About Henan Huaying Agricultural Development Co.Ltd(002321)
Inquiry letter of 2021 Annual Report
Annual report inquiry letter [2022] No. 159 of the company Department Henan Huaying Agricultural Development Co.Ltd(002321) board of directors:
During the post review of your company’s 2021 annual report (hereinafter referred to as the “annual report”), our department paid attention to the following matters:
1. According to the previous announcement of your company, the Henan Huaying Agricultural Development Co.Ltd(002321) reorganization plan (hereinafter referred to as the reorganization plan) approved by the intermediate people’s Court of Xinyang City, Henan Province (hereinafter referred to as “Xinyang intermediate people’s court”) stipulates that according to the provisions of Article 82 of the enterprise bankruptcy law and the review and confirmation of the declaration of creditor’s rights, the relevant creditor’s rights mainly include property guaranteed creditor’s rights, tax creditor’s rights, employee’s rights and ordinary creditor’s rights. Among them, there are 15 creditors of the property secured creditor group reviewed and determined by the manager, with the amount of creditor’s rights of 1.339 billion yuan; 307 ordinary creditor group creditors determined by the manager, with a creditor’s right amount of 4.019 billion yuan; There are 2 creditors in the tax creditor’s right group reviewed and determined by the manager, with the creditor’s right amount of 101519 million yuan; According to the investigation of the manager, the total amount of employee creditor’s rights is 342 million yuan. In addition, the estimated creditor’s rights of your company include: deferred determination of creditor’s rights, that is, among the creditor’s rights declared to the manager, the total amount of deferred determination of creditor’s rights due to pending litigation and the need to supplement evidence materials is 216 million yuan, involving 21 creditor’s rights; Undeclared creditor’s rights, that is, according to the records of your company’s financial books, the company’s description and the preliminary investigation of the manager, as of December 1, 2021, the total amount of creditor’s rights known to your company but not declared by the creditor according to law is about 362 million yuan. The aforesaid creditor’s rights totaled 6.288 billion yuan. On April 14, 2022, Xinyang intermediate people’s Court issued [2021] Yu 15 Po No. 6-4 civil ruling, which confirmed that the implementation of your company’s reorganization plan has been completed and terminated relevant reorganization procedures.
According to the annual report, the monetary capital balance of your company at the end of the reporting period increased from 235 million yuan at the beginning of the reporting period to 920 million yuan, mainly due to the restructuring investment received during the reporting period of 755 million yuan. At the same time, according to the restructuring plan, the closing balance of your company’s short-term loans, long-term loans, notes payable, accounts payable, non current liabilities due within one year, long-term accounts payable and other related liability subjects changed significantly compared with the beginning of the reporting period. During the reporting period, your company confirmed the income from debt restructuring of RMB 1.602 billion, and the ending balance of net assets attributable to shareholders of listed companies was RMB 1.117 billion, a decrease of 18.26% compared with the ending balance adjusted in 2020.
Please your company:
(1) Describe in detail your company’s implementation of the reorganization plan during the reporting period, including but not limited to the payment of debt repayment cash, the transfer of debt paying equity, the signing of debt retention agreement (if any) or the conclusion of debt retention arrangement, the disposal of inefficient assets, etc., and explain whether there is any difference between the amount of debt actually to be paid off in the implementation process and the amount specified in the reorganization plan. If so, Please explain the reasons and the impact on the bankruptcy and reorganization of your company, further verify and explain the source of funds of relevant reorganization investors on the basis of letter inquiry, and whether there are other agreements or arrangements that should be disclosed but not disclosed; (2) Based on the reply to question (1), explain in detail the specific accounting treatment process of your company for the matters involved in bankruptcy reorganization, and its impact on the financial status and operating results such as the net profit attributable to the shareholders of the listed company and the net assets attributable to the shareholders of the listed company during the reporting period, and further focus on the cash invested by the reorganization investors The reasons, basis and rationality of the reduction of relevant liabilities due to the reorganization plan included in 2021, and whether they comply with the relevant provisions of the accounting standards for business enterprises;
(3) Describe in detail the calculation process of relevant debt restructuring income, and whether the recognition of debt restructuring income in 2021 complies with the requirements of guidance for the application of regulatory rules – Accounting No. 1 on the recognition of debt restructuring income in 2021 when your company’s restructuring procedures are not completed by the end of 2021, and whether there is conclusive evidence that the major uncertainty related to restructuring has been eliminated by the end of 2021, if so, Further explain the judgment basis and its rationality, as well as whether the relevant accounting treatment is prudent and compliant.
The annual audit accountant is requested to check the above issues and give clear opinions, and explain in detail the audit procedures, audit evidence and conclusions obtained.
2. The annual report shows that according to the provisions of the reorganization plan, after your company applied and the manager reported to Xinyang intermediate people’s court, your company publicly auctioned some inefficient assets on Jingdong auction bankruptcy Qiangqing platform. Among them, the total original book value of the four asset packages is 3.717 billion yuan, the corresponding evaluation value is 1.054 billion yuan, and the auction transaction price is 347 million yuan; Asset package 1 to asset package 3 have been traded, and the expected transaction price of asset package 4 is 9.4826 million yuan.
Please your company:
(1) Explain the specific details of inefficient assets to be disposed according to the reorganization plan, including but not limited to asset type, asset name, accounting time, book balance, accrued impairment provision, book value, assessed value, reasons for disposal, etc. if it is equity assets, please further explain the operation and main financial data of the relevant subject matter in the latest year and next period;
(2) Describe your company’s evaluation of relevant assets item by item, including but not limited to the name of the evaluation institution, the selection procedure of the evaluation institution and its fairness, the evaluation method adopted and its rationality, the selection of main parameters, the selection basis and its rationality, and the evaluation conclusion and its rationality and fairness;
(3) Describe in detail the specific process of your company’s disposal of relevant assets, including but not limited to the auction time, whether the auction is off and its impact on the transaction price, the transaction time and amount, whether the transferee and its associated relationship with your company, the company’s directors, supervisors, 5% shareholders, actual controllers, etc., or other relationships that may lead to interest preference. On this basis, combined with the reply to the above questions (1) (2), Compare the difference between the actual auction transaction price and the assessed value, explain in detail the specific accounting treatment process of your company for the above inefficient asset disposal matters, including but not limited to the recognition time point and recognition basis, and further explain whether your company’s provision for impairment of relevant assets is sufficient and reasonable. The appraisal institution is requested to check and give clear opinions on the above questions (2) and the annual audit accountant on the above questions (1) (3).
3. The annual report shows that the total book balance of assets held for sale by your company as of the end of the reporting period is 2.108 billion yuan, and the provision for impairment of 7 assets such as medium and long-term equity investment and fixed assets is 1.644 billion yuan; The ending balance of liabilities held for sale was 187 million yuan.
In combination with the implementation of the reorganization plan, your company is requested to explain in detail the specific composition and subject name of the above held for sale assets and liabilities, as well as the time point and basis for transferring relevant assets and liabilities to held for sale assets and liabilities, as well as the basis and sufficiency of the provision for impairment of the above held for sale assets.
Ask the annual audit accountant to check and give clear opinions.
4. On April 29, 2021, Asia Pacific (Group) Certified Public Accountants (special general partnership) (hereinafter referred to as “Asia Pacific Institute”) issued an audit report on your company’s 2020 financial report, which formed the basis of unable to express an opinion, including sustainable operation, the nature, authenticity and recoverability of other receivables, major inventory disposal, litigation and estimated liabilities, default of interest bearing liabilities, etc. According to the reply of Asia Pacific (Group) accounting firm (special general partnership) on the inquiry letter of Henan Huaying Agricultural Development Co.Ltd(002321) 2020 annual report disclosed by your company on August 7, 2021, for the deterioration disposal of inventory goods of 165 million yuan and the loss of raw materials of 101 million yuan, Asia Pacific believes that the relevant events occurred earlier than the time of its audit site, resulting in its failure to personally supervise the relevant deteriorated inventory goods and raw materials, Your company failed to provide relevant image materials available for reference, and failed to provide relevant account records and relevant transportation records submitted to third-party external institutions such as market supervision department. Due to the limitation of audit scope, Asia Pacific Institute failed to check the relevant accounting records and supporting documents of Huangchuan Huaying Biological Products Co., Ltd. and Huangchuan Zhaowei planting and breeding professional cooperative on relevant matters, The audit scope is limited due to the above reasons and matters, which makes it impossible to implement further audit procedures or replace audit procedures to obtain sufficient and appropriate audit evidence to confirm the authenticity of the above two transactions and whether they have commercial substance.
On April 30, 2022, your company disclosed the special statement of the board of directors on the elimination of the impact of matters involved in the non-standard audit opinion in 2020 and the special statement of Asia Pacific Institute on the non-standard audit opinion of Henan Huaying Agricultural Development Co.Ltd(002321) 2021 financial report (hereinafter referred to as the non-standard opinion statement of Accountants), which showed that your company has eliminated the impact of matters involved in the non-standard audit opinion in 2020. Among them, for sustainable operation, the above materials say that the reorganization of your company will help to improve the company’s asset liability structure, enhance the company’s profitability and promote the company to return to the track of healthy and sustainable development. Therefore, the impact of the matter that cannot express opinions has been eliminated; In view of the nature, authenticity and recoverability of other receivables, the above materials said that other receivables involved in the matter for which opinions cannot be expressed have been included in the disposal scope of non retained assets related to your company’s reorganization plan. During the reporting period, your company accrued credit impairment losses according to the difference between the book value of the amount and the auction value. So far, the asset has been disposed in accordance with the provisions of the reorganization plan, Therefore, the influence of the matter that cannot express opinions has been eliminated; For the disposal of major inventories, the above materials said that during the reporting period, your company further improved the approval procedures for the disposal of major inventories, obtained the approval procedures for the disposal agreed by the state owned assets supervision and Administration Office of Huangchuan County and the office of the people’s Government of Huangchuan County, obtained the test reports of some reserved samples by the third-party testing institutions, and provided relevant supporting materials for the occurrence of epidemic and major natural disasters in 2020, Your company has provided sufficient and appropriate evidence of inventory disposal to prove the authenticity and commercial essence of inventory transactions, and the impact of inventory disposal on the financial statements in the reporting period has been eliminated; For the external guarantee in litigation and estimated liabilities, the guarantee creditor’s rights determined by your company according to the declaration are included in the current profits and losses and liabilities, so the impact of the event that cannot express opinions has been eliminated; For the litigation matters of Hangzhou Jinhong sanniao down products Co., Ltd. (hereinafter referred to as “sanniao down”) in the litigation and estimated liabilities, your company has corrected the accounting errors, so the impact of the matters that cannot express opinions has been eliminated; For the default of interest bearing liabilities, your company has corrected accounting errors, so the impact of the event that cannot express opinions has been eliminated. Please explain in detail the audit evidence details provided by your company in this reporting period on the matters that cannot express opinions in 2020, including but not limited to the type of evidence, issuing time, issuing subject, etc., in combination with the audit restrictions of the annual audit accountant in the previous reporting period, and explain in detail the specific reasons and rationality of your company’s failure to provide relevant evidence in the previous reporting period in combination with the supplementary evidence details provided in this reporting period, On this basis, explain whether there is any falsification or fabrication of relevant audit evidence in the reporting period.
Please the annual audit accountant:
(1) In combination with the limited audit in the previous reporting period, explain in detail the audit procedures implemented in this reporting period for the matters on which the company cannot express opinions in 2020, the audit evidence obtained and its differences from the previous reporting period, and explain the specific contents of the audit evidence obtained in this reporting period, including but not limited to the type of evidence, issuing subject, issuing time, etc., and further explain the reasons for believing that the relevant audit evidence is sufficient and appropriate Basis and its reasonable compliance, which should focus on the specific circumstances of the audit evidence obtained for the above major inventory disposal matters in the reporting period. The relevant evidence is sufficient to prove the reasons, basis and reasonable compliance of the authenticity and commercial essence of inventory transactions, and whether it complies with the relevant provisions of the auditing standards of Chinese certified public accountants;
(2) On the basis of the reply to question (1), make quantitative analysis to explain the amount of possible impact on the company’s financial statements in this reporting period caused by matters that cannot express opinions in the previous reporting period, whether it will lead to changes in the nature of the company’s profits and losses and negative net assets, whether the relevant impact is significant and extensive, the judgment basis and its reasonable compliance, and further verify and explain whether the audit opinion issued in this reporting period is reasonable If it is appropriate, whether there is a situation in which an unqualified opinion with an emphasis paragraph replaces a qualified opinion, cannot express an opinion or a negative opinion, and put forward a sufficient and reasonable basis.
5. The annual report and the announcement on correction and retroactive adjustment of previous accounting errors disclosed by your company on the same day show that your company’s correction of accounting errors involves multiple accounting subjects in the financial statements of 2020. Among them, in combination with the creditor’s declaration and confirmation of creditor’s rights, your company and the manager will increase the financial expenses of your company by 191 million yuan, increase the accounts payable in the growth period by 127 million yuan, increase other accounts payable by 208821 million yuan, interest payable by 430739 million yuan, reduce taxes and surcharges by 3.8466 million yuan and reduce taxes payable by 3.8466 million yuan in 2020; As the funds occupied by the controlling shareholder were not actually paid off at the end of 2020, the actual account was in the prepayment, so the other receivables were increased by 898337 million yuan and the prepayment was decreased by 898337 million yuan; The estimated liabilities of sanniao down v. Hangzhou Huaying Xintang down products Co., Ltd. should be accrued. Therefore, the non operating expenses and estimated liabilities were increased by 150859 million yuan and 150859 million yuan respectively.
Please your company:
(1) In combination with the specific matters involved in this correction of accounting errors, explain the specific reasons why your company does not accurately present the end of period data in the financial statements of 2020 and the balance sheets of the first quarter report, semi annual report and third quarter report of 2021, whether there are financial frauds such as falsely increasing income, net profit and net assets, and whether this correction of accounting errors has fully reflected the impact of relevant matters, Whether relevant matters may have an impact on your company’s 2021 financial statements, and specify the specific amount of impact (if applicable);
(2) In combination with the financial status, credit risk changes and other factors of Henan Huangchuan Huaying poultry Corporation (hereinafter referred to as “Huaying poultry Corporation”), the occupier of the above funds, explain in detail the reasons, basis and rationality of the above accounting error correction that does not involve the provision of bad debt reserves for relevant funds;
(3) In combination with the reply to the above questions (1) (2), see
