ShineWing certified public accountants, Chaoyang men North Street, Dongcheng District, Beijing Tel: + 86 (010) 65542288, 9 / F, block a, Fu Hua Manson,
ShineWing No.8, Chaoyangmen Beidajie, fax:
Dongcheng District, Beijing, +86(01065547190 certified public accountants 100027, P.R.China facsimile: +86(01065547190
About Shenzhen Stock Exchange
Reply to the inquiry letter on the annual report of Zhongtian Financial Group Company Limited(000540) the first Department of listed company management of Shenzhen Stock Exchange:
According to the requirements of your department’s “annual report inquiry letter of the company Department [2022] No. 186” inquiry letter on the annual report of Zhongtian Financial Group Company Limited(000540) (hereinafter referred to as the inquiry letter), ShineWing Certified Public Accountants (special general partnership) (hereinafter referred to as US) combined with the audit of the 2021 financial statements of Zhongtian Financial Group Company Limited(000540) (hereinafter referred to as Zhongtian Financial Group Company Limited(000540) group or company, including its subsidiaries), the matters on which the inquiry letter requires us to express verification opinions are described as follows one by one:
1、 The annual report shows that the financial statements of your company are due to the progress of equity acquisition transactions of Huaxia Life Insurance Co., Ltd. (hereinafter referred to as “Huaxia life”), the recoverability of deposit, the rationality of measurement and adequacy of disclosure of non-public market investment ShineWing Certified Public Accountants (hereinafter referred to as “ShineWing”) issued an audit report with a qualified opinion with emphasis on the event segment and an internal control audit report with an unqualified opinion with emphasis on the event segment. Please verify and explain the following items by your company and relevant parties:
(2) In combination with question (1), the annual audit accountant of your company is requested to analyze and explain whether the misstatement or undetected misstatement (if any) of relevant matters has or may have a wide impact on the financial statements, and whether there is a situation where qualified opinions are used instead of unable to express opinions or negative opinions, in accordance with the requirements of No. 14 reporting rules and guidelines for the application of regulatory rules – Audit No. 1.
reply:
(I) auditing standards for Chinese certified public accountants and relevant regulatory rules
1. Auditing standards for Chinese certified public accountants No. 1502 – expressing unqualified opinions in audit reports
Article 5 of the auditing standards for Chinese certified public accountants No. 1502 – issuing unqualified opinions in audit reports stipulates that “universality is a term describing the impact of misstatement, which is used to explain the impact of misstatement on the financial statements or the possible impact of undetected misstatement (if any) on the financial statements due to the inability to obtain sufficient and appropriate audit evidence
The judgment of bookkeeping accountants has extensive impact on the financial statements, including the following aspects: (I) it is not limited to the impact on specific elements, accounts or items of the financial statements; (II) although it only affects specific elements, accounts or items of the financial statements, these elements, accounts or items are or may be the main components of the financial statements; (III) when related to disclosure, the impact is very important for users of financial statements to understand the financial statements. “
According to Article 8 of the auditing standards for Chinese certified public accountants No. 1502 – expressing unqualified opinions in audit reports, “Under any of the following circumstances, the certified public accountant shall express a qualified opinion: (I) after obtaining sufficient and appropriate audit evidence, the certified public accountant believes that the misstatement alone or combined has a significant impact on the financial statements, but does not have universality; (II) the certified public accountant is unable to obtain sufficient and appropriate audit evidence as the basis for forming the audit opinion, but believes that the undetected misstatement (if any) It may have a significant impact on the financial statements, but it is not extensive. “
Article 9 of the auditing standards for Chinese certified public accountants No. 1502 – expressing unqualified opinions in the audit report stipulates that “after obtaining sufficient and appropriate audit evidence, if it is considered that the misstatement alone or combined has a significant and extensive impact on the financial statements, the certified public accountant shall express a negative opinion.”
Article 10 of the auditing standards for Chinese certified public accountants No. 1502 – Express unqualified opinions in the audit report stipulates that “if sufficient and appropriate audit evidence cannot be obtained as the basis for forming the audit opinion, 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.”
2. Rules for the preparation of information disclosure of companies offering securities to the public No. 14 – handling of non-standard audit opinions and matters involved (2020)
According to Article 6 of the rules for the preparation of information disclosure of companies offering securities to the public No. 14 – non-standard audit opinions and the handling of matters involved (2020), “The certified public accountant issuing the qualified opinion shall issue a special explanation for the relevant matters involved in the qualified opinion, including (but not limited to): (I) detailed reasons and basis for issuing the qualified opinion, including the reasons why the certified public accountant believes that the matters involved in the qualified opinion do not have a broad impact on the financial statements as described in the audit standards; (II) The amount of possible impact of relevant matters on the company’s financial position, operating results and cash flow during the reporting period, and explain whether the nature of the company’s profit and loss has changed after considering the impact amount; If it is not feasible to provide the possible impact amount of relevant matters, the reasons for the infeasibility shall be explained in detail. “
3. Guidelines for the application of regulatory rules – Audit No. 1
“III. (III) regulatory requirements” in the guidance on the application of regulatory rules – Audit No. 1 of the CSRC, “Certified public accountants shall carefully evaluate whether the impact of relevant matters on the financial statements is extensive. If there is no obvious evidence to the contrary, the following circumstances indicate that the impact of relevant matters on the financial statements is extensive: including multiple major events that cannot obtain sufficient and appropriate audit evidence; a single event has a great impact on the main components of the financial statements; it may affect delisting indicators, risk warning indicators and profit and loss nature Change, going concern, etc.
If a certified public accountant, after obtaining sufficient and appropriate audit evidence, believes that the misstatement has a significant and extensive impact on the financial statements, he shall give a negative opinion. If it is unable to obtain sufficient and appropriate audit evidence, but believes that the undetected misstatement may have a significant and extensive impact on the financial statements, it shall express an opinion. “
(II) analyze and explain whether the misstatement of relevant matters or the undetected misstatement (if any) has or may have a wide impact on the financial statements, and whether there is a situation where qualified opinions are used instead of unable to express opinions or negative opinions.
1. Zhongtian Financial Group Company Limited(000540) group’s overall financial situation and operating results reflected in the financial statements approved by the board of directors
Project end of 2021 / year of 2021 (100 million yuan)
Total assets 154548
Total liabilities 143404
Total shareholders’ equity: 111.43
Total shareholders’ equity attributable to the parent company 118.91
Total profit -117.30
Net profit -106.19
Based on the listed financial conditions and operating results, before issuing the audit opinion, the exchange analyzed and evaluated the possible impact of the matters that led to our limited audit and failed to obtain sufficient and appropriate audit evidence on the company’s financial statements approved by the board of directors.
2. Impact of reservations on related matters
Proportion of items related to financial statement items affected by reserved items in total assets (100 million yuan)
Other non current assets and credit impairment of Huaxia Life Insurance Co., Ltd
The progress of the company’s equity acquisition transaction lost 70.00 4.53% and the recoverability of the deposit. Measurement of non-public market investment other non current financial assets and independent
Reasonableness and sufficiency of disclosure income from changes in the fair value of assets and financial business 144.04 9.29%
As shown in the above table, the impact of the above reserved items is limited to other non current assets, other non current financial assets, independent account assets, credit impairment losses and income from changes in fair value of financial business. The single amount is significant, the proportion of asset items in the company’s total assets at the end of 2021 is low, and the income statement items are limited to two financial statement items, which do not form a major part of the company’s financial statements. The subsequent measurement of the deposit paid by the company for the equity transaction of Huaxia life insurance is mainly affected by the progress of the transaction. If the transaction is not finally reached, the company may recover the deposit; It may also face the risk that the deposit cannot be recovered in full, and the management of the company believes that it is impossible to estimate the recoverable amount and properly withdraw the credit impairment loss; The company’s subsidiary Zhongrong Life Insurance Co., Ltd. (hereinafter referred to as Zhongrong life) has measured and disclosed the equity of non listed companies according to the data and information obtained by it. The accuracy of relevant management estimates may lead to changes in the amount of changes in fair value.
3. Impact analysis of matters related to reservations
(1) The matters with reservations will not change the nature of the company’s profit and loss in 2021. Although the matters related to the reserved opinion may affect the income statement items such as credit impairment loss and income from changes in fair value of financial business, as mentioned above, the impact of relevant matters on the company’s operating results in 2021 will not change the nature of the company’s profit and loss in 2021. On the basis of the company’s pre tax loss in 2021, it is not very important for the users of the company’s financial statements to understand the financial statements.
(2) The matters with reservations are not expected to result in negative net assets attributable to shareholders of the parent company. The assets involved in the reservation are the deposit for the acquisition of the equity of Huaxia life and the equity of non listed companies invested. According to the information disclosed by the company, the equity purchase of Huaxia life is still in progress; For the equity of non listed companies, the management of Zhongrong life insurance has measured and disclosed according to the information obtained. On this basis, as well as the total assets and net assets of the company at the end of 2021 mentioned above, it is expected that the matters related to the reservation will not lead to the negative net assets of the Company attributable to the shareholders of the parent company, as well as the matters such as risk early warning and delisting.
(3) The matters with reservations have a significant impact on the income statement and the liquidity of the company. Since we failed to obtain sufficient and appropriate audit evidence for the above matters, we are unable to judge the possible misstatement amount of relevant matters. However, the impact of relevant matters on the income statement may exceed the overall importance level of the consolidated financial statements by 150 million yuan, and the equity purchase transaction of Huaxia life was not completed as expected, and the deposit was not terminated and recovered, which had an adverse impact on the liquidity of the company, Therefore, we believe that the above matters have a significant impact on the company’s financial statements.
To sum up, according to the analysis and examples of the universality of the impact in Article 5 of the auditing standards for Chinese certified public accountants No. 1502 – issuing unqualified opinions in audit reports and question 3 of the answers to the auditing standards for Chinese certified public accountants No. 16 – unqualified opinions in audit reports, after analyzing the universality defined in the guidelines for the application of regulatory rules – Auditing No. 1, We judge that the above matters may have a significant impact on the financial statements, but they are not extensive. Therefore, we have expressed a qualified opinion on the above matters in accordance with Article 8 of the auditing standards for Chinese certified public accountants No. 1502 – expressing non unqualified opinions in audit reports, and there is no case where the qualified opinion is used to replace the unqualified opinion or negative opinion.
2、 In 2017, your company plans to purchase the equity of Huaxia Life Insurance Co., Ltd. from Beijing Millennium Shihao and Beijing Zhongsheng century, and pay a deposit of 7 billion yuan. At present, it is uncertain whether the relevant transactions can be approved by the industry regulatory authorities. The annual financial statements of your company in 2020 and 2021 were issued with qualified audit reports because the accountant failed to obtain sufficient and appropriate audit evidence on the progress of the above transactions, the recoverable amount of equity acquisition deposit and its impact on the operation. Please your company:
(2) According to the announcement of periodic reply to the letter of concern disclosed by your company on March 23, your company has not made impairment provision for the deposit of 7 billion yuan in 2021. Please explain your company in combination with question (1)
