Audit report
Dxsz [2022] No. 14- 00002
Daxin certified public accountants LLP (special general partnership)
Wuyige certified pub l IC ac count Tan ts.llp Tel: + 86 (10) 82330558 Xueyuan interna l tower, 15 / F, Xueyuan interna l tower, No.1 Zhichun Road, 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668, Haid Ian dist. website: www.daxincpa.com com. cn. Beij ing, Ch ina, 100083
audit report
Dxsz [2022] No. 14-00002 Huasu Holdings Co.Ltd(000509) all shareholders:
1、 Audit opinion
We have audited the financial statements of Huasu Holdings Co.Ltd(000509) (hereinafter referred to as "the 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 the financial statements in 2021.
In our opinion, 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 parent company's financial position as of December 31, 2021 and the consolidated and parent company's operating results and cash flow in 2021.
2、 Basis for forming audit opinions
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 your 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 our audit opinion.
3、 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 do not express separate opinions on these matters. (I) revenue recognition of Tianji Zhigu (Hubei) Information Technology Co., Ltd. (hereinafter referred to as Tianji Zhigu)
1. Event description
Your company's revenue mainly comes from the production and sales of LCD screens and complete machines of Tianji Zhigu, the enterprise merger and acquisition unit completed in September 2021. The total operating revenue of Tianji Zhigu newly included in the merger confirmed by your company in 2021 is RMB 242.384 million, accounting for 82.28% of your company's operating revenue in 2021. If your company has obtained the approval of the shareholders' meeting and gone through the industrial and commercial transfer registration through enterprise M & A, September 30, 2021 is recognized as the merger date; The revenue from production and sales of LCD and complete machine is recognized when the performance obligation in the contract is fulfilled, that is, when the customer obtains the control over relevant goods or services, the revenue is recognized according to the transaction price apportioned to the performance obligation; For domestic sales, revenue is recognized when the products are sent to the designated warehousing department and confirmed by the customer;
Wuyige certified pub l IC ac count Tan ts.llp Tel: + 86 (10) 82330558 Xueyuan interna l tower, 15 / F, Xueyuan interna l tower, No.1 Zhichun Road, 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668, Haid Ian dist. website: www.daxincpa.com com. cn. Beij ing, Ch ina, 100083
For export business, revenue shall be recognized when shipping and obtaining export declaration form; See note III (XXIII) and note V (XXXVI) of the financial statements for details of the recognition of operating revenue of Tianji Zhigu. The recognition of Tianji Zhigu's income after the merger has a significant impact on the company's financial statements this year. Therefore, we recognize the recognition of Tianji Zhigu's income newly included in the merger as a key audit matter.
2. Audit response
Our audit procedures mainly include:
(1) Understand and evaluate the design and operation effectiveness of key internal controls related to revenue recognition;
(2) Understand and evaluate whether the revenue recognition policy of Tianji Zhigu is appropriate through reviewing the sales contract and interviewing with the management, and review whether the relevant accounting policies are consistently applied;
(3) Carry out the detailed test of operating revenue, check the main customer contracts, delivery orders, invoices, waybills, receipt (or customs declaration), payment collection records, etc., and evaluate whether the relevant revenue recognition is in line with the accounting policies of the company for revenue recognition;
(4) Independently confirm the sales volume and accounts receivable balance of major customers, and check the post period recovery of accounts receivable; (5) For overseas sales revenue, check the E-port system, and check the customs declaration and revenue confirmation one by one in combination with the ship list; Check whether the matching of collection amount, collection time and sales revenue determination time point and currency are abnormal; Check whether the current receivable export tax rebate and the actually received tax rebate bank flow are abnormal, and check with the confirmation of overseas sales revenue;
(6) Perform a cut-off test on the operating income recognized before and after the balance sheet date to assess whether the operating income is recognized in an appropriate period.
(II) inventories and their falling price reserves
1. Event description
As stated in notes III (XI) and V (VI) to the consolidated financial statements of your company, as of December 31, 2021, your company
The book balance of the company's inventories totaled 208067400 yuan, accounting for 36.19% of the total assets, and the provision for inventory falling price was 4.864 million yuan.
The provision for inventory falling price reserves depends on the estimation of the net realizable value of the inventory; The determination of the net realizable value of inventories requires the management to estimate the selling price of inventories and the amount of costs, selling expenses and relevant taxes to be incurred at the time of completion. As the project involves a significant amount of money and requires significant judgment by the management, we regard it as a key audit matter.
2. Audit response:
(1) Evaluate the design and implementation of internal control related to inventory and falling price reserves;
(2) Supervise the inventory, check the quantity, status and product validity of the inventory;
(3) Obtain the year-end stock age list of inventory, analyze and review the inventory with long stock age, and analyze whether the inventory falling price reserve is reasonable;
(4) Reviewed the net realizable value of inventory and the amount of inventory falling price reserves determined by the company's management.
Wuyige certified pub l IC ac count Tan ts.llp Tel: + 86 (10) 82330558 Xueyuan interna l tower, 15 / F, Xueyuan interna l tower, No.1 Zhichun Road, 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668, Haid Ian dist. website: www.daxincpa.com com. cn. Beij ing, Ch ina, 100083
4、 Other information
The management of your company is responsible for other information. Other information includes the information covered in your 2021 annual report, but does not include the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information, nor does it express 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. In this regard, we have nothing to report.
5、 Responsibilities of management and governance for financial statements
The management is responsible for preparing the financial statements in accordance with 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 caused by fraud or error.
In preparing the financial statements, the management is responsible for assessing the company's ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate the company, terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of your company.
6、 Responsibilities of certified public accountants for the audit of financial statements
Our objective is to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement due to fraud or error, and to issue an audit report containing audit opinions. Reasonable assurance is a high-level assurance, but it does not guarantee that an audit performed in accordance with audit standards can 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 performing audit work in accordance with audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
(I) identify and assess the risks of material misstatement of financial statements due to fraud or error, design and implement audit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. As fraud may involve collusion, forgery, intentional omission, misrepresentation or override of internal control, material misstatement caused by fraud is not found
Wuyige certified pub l IC ac count Tan ts.llp Tel: + 86 (10) 82330558 Xueyuan interna l tower, 15 / F, Xueyuan interna l tower, No.1 Zhichun Road, 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668, Haid Ian dist. website: www.daxincpa.com com. cn. Beij ing, Ch ina, 100083
The risk of is higher than the risk of failing to find major misstatements caused by errors.
(II) understand the internal control related to audit to design appropriate audit procedures.
(III) evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
(IV) draw a conclusion on the appropriateness of the management's use of the going concern assumption. At the same time, according to the audit evidence obtained, draw a conclusion on whether there are major uncertainties in the matters or circumstances that may cause major doubts about the company's ability to continue as a going concern. If we conclude that there is significant uncertainty, the auditing standards require us to draw the attention of statement users to the relevant disclosures in the financial statements in the audit report; If the disclosure is insufficient, we should express a non unqualified opinion. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause your company to be unable to continue its business.
(V) evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
(VI) obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in your company to express an audit opinion on the financial statements. We are responsible for guiding, supervising and implementing the group audit, and assume full responsibility for the audit opinion.
We communicate with the management on the planned audit scope, schedule and major audit findings, including the noteworthy internal control defects identified in the audit.
We also provide a statement to the management on compliance with the ethical requirements related to independence and communicate with the management all relationships and issues that may reasonably be considered to affect our independence
