crashteamracingnitrofueledps4| Dahua Stock Exchange was publicly condemned by the Shenzhen Stock Exchange, and two accountants were suspended from accepting securities business for 36 months

Source: under the plane tree V

May 14thCrashteamracingnitrofueledps4Jin Tongling was involved in the fake case.Crashteamracingnitrofueledps4Dahua accounting firm received disciplinary action from the Shenzhen Stock Exchange. Jin Tongling (300091) annual report from 2017 to 2022 had false records such as false increase or decrease of operating income and total profits. Dahua Institute provided audit services for Jin Tongling's financial statements from 2017 to 2022 and issued audit reports with standard and unqualified opinions. Signed certified public accountants Fan Rong, Yan Lisheng, Hu Zhigang, Dahua Institute did not diligently do its duty when auditing Jin Tongling's annual financial statements from 2017 to 2022. There are false records in the audit report issued. Shenzhen Stock Exchange decided: (1) to punish Dahua for not accepting its securities business and securities service business related documents for six months; (2) to Fan Rong and Yan Lisheng for 36 months not to accept its securities business and securities service business related documents; (3) to punish Hu Zhigang for not accepting its securities business and securities service business related documents for 12 months. The punishment of public condemnation given to Dahua; 5. The punishment of public condemnation of Fan Rong, Yan Lisheng and Hu Zhigang.

The parties:

Dahua accounting firm (special general partnership), Jin Tongling Technology Group Co., Ltd. (hereinafter referred to as Jin Tongling or the company) annual financial statements audit institutions from 2017 to 2022, and the reporting accountant of Jin Tongling's application for issuing shares to specific targets in 2020, residence: building 7, Building 16, West fourth Ring Road, Haidian District, Beijing.

Fan Rong, the signed certified public accountant of Jin Tongling's annual financial statement audit report from 2017 to 2021, and the signed certified public accountant of Jin Tongling's application project for issuing shares to specific targets in 2020.

Yan Lisheng, Jin Tongling signed certified public accountant in financial statement audit report from 2018 to 2022, and signed certified public accountant of Jin Tongling's application project for issuing shares to specific targets in 2020.

Hu Zhigang is a certified public accountant who signed the audit report of Jin Tongling's financial statements in 2017 and 2022.

According to the facts identified in the Administrative penalty decision ((2024) No. 1) and the Market No. Entry decision ((2024) No. 1) issued by the Jiangsu Regulatory Administration of China Securities Regulatory Commission Dahua Accounting firm (Special General Partnership) (hereinafter referred to as Dahua Institute) and signed certified public accountants Fan Rong, Yan Lisheng and Hu Zhigang during the audit business of Jin Tongling's annual financial statements from 2017 to 2022 and Jin Tongling's application to issue shares to specific targets in 2020, there are the following violations:

I. Dahua Institute provides audit services for Jin Tongling.

According to the Jiangsu Regulatory Administration of the China Securities Regulatory Commission, Jin Tongling's annual report from 2017 to 2022 falsely increased or decreased business income and total profits.

Dahua Institute provides audit services for Jin Tongling's financial statements from 2017 to 2022, all issued standard unqualified audit reports, signed by certified public accountants Fan Rong, Yan Lisheng, Hu Zhigang. Dahua Institute is a reporting accountant who applied for Jin Tongling to issue shares to a specific target in 2020, and submitted a standard unqualified opinion audit report on Jin Tongling's annual financial statements in 2019. The signed certified public accountants are Fan Rong and Yan Lisheng.

II. When Dahua Institute audited Jin Tongling's financial statements from 2017 to 2022, it did not perform its duties diligently, and the audit report issued by Dahua Institute had false records.

(1) the annual audit report issued by Dahua from 2017 to 2021 takes the income from Jin Tongling construction contract as a key audit item.

In 2017, Jintongling construction contract revenue increased significantly compared with the previous year, and accounted for a high proportion of business revenue, and has maintained a high proportion from then on to 2021. According to the relevant annual audit report of Dahua Institute, the income of Jin Tongling construction contract from 2017 to 2021 is 73726 respectively.Crashteamracingnitrofueledps4.million yuan, 90321Crashteamracingnitrofueledps4340,000 yuan, 502.4245 million yuan, 223.9955 million yuan and 536.7696 million yuan, accounting for 50.38%, 46.43%, 26.72%, 15.60% and 30.59% of Jin Tongling's business income, respectively. The audit report of Jin Tongling issued by Dahua from 2017 to 2021 takes the revenue from the construction contract as a key audit item.

(2) there are major defects in the risk assessment procedures and internal control testing procedures related to the construction contract

1. During the audit of the 2017 annual report, there was no reliable basis for the business income, operating cost and completion schedule of the cash channeling construction contract issued by the Dahua Institute project group, and there was a significant difference between the project manager and Jin Tongling on the method of confirming the actual input cost of the construction contract. Fan Rong, the project partner, did not inform Dahua of the above information so that Dahua could take the necessary action. The audit working paper also did not see the relevant documents prepared by the project team to reflect the above-mentioned issues and the record of discussion and treatment.

2. The professional judgment of the income recognition method of the construction contract is seriously improper. Jin Tongling's 2017 annual audit report issued by Dahua disclosed that "the company uses the completion percentage method to confirm the relevant construction contract revenue, and determines the contract completion progress by accumulating the actual project cost in proportion to the total estimated contract cost". There are three construction contract projects in Jin Tongling, accounting for 71.64% of the construction contract revenue in that year, taking the supplier's investment in the project as its own input and confirming the actual contract cost and completion progress, and then confirming the corresponding income. this method violates the provisions of Article 22 of the Enterprise Accounting Standards 15-Construction contract (2006). When Dahua Institute accepted the audit of Jin Tongling Annual report for the first time in 2017, it approved Jin Tongling's above practice, and took the supplier's reply to the progress of the project as the main audit evidence, and the professional judgment of the signed certified public accountant was seriously improper.

3. There is no understanding of internal control activities related to the construction contract business in the audit working paper, and there are no control tests on the business critical control points of the construction contract. According to Dahua Institute's 2017-2021 audit reports, important audit procedures for construction contract revenue include "We understand and evaluate the design of management's internal controls related to construction contract revenue and cost recording. And test the effectiveness of the implementation of key controls, including internal controls related to actual engineering costs and estimated total contract costs. However, internal control activities related to business income from construction contracts were not identified in the audit working papers from 2017 to 2018, and internal control activities related to key financial data such as projected total revenue, estimated total costs and actual input costs were not identified in the audit working papers from 2019 to 2021, only the calculation process of Jin Tong's recognition of construction contract revenue was recorded in the draft. The internal control tests related to the actual project cost and the estimated total contract cost are not seen in the draft from 2017 to 2021.

(III) significant deficiencies in the substantive procedures related to construction contract income from 2017 to 2022

1. There are significant deficiencies in the substantive procedures related to construction contract income in 2017.

(1) there is a significant difference between the on-site supervision of some projects and the book confirmation progress of Jin Tongling. Dahua did not re-evaluate the possible financial fraud risk of Jin Tongling and did not take appropriate audit measures.

Daming County Grass Root New Energy Heat and Power Co., Ltd. Biomass 2*12MW cogeneration project (hereinafter referred to as Daming Project) is an important construction contract project of Jin Tongling in 2017. After supervising and taking photos of the Daming project site, Dahwa Institute has found that the construction progress of the civil engineering site of the project is obviously inconsistent with the progress confirmed by the company's book and the civil engineering construction progress confirmed by the supplier's reply letter, and still confirms the civil construction cost input according to the unreliable supplier confirmation letter as the main audit evidence. In the audit working paper, there are no photos of on-site supervision of Daming project, no relevant records of accountants' discussion on Daming project, and so on. In view of the abnormal situation, Dahua did not re-evaluate the integrity of management and the risk of financial fraud, and did not implement effective audit measures to deal with the risk of financial fraud.

(2) the on-site supervision procedure for construction contract business has not been effectively implemented.

The project of comprehensive utilization of waste heat from Jintong Ling Xin Jian Jing and Yuan Xin Materials Co., Ltd. (hereinafter referred to as Jinhe Source waste Heat Power Generation Project) is an important construction contract project for Jin Tonling in 2017. According to the 2017 audit working paper, Dahua Institute conducted on-site supervision of the Jinghe source waste heat power generation project. According to the inventory list of Engineering Construction (Xinjiang Jinghe Source Project), the equipment list listed in the table does not match the book project investment, the supervision plate records are incomplete, and some equipment does not record the number of supervision plates. Dahua Institute did not effectively implement the on-site supervision procedures to obtain sufficient and appropriate audit evidence.

(3) whether the changes in inventory between the supervision date and the balance sheet date have been properly recorded

Dahua Institute carried out on-site supervision of the Jinghe source waste heat power generation project on March 29, 2018, nearly 3 months later than the balance sheet date. Dahua Institute did not implement audit procedures to reverse the supervision of the stocktaking date to the balance sheet date. Jinghe source waste heat power generation project has the situation that the goods are shipped to the project site between the balance sheet date and the inventory date.

2. There are significant deficiencies in the substantive procedures related to construction contract income in 2018.

(1) with regard to the major anomalies found in this year's audit, combined with the information learned in last year's audit, the management integrity and financial fraud risk were reassessed, and further procedures such as site visits were not implemented to deal with the fraud risk.

First, in the audit of the 2018 annual report, the signed certified public accountant found that the boilers of Nantong Construction Group Co., Ltd., the main supplier of Daming project, were actually supplied by Shanghai Yunneng Energy Technology Co., Ltd. (hereinafter referred to as Shanghai Yunneng), a wholly-owned subsidiary of Jintongling, and had not yet been put into production. Dahwa Institute did not doubt that the boiler had not been put into production for two years since the start of the Daming project, that there was a significant inconsistency between the revenue recognition and the on-site project progress, and did not re-evaluate the integrity of the management. Daming did not implement on-site supervision, visits and other procedures to deal with the major fraud risks that may exist in the company.

Second, the main evidence of the progress of the Daming project confirmed by Dahua is abnormal. The 2018 reply of Nantong Construction Group Co., Ltd., the main supplier of Daming project, has some abnormal situations, such as the contradictory contents, the inconsistency between the letter address and the supplier's registered address and actual office, and so on. Dahua took the supplier reply with questionable reliability as the main audit evidence and did not take further audit measures to properly deal with the risk of fraud.

(2) there is no professional doubt about the obviously abnormal reply.

First, in the Jinghe Source waste Heat Power Generation Project and Hebei Shengtao Environmental Technology Co., Ltd. Coke dry quenching waste Heat recovery Project (hereinafter referred to as Hebei Shengtao Project), there are three letters aimed at suppliers. Only one letter was recorded, but two replies were received and the contents were inconsistent. The accountant did not record the reasons for receiving the two originals of the reply, did not pay attention to the reliability of the above reply, did not maintain professional doubt about the abnormal phenomenon, and did not evaluate its impact on the audit work and conclusions.

Second, in 2018, Jintongling Xinjiang Jinjin and Yuan New Materials Co., Ltd. has an annual output of 280000 tons of high-purity silicon project main supplier Guizhou Metallurgical Construction Xinjiang Branch letter shows that the procurement of electric furnace equipment has completed 85% of the total contract, the installation of electric furnace equipment has completed 55% of the total installation, but accountants approved that the company's book equipment procurement and installation are 100% of the completion progress. The accountant did not pay attention to the abnormal situation that the evidence obtained by letter was inconsistent with the book progress, and did not implement further audit procedures to verify the actual cost.

(3) the on-site supervision procedure for construction contract business has not been effectively implemented.

According to the 2018 audit working paper, the accountant conducted an on-site supervision of the Hebei Shengtao project. According to the inventory list of CDQ waste heat recovery project of Hebei Shengtao Environmental Protection Technology Co., Ltd., the equipment list listed in the table does not match the book project investment, and the supervision plate records are incomplete, and some equipment does not record the number of supervision plates. Dahua Institute did not effectively implement the on-site supervision procedures to obtain sufficient and appropriate audit evidence.

3. There are significant deficiencies in the substantive procedures related to construction contract income in 2019.

The signed certified public accountant knows that there has been no progress in the on-site construction of the Daming project since the audit of the 2017 annual report, but the audit confirmed that the progress of civil engineering installation reached 92.69% and the progress of boiler equipment reached 38.95%. When the project team proposed to visit the site of the Daming project, the signed CPA did not arrange for the implementation of on-site supervision, visits and other audit procedures, and still used the untrusted supplier reply as the main audit evidence. did not re-evaluate the integrity of management and the risk of financial fraud, did not implement effective audit measures to deal with the risk of financial fraud.

4. There are major deficiencies in the substantive procedures related to construction contract income in 2020.

(1) the accountant does not pay attention to the abnormal situation that the completion progress is inconsistent with the approved completion schedule, which is known from the field interview.

Dahua Institute carried out on-site visit procedures to customers from January 2021 to the blast furnace converter gas recovery and power generation project of Shaanxi Lueyang Iron and Steel Co., Ltd. (hereinafter referred to as the Luogang project). The interview records show that the progress of the project was 60% of the overall completion of the civil construction and 60% of the overall installation. However, the progress of civil works approved by Dahua Institute for the revenue of the Luigang project in 2020 has reached 78.30%, and the progress of project installation has reached 100%, which is obviously inconsistent with the situation of site visits. Dahua Institute did not pay enough attention to the contradiction between the audit evidence obtained in the interview and the approval progress, and did not implement further audit procedures to deal with it properly.

(2) do not pay attention to the abnormal situation that the equipment input confirmed by the construction contract business does not match the installation progress.

According to the audit working paper, the accountant recorded the installation progress of the project at 100% when calculating the revenue of the Luigang project, but the actual input cost of equipment and materials recorded was less than 50% of the estimated total cost of equipment and materials. Dahua Institute failed to pay attention to the abnormal situation that the equipment input did not match the installation schedule, did not analyze the contradiction that the installation had been completed without full input of equipment and materials, and did not maintain professional doubts about the above abnormalities. Failed to obtain more audit evidence for the rationality of the completion schedule.

5. There are significant deficiencies in the substantive procedures related to construction contract income in 2021.

Kaisai (Taiyuan) Biomaterials Co., Ltd. newly built compressed air station project (hereinafter referred to as Kaisai project) is a new construction contract project for Jin Tongling in 2021. Dahua Institute carried out the subcontractor contract review procedure for the construction contract project, listing the name, amount, signing time and contract terms of the subcontractor, but did not review the new Kaisai project with large revenue in 2021, nor did it conduct a background check on the industrial and commercial information of Nantong Peilin Metal Materials Co., Ltd., the main supplier of the project.

6. There are significant deficiencies in the substantive procedures related to construction contract income in 2022.

In 2022, Shanghai Transport Energy failed to accurately calculate the amount of significant financing components in the energy efficiency improvement project of 80MW generating units of Neijiang Xingming Energy Co., Ltd. in accordance with the Accounting Standards for Enterprises No. 14-Revenue (2017), and did not accurately remove the significant financing components from the estimated total income. In the audit of the 2022 annual report, Dahua did not fully pay attention to and review the amount of major financing components in the contract of the project, resulting in the failure to find that Shanghai Transport could not confirm the revenue of the project accurately.

When Dahua Institute audited Jin Tongling's financial statements for the period from 2017 to 2022, there were major defects in risk assessment and internal control testing procedures, failure to take appropriate audit measures to deal with fraud risks, and major defects in substantive procedures, in violation of the relevant practice standards, failed to perform due diligence obligations, and the audit reports issued were falsely recorded. It violates the provisions of Article 1.4 of the gem Stock listing rules (revised in 2023) and Article 18 of the gem listing Review rules (hereinafter referred to as the refinancing Review rules).

Fan Rong is directly in charge as the project partner of Jin Tongling's audit report from 2017 to 2021, the signed certified public accountant, and the signed certified public accountant of Jin Tongling's 2020 application project for issuing shares to specific targets. Fan Rong's above-mentioned related acts violate Article 1.4 of the gem listing rules (revised in December 2020) and Article 18 of the refinancing Review rules.

Yan Lisheng is directly in charge as the signed certified public accountant of Jin Tongling's audit report from 2018 to 2022 and the signed certified public accountant of Jin Tongling's application project for issuing shares to specific targets in 2020. The above-mentioned related actions of Yan Lisheng violated the provisions of Article 1.4 of the gem listing rules (revised in 2023) and Article 18 of the refinancing Review rules.

Hu Zhigang, as the signed certified public accountant of Jin Tongling's 2017 audit report, and the project partner and signed certified public accountant of the 2022 audit report, is directly in charge. Hu Zhigang's above related behavior violates rules 1.4 and 2.23 of the gem listing rules (revised in 2018) and 1.4 of the gem listing rules (revised in 2023).

In view of the above violations, in accordance with Article 16.5 of the gem listing rules (revised in 2018), Rule 12.7 of the gem listing rules (revised in December 2020), and Rule 12.7 of the gem listing rules (revised in 2023) The provisions of articles 45 and 47 of the guidelines on self-discipline Supervision of listed companies-Standards for the implementation of Disciplinary actions (revised in 2024) and Article 42 of the rules on Review of refinancing have been examined and adopted by the Disciplinary Committee of the bourse, the exchange has made the following disciplinary decisions:

(1) Dahua accounting firm (special general partnership) shall be punished for not accepting the relevant documents of securities business and securities service business issued by Dahua accounting firm for six months. During the period from May 14, 2024 to November 13, 2024, the related documents of securities business and securities service business issued by it will not be accepted.

Second, Fan Rong and Yan Lisheng shall be punished for refusing to accept the relevant documents of securities business and securities service business issued by them for 36 months. From May 14, 2024 to May 13, 2027, documents related to securities business and securities services issued by Fan Rong and Yan Lisheng will not be accepted.

Third, Hu Zhigang shall be punished for not accepting the relevant documents of securities business and securities service business issued by Hu Zhigang for 12 months. During the period from May 14, 2024 to May 13, 2025, documents related to securities business and securities services issued by Hu Zhigang will not be accepted.

IV. Punishment for public censure of Dahua accounting firm (special general partnership)

Fifth, Fan Rong, Yan Lisheng and Hu Zhigang should be publicly reprimanded.

If Dahua Institute, Fan Rong, Yan Lisheng and Hu Zhigang are not satisfied with the disciplinary decision taken by the institute, they may apply to the exchange for review within 15 trading days from the date of receipt of this disciplinary decision. The application for review shall be submitted to the designated contact person of the exchange by post or on-site submission (Ms. Liu, Tel: 0755-88668240).

The above violations and the punishment given by Dahua Institute, Fan Rong, Yan Lisheng and Hu Zhigang will be recorded in the integrity file.

Shenzhen Stock Exchange

May 14, 2024