Zheshang Bank Co.Ltd(601916) confirming that no reply has been received on the illegal guarantee matters in April 2021 and prior years, we are unable to obtain sufficient and appropriate audit evidence to judge the accuracy of bank deposit amount and the integrity of guarantee and other matters.
(II) illegal external guarantee and occupation of funds by controlling shareholders and related parties
As stated in “XIV. Other important matters (II) capital occupation and repayment” in the notes to the financial statements, Julong company provided guarantee for the affiliated companies controlled by the controlling shareholder and its related parties with the certificates of deposit of its subsidiaries Julong self service and Julong rongchuang, resulting in the capital occupation of 355967900 yuan by the controlling shareholder and its related parties; 97.5 million yuan of capital occupied by controlling shareholders and their related parties is formed by withdrawing debugging currency and transferring it to personal accounts; The funds occupied by the controlling shareholder and its related parties are 695551 million yuan in the form of transferring funds from the supplier to the related companies controlled by the controlling shareholder and its related parties.
As of the date of issuance of this audit report, there are still 288190800 yuan (including 307802 million yuan of interest receivable) of non operating funds occupied by the company that have not been recovered, and the recoverable amount is subject to significant uncertainty. At the same time, as the impact of major defects in relevant internal control in the early stage has not been completely eliminated, we are unable to obtain sufficient and appropriate audit evidence to judge the integrity of Julong’s external guarantee, the recoverability of the remaining funds occupied by the controlling shareholders and related parties, the rationality of the value reduction loss and its possible impact on the financial statements.
(III) investigation items filed by the CSRC
As stated in the notes to the financial statements “XIV. Other important matters (III) case filing and investigation by the CSRC”, Julong company and its actual controllers Liu Changqing and Liu Yongquan received the investigation notice issued by the China Securities Regulatory Commission on July 13, 2021. Because Julong shares, Liu Changqing and Liu Yongquan were suspected of illegal information disclosure, according to the relevant provisions of the securities law of the people’s Republic of China, It is decided to file a case for investigation against Julong Co., Ltd., Liu Changqing and Liu Yongquan. As of the date of issuance of this audit report, Julong company has not received the concluding opinions or decisions of the China Securities Regulatory Commission on the above investigation matters, and we are unable to judge the extent and scope of the impact of the investigation results on Julong company’s financial statements.
3、 Opinions of the board of directors on audit reports that cannot express opinions
The board of directors of the company respects the opinions of zhongxinghua Certified Public Accountants on the above matters, and explains the basic matters on which opinions cannot be expressed as follows:
(I) bank deposit letter of credit
1. The amount of bank deposit without letter of confirmation procedure is 107062 million yuan, which is detailed as follows:
Inquiry company name deposit bank closing amount (note)
RMB)
Ningbo Duowei Julong venture capital partnership
China China Minsheng Banking Corp.Ltd(600016) Ningbo Min’an road sub branch 213.77
(limited partnership) Ningbo Duowei
Limited partner of Ningbo Duowei Julong venture capital partnership, none
(limited partnership) Bank Of Hangzhou Co.Ltd(600926) Wenchuang sub branch 8189 (custodian account) 172587569 finance and capital of the company
Ningbo Duowei Julong venture capital partnership Bank Of Hangzhou Co.Ltd(600926) Wenchuang sub branch 9981 (control of current special fund account)
(limited partnership) 800812100
Julong (Shanghai) Enterprise Development Co., Ltd. ICBC Shanghai Zhongshan South Road sub branch 508.64
India’s wholly-owned subsidiary idbi bank 49765552
India bank 3889 wholly owned subsidiary
Total 1070626382
Because Ningbo Duowei Julong venture capital partnership (limited partnership) and Julong (Shanghai) Enterprise Development Co., Ltd. operate in Shanghai, the above companies are unable to implement the process of using seal and bank deposit letter due to epidemic risk control;
Employees of a wholly-owned subsidiary in India cannot implement the bank deposit letter process due to the impact of the epidemic in China;
After the impact of the epidemic outside China is reduced, the company will coordinate relevant companies to actively cooperate with the audit institution to supplement and complete the letter work, and confirm the accuracy of the above account amount and the pledge and guarantee.
2. The amount of bank deposits that have not received the reply is 7.7725 million yuan, which is detailed as follows:
Closing amount
Name of inquiry company deposit bank
(RMB)
Julong Co.Ltd(300202) China Citic Bank Corporation Limited(601998) Shanghai Nanjing East Road sub branch 38289582
Julong Co.Ltd(300202) Bank of Communications Shanghai branch business department 64128097
Julong Co.Ltd(300202) China China Construction Bank Corporation(601939) Qingdao Branch Laixi sub branch-
Julong (Shanghai) Enterprise Development Co., Ltd. ICBC Shanghai Dong’an road sub branch 9.19
Julong rongchuang Technology Co., Ltd. China Zheshang Bank Co.Ltd(601916) Shenyang branch business department 5.00
Commerz bank 230943186, a wholly-owned subsidiary of Germany
Deutsche Bank 269504507, a wholly-owned subsidiary of Germany
Deutsche Bank, a wholly-owned subsidiary of Germany (deposit) 34299704
Standard Bank 140080832, a wholly-owned subsidiary of South Africa
Total 777247327
The above-mentioned banks that have not received a reply basically failed to reply in time due to the control of the epidemic outside China. After the impact of the epidemic is reduced, the company will coordinate relevant companies to actively cooperate with the audit institution to supplement and complete the letter work and confirm the above-mentioned accounts
Julong rongchuang Technology Co., Ltd. has not replied to the letter. After many communications between our company and the staff of the audit institution, China Zheshang Bank Co.Ltd(601916) Shenyang Branch replied to reply within 10 working days from the date of receiving the letter on April 22. The company will cooperate with the audit institution to continuously track the reply to the above letter. As of the date of issuance of the audit report, the total amount of bank deposits of the company and relevant subsidiaries in China Zheshang Bank Co.Ltd(601916) is 246206 yuan;
As an auxiliary verification means for the above bank deposit amount, pledge and guarantee, the company cooperated with the audit institution to review the online banking information of relevant bank accounts and found no abnormalities.
(II) illegal external guarantee and occupation of funds by controlling shareholders and related parties
The company has cooperated with the audit institution to implement the following audit procedures:
1. The audit institution has implemented the letter work of all banks. Except for the above banks that cannot reply due to special reasons, other banks have replied to confirm that there are no pledges and guarantees;
2. The audit institution went to the bank to print the bank flow of the company and major subsidiary companies in recent three years. Through the closed-loop verification of bank flow – company accounts – Bank flow by the audit institution, no new illegal guarantee and capital occupation of the company were found as of the date of issuance of the audit report;
3. The company cooperates with the audit institution to obtain all bank transactions of the company’s controlling shareholders, actual controllers and related parties since 2016. As of the date of issuance of the audit report, no new illegal guarantee and capital occupation of the company have been found; 4. The company cooperated with the audit institution to obtain the credit investigation report of the company and its subsidiaries, and found no new illegal guarantee and capital occupation of the company;
5. The audit institution obtained the real estate information query report from the real estate trading center and found no new illegal guarantee and capital occupation of the company.
In addition, as of the date of issuance of the audit report, the company still has 282190800 yuan (including interest receivable) of non operating funds occupied by the controlling shareholder, and the recoverable amount is subject to significant uncertainty. In this regard, the company has fully accrued bad debts in the reporting period.
To sum up, the financial department of the company actively cooperated with the audit work according to the requirements of the audit institution during the audit of the annual report, provided the audit manuscript materials and relevant evidence to the audit institution comprehensively and truly, earnestly implemented the requirements of the board of directors of the company, and fulfilled the responsibility of cooperating with the audit work. The board of directors of the company respects the audit opinions issued by the audit institution, regrets the delisting results and regrets the losses caused to the majority of investors. The board of directors of the company will further urge the management to urge the actual controller to properly solve the external guarantee and the occupation of funds by related parties as soon as possible, so as to eliminate the relevant negative effects. Strengthen and improve the internal control system, improve and ensure the quality of internal control, continue to strictly investigate possible violations such as fund occupation and illegal guarantee, perform the obligation of information disclosure according to law, and safeguard the legitimate rights and interests of all shareholders.
4、 Opinions of independent directors on audit reports that cannot express opinions
Zhongxinghua Certified Public Accountants issued an audit report that could not express an opinion on the company’s 2021 financial statements. After and zhongxinghua accounting
