Daxin Certified Public Accountants (special general partnership)
Reply of Shenzhen Stock Exchange to the inquiry letter of * ST star 2021 interim report
Dxbz [2022] No. 4-00005 Shenzhen Stock Exchange gem company management department:
Jiangxi Firstar Panel Technology Co.Ltd(300256) (hereinafter referred to as "company", "listed company" or " Jiangxi Firstar Panel Technology Co.Ltd(300256) ") received the inquiry letter on semi annual report of Jiangxi Firstar Panel Technology Co.Ltd(300256) issued by your ministry on August 22, 2021 (GEM semi annual report inquiry letter [2021] No. 5). According to the requirements, the answers to the questions of accountants involved in the inquiry letter are as follows:
Differences or discrepancies in the mantissa of the data referred to in this reply are due to rounding.
4. Daxin Certified Public Accountants (special general partnership) (hereinafter referred to as "Daxin") has issued a standard unqualified audit opinion for your company's financial statements in 2020. Please Daxin: (1) check the correction of financial statement items in the error correction announcement, and express clear opinions on whether the relevant corrections comply with the accounting standards for business enterprises and whether they affect the issued audit opinions. (2) Issue special instructions on the implementation of financial report audit in 2020, including but not limited to the assessment of the company's financial misstatement risk, the audit procedures adopted for the corrected financial statement subjects, whether the audit evidence obtained is sufficient and appropriate, and fail to identify the causes of accounting errors in relevant statement subjects, The basis and appropriateness of issuing standard unqualified audit opinions, the appropriateness of the verification opinions of the annual report inquiry letter, whether the audit opinions and the verification opinions of the annual report inquiry letter know that the company has matters that need to be corrected for accounting errors, the communication with the company during the audit implementation process and after the issuance of the audit opinions, as well as other situations that need to be explained.
Accountant's reply:
(1) Check the correction of financial statement items in the error correction announcement, and express clear opinions on whether the relevant corrections comply with the accounting standards for business enterprises and whether they affect the issued audit opinions.
reply:
On August 20, 2021, after the announcement of Jiangxi Firstar Panel Technology Co.Ltd(300256) announcement on early error correction [Announcement No. 2021-0088] (hereinafter referred to as "error correction announcement"), we immediately communicated with the company on error correction. As the relevant matters of the company are still being sorted out, we failed to provide the basis for error correction and specific evidence of adjustment matters.
On September 29, 2021, the company received the notice of filing a case (No.: Zheng Jian Li Jian Zi 0392021018) from China Securities Regulatory Commission, and was filed for investigation because the company was suspected of violating laws and regulations in information disclosure. At this time, the company failed to complete the clean-up work, and failed to hire an accounting firm to conduct a comprehensive audit of the corrected financial statements and confirm the relevant adjustment data. It only provided some adjustment entries of the Institute, but failed to provide the specific basis for the adjustment matters. As of January 14, 2022, we have only received Jiangxi Firstar Panel Technology Co.Ltd(300256) inquiry and feedback responses on the error correction announcement, adjustment entries from 2019 to 2020 and self-examination instructions of the enterprise.
Based on these materials, we are unable to express opinions on whether the rationality, accuracy and completeness of the adjustment reasons comply with the accounting standards for business enterprises. However, since the correction of the company's early errors on August 20, 2021, we have conducted self-examination on the announced matters against the audit draft. For the self-examination, see the description in reply question (2).
(2) Issue special instructions on the implementation of financial report audit in 2020, including but not limited to the assessment of the company's financial misstatement risk, the audit procedures adopted for the corrected financial statement subjects, whether the audit evidence obtained is sufficient and appropriate, and fail to identify the causes of accounting errors in relevant statement subjects, The basis and appropriateness of issuing standard unqualified audit opinions, the appropriateness of the verification opinions of the annual report inquiry letter, whether the audit opinions and the verification opinions of the annual report inquiry letter know that the company has matters that need to be corrected for accounting errors, the communication with the company during the audit implementation process and after the issuance of the audit opinions, as well as other situations that need to be explained. reply:
1、 Overview of 2020 annual report audit
(I) business undertaking
On April 27, 2020, the company held the 7th Meeting of the 4th board of directors and the 3rd meeting of the 4th board of supervisors, deliberated and approved the proposal on audit institution fees in 2019 and appointment of audit institution in 2020, and the board of directors agreed to renew the appointment of Daxin Certified Public Accountants (special general partnership) (hereinafter referred to as "Daxin") as the company's audit institution in 2020. According to the communication with the company, we started the project to undertake the evaluation on November 23, 2020:
1. Business survey. We understand the business environment of the enterprise and the integrity of the management through interview and inquiry with the management and relevant personnel of the enterprise; Through the procedures of Internet inquiry and on-the-spot observation of enterprise office operation, understand the industry policies, enterprise operation risks, laws and regulations environment, etc; Obtain enterprise financial statements and other information, and understand enterprise accounting policies, major transactions and operating conditions through analysis and other procedures. According to the investigation, evaluate the changes of the industry, ownership structure and main business of the enterprise compared with the previous period, and the changes of subsidiaries, joint ventures, associates and branches compared with the previous period, and draw the investigation conclusion on the business of the enterprise in the current period.
2. Confirm the preconditions of audit. We communicate with the management to reach an agreement on the management's recognition and understanding of its responsibilities, and determine whether the preparation basis of the financial report adopted by the management in preparing the financial statements is acceptable.
3. Evaluate independence and professional competence. We evaluate the independence and professional competence of the firm and members of the project team in accordance with the relevant provisions on quality control over the audit of financial statements formulated by the Institute.
4. Reach an agreement on the terms of the audit engagement. Reach an agreement with the enterprise on the relevant audit objectives, audit scope, management's responsibilities for the financial statements, arrangements for the implementation of the audit work, the purpose of the audit report and other audit engagement terms.
5. Sign the audit engagement letter. According to the relevant quality control processes of the Institute, we completed the evaluation on maintaining customer relations and specific audit business, reached a conclusion, established a project team, held a technical preparation meeting before project entry, completed the project approval process, and confirmed to undertake its 2020 annual report audit.
(II) implementation of project audit
Our institute dispatched a project team on December 3, 2020 to start the preliminary review of * ST star 2020 annual report, and completed the field audit in early April 2021. We issued the 2020 audit report for * ST star on April 22, 2021. The implementation of the project audit is summarized as follows:
1. Planned audit
After we decided to undertake the 2020 annual report audit, based on the previous project audit experience and combined with the results of the preliminary business activities carried out during the undertaking evaluation, we formulated the overall audit strategy, defined the audit objectives, audit scope, preliminarily determined the importance level, project organization and management, and formulated the preliminary specific audit plan.
Including the schedule of audit work at each stage, and considering the design of analysis procedures for risk assessment, understanding of the legal and regulatory framework applicable to the company, whether experts are required to participate, etc. before identifying and assessing the risk of material misstatement.
2. Risk assessment (including fraud risk assessment)
Our audit work is based on the risk oriented audit theoretical model. When implementing risk assessment procedures and related activities, we understand the company and its environment, industry status, legal environment and regulatory environment through inquiry, inquiry, observation and analysis; Understand the ownership structure, organizational structure and management of the company; Understand the company's business objectives, strategies and related business risks, and the measurement and evaluation of financial performance; Understand and evaluate the choice and change of accounting policies in this year; Analyze the year before and after the company's unaudited financial statements, and analyze with the same industry. Understand the internal control environment at the overall level of the company through inquiry and inspection, including the establishment and operation of three meetings, the establishment of internal institutions, internal audit, human resources, corporate culture, financial reporting process, performance assessment, etc. In particular, for the identification and assessment of the risk of material misstatement caused by fraud, in addition to taking revenue recognition as the risk field of material misstatement caused by fraud based on the assumption that there is fraud risk in revenue recognition, we also discuss the ways and fields of material misstatement caused by fraud and how fraud may occur in the financial statements through the internal discussion of the project team. Understand the internal control related to audit by asking the management, including the management's assessment of the risk of material misstatement of financial statements due to fraud, the identification and response process of fraud risk; The management's notification to the management on the identification and response process of fraud risk; Management's notification to employees on their business philosophy and ethics, etc. Ask the management, management and other personnel within the enterprise to determine whether they are aware of any fraud facts, fraud suspects or fraud allegations affecting the enterprise. We also understand inappropriate or abnormal activities related to accounting and other adjustments by asking people involved in the financial reporting process; Check the accounting entries and other adjustments made at the end of the reporting period; Review whether there is bias in accounting estimates and other procedures, and identify special risks due to the management's override of control.
3. Improve audit plan
Planned audit is not an isolated stage of audit business, but a continuous and constantly revised process. We communicated and discussed the risk assessment, formed a summary table of risk assessment results, and identified the recognition levels of financial statements and various transactions, account balances and disclosures, major misstatement risks and special risks. Then, according to the risk assessment results, update and improve the overall audit strategy and specific audit plan previously formulated, mainly including adjusting the important components of the financial statements, areas with high risk of material misstatement and important components of the group audit, and readjust the personnel arrangement of the specific project team, especially the audit in high-risk areas Make detailed plans for further audit procedures and plans for important accounts and transactions.
4. Implementation of audit
For the assessed risk of material misstatement at the financial statement level, we implemented overall countermeasures according to the overall audit strategy and specific plans. For example, for revenue recognition, we understand and evaluate the enterprise's revenue recognition policy by reviewing the sales contract and interviewing with the management; Inquire the management and governance, and evaluate the management and fraud risk; Understand and test revenue related internal control to determine its dependability; Implement analysis procedures for income and cost, including: analysis of monthly income, cost and gross profit fluctuation in the current period, comparative analysis of income, cost and gross profit margin of main products in the current period with that in the previous period, and comparative analysis with indicators of the same industry; In combination with the procedures of accounts receivable correspondence, and spot check the relevant documents of revenue recognition, check the authenticity of the recognized revenue, and implement the field visit procedures for spot check of important customers.
For the risk of material misstatement at the identified level of the assessment, we implemented further audit procedures, including control test procedures and substantive procedures, according to the overall audit strategy and specific audit plan arrangement. We carry out control tests according to various business cycles of the enterprise, and obtain audit evidence on the effectiveness of control operation through inquiry, inspection, re execution and other procedures. When evaluating the effectiveness of relevant control operations, we also evaluate whether the misstatements found through the implementation of substantive procedures indicate that the control has not been effectively operated. We carry out substantive tests according to the items of the financial statements and obtain relevant audit evidence through necessary audit procedures such as inspection, confirmation, supervision, recalculation, analytical review and inquiry. In addition, substantive procedures such as special detail testing shall be implemented for the identified special risks. 5. Complete the audit
In the whole audit process and before reaching the overall conclusion, we evaluate whether the assessment of the risk of material misstatement is still appropriate according to the audit procedures implemented and the audit evidence obtained, improve the overall audit strategy and specific audit plan according to the revised risk assessment results, modify the importance level and obtain further audit evidence as much as possible, After considering all relevant audit evidence, form audit opinions and complete the audit work. Finally, according to the quality control regulations on the audit of financial statements formulated by the Institute, complete the review of project quality control, approve the seal and issue the audit report.
2、 Risk assessment of financial misstatement of the project
In accordance with the overall audit strategy and specific audit plan formulated, as well as the relevant provisions of Audit Standard No. 1211 - identifying and assessing the risk of material misstatement by understanding the auditee and its environment, we have implemented risk assessment procedures such as inquiry, analysis procedures and inspection, from the relevant industry conditions, legal environment, regulatory environment and other external environment The nature of the auditee, the selection and application of accounting policies, the target strategy and the relevant operational risks that may lead to the risk of material misstatement, the measurement and evaluation of financial performance and relevant internal control are subject to risk assessment. The risks of material misstatement are identified and assessed as follows:
1. Understand the company and its environment through inquiry and inquiry, and understand the company's industry status, legal environment and regulatory environment. After evaluation, although the mobile phone electronics industry continues to be depressed, with the advent of the 5g era, mobile phone shipments, wearable and other electronic products are expected to grow, and the industry revenue is expected to continue to grow.
2. Understand the company's ownership structure, organizational structure and management through inquiry and inquiry. Since Pingxiang state-owned assets holding in 2019, the nature of the company has changed to state-owned holding. The Management Committee of Pingxiang Economic Development Zone has strengthened management by appointing directors, appointing management and other measures. At the same time, based on the related relationship and transactions between the company's subsidiaries, we assess that the company may have risks related to the offset of unrealized gains from related party transactions at the consolidation level.
3. Understand and evaluate the selection and change of accounting policies in this year through inquiry and inquiry. Except for the changes of accounting policies in accordance with the newly promulgated and implemented accounting standards for business enterprises, there are no other changes of accounting policies. In terms of accounting policy selection, for the provision of credit impairment loss of accounts receivable, we assess the risk that the company may not consider the overdue accounts receivable individually and make full provision for bad debt reserves.
4. Understand the company's business objectives, strategies and relevant business risks through inquiry and inquiry. After evaluation, Pingxiang state-owned assets holding has continuously provided the company with capital, policy and industrial support, which has greatly improved the company's financial and business pressure. At the same time, we also observe the company's business activities, check the production and business premises and plant equipment, and understand the development of the company's business activities.
5. Understand the measurement and evaluation of the company's financial performance through inquiry and inquiry. According to the evaluation, Pingxiang state-owned assets holding company has implemented the state-owned enterprise related management system for the management of the company
