Reasons for issuing non-standard audit reports by firms

Do you know why audit firms issue non-standard audit reports? The following is the knowledge I brought to you about the reasons why the firm issued non-standard audit reports. Welcome to reading.

Audit report on unqualified financial statements with emphasized matters

The ability of 1 to continue operation is uncertain.

1. Zhujiang Holdings (audited by Zhongxinghua Certified Public Accountants). As stated in the notes to the financial statements, as of 20 15 12 3 1, the consolidated net assets of Zhujiang Holding Company are -233,193,926.40 yuan, and there may be significant uncertainties in its going concern. Certified public accountants remind users of financial statements to pay attention to the above matters.

2. Nanhua Bio (audited by Tian Jian Certified Public Accountants). The operating income of Nanhua Bio-Company has dropped sharply for three consecutive years. The net loss after deducting non-recurring gains and losses in 20 15 was 23,647,900 yuan. As of 20 15, 12, 3 1, current liabilities are 74.859 million yuan higher than current assets. South China Bio-company has disclosed the improvement measures to be taken in the notes to the financial statements, but there is still great uncertainty about its sustainable operation ability. Certified public accountants remind users of financial statements to pay attention to the above matters.

3. Shenzhen China A (audited by Ruihua Certified Public Accountants). As stated in the notes to the financial statements, the restructuring plan of China Bicycle Company was completed on February 27, 20 13, and the bankruptcy procedure was terminated. In the reorganization plan, the company set the conditions for introducing the reorganizers, hoping to restore the ability of sustainable operation and profitability through asset reorganization. As of the audit report date, the company has not introduced the restructuring party, and only keeps the bicycle business before the restructuring party injects assets to maintain the sustainable operation ability of China Bicycle Company. Therefore, there is still uncertainty about the sustainable operation ability of China Bicycle Company. Certified public accountants remind users of financial statements to pay attention to the above matters.

The result is very uncertain.

1.AVIC Panther (audited by Beijing Zhongzheng Tiantong Certified Public Accountants). As stated in the notes to the financial statements, as of the date of approval of the financial statements, the lawsuit filed by the Management Committee of Weihai Economic and Technological Development Zone against AVIC Panther is still under trial, and the result is still uncertain. Certified public accountants remind users of financial statements to pay attention to the above matters.

2. Xuefeng Technology (audited by Dahua Certified Public Accountants). As stated in the notes to the financial statements, Xuefeng Technology Company received the Notice of Investigation (No.:XJTZ [20 15]No. 16) from China Securities Regulatory Commission on February 8, 2015. Because Xuefeng Technology Company was suspected of violating securities laws and regulations, it was reminded by People's Republic of China (PRC) * * Certified Public Accountants.

3. BOC Cashmere Industry (audited by Xinyong Zhonghe Certified Public Accountants). Certified public accountants remind users of financial statements that BOC Cashmere Company received the Notice of Investigation from China Securities Regulatory Commission on 2065438+2005129 October, and decided to initiate an investigation on the company. As of the date of issuance of the audit report, the investigation by the CSRC has not yet ended.

The other 3 people

1. Sihuan Bio (audited by Lixin Certified Public Accountants). As stated in the notes to the financial statements, (1)20 15 12 Sihuan Biological Company failed to withdraw the asset impairment reserve through its subsidiary Xinjiang Aidi New Energy Technology Co., Ltd.; (2) The project of producing clean fuel oil from coal tar hydrogenation by Xinjiang Aidi New Energy Technology Co., Ltd., a subsidiary of Sihuan Bio-company, has been terminated, and there is great uncertainty in its sustainable operation ability; Furthermore, there is great uncertainty in the sustainable operation ability of Jiangyin Sihuan Investment Co., Ltd.; (3) Sihuan Biological Company and its subsidiary, Jiangsu Vision Wei Ecological Park Technology Co., Ltd. purchased engineering seedlings for the same project. As of 20 15, 12, 3 1, the quick action ratio of Jiangsu Vision Wei Ecological Park Technology Co., Ltd. was 2.97%. In addition, after the balance sheet date, we continue to purchase engineering seedlings for 205 million yuan, which leads to great uncertainty in short-term solvency. Certified public accountants remind users of financial statements to pay attention to the above matters.

2. Hongda shares (audited by Tian Jian Certified Public Accountants). As stated in the notes to the financial statements, as of 20 15 12 3 1, the inventory of Yunnan Jinding Zinc Industry Co., Ltd. is 23 108700 tons, with a book value of 1057 million yuan, accounting for 22.99% of the total net assets. At present, the construction of this low-grade mine utilization project is still in the preliminary preparation stage. Certified public accountants remind users of financial statements to pay attention to the above matters.

3. Shanghai Material Trade (audited by Lixin Certified Public Accountants). Certified public accountants remind users of financial statements that due to the company's decision-making mistakes in key positions, it failed to find out the other customers' operational difficulties in time, the capital chain was broken, and the inventory was misappropriated, which led to the company's capital risk, the advance payment was not cashed, and the inventory suffered heavy losses. At present, these incidents have entered the judicial process, and the above-mentioned related assets and companies have been divested from listed companies through asset restructuring.

Audit report on qualified financial statements

The ability of 1 to continue operation is very uncertain.

1. Kairuide (audited by Xi Zhong Certified Public Accountants). The net loss of Kairuide Company in 2065438 was+05,985,700 yuan, the accumulated loss was 324,436,300 yuan, the operating cash flow was-17,443,500 yuan, and the bank loan was14,325,000 yuan overdue; In 20 15, the company's general meeting of shareholders deliberated and approved the sale of all textile assets. As of the audit report date, both parties have completed the transfer of some assets, and entrusted some assets that have not been transferred to a third party designated by Shandong Demian Group for operation. However, the assets to be transformed by the company have not been transferred, and there is uncertainty in the transformation operation, which leads to significant uncertainty in the company's ability to continue operations. At the same time, as stated in the 20 15 financial statements of Kairuide Company, the company's contingencies have not been resolved, and the certified public accountants cannot judge the impact of this event on the financial statements. In addition, the possible impact of the existence of security matters also leads to significant uncertainty in the sustainable operation ability of Kairuide Company. Although Kairuide Company put forward improvement measures in the notes, there are still great uncertainties, which may lead to great doubts about Kairuide Company's ability to continue to operate.

2. Reclaimed water fishery (audited by China Audit Asia Pacific Certified Public Accountants). The former major shareholder (individual) of Xiamen Xinyangzhou Aquatic Industry and Trade Co., Ltd. (hereinafter referred to as Xinyangzhou Company), a newly acquired subsidiary of Zhongshui Fishery Company, occupied the company's capital of 65.438+0.68 billion yuan, and a large number of accounts receivable it handled were not recovered, which led to a serious shortage of cash flow of Xinyangzhou Company and greatly affected its continuous operation. In this period, provision for bad debts was made for accounts receivable of 263 million yuan. The certified public accountant has carried out the confirmation procedure for major accounts receivable, but has not received a reply, so the certified public accountant cannot carry out other audit procedures to obtain sufficient and appropriate audit evidence.

3. Landscape culture (audited by Xi Zhong Certified Public Accountants). As stated in the notes to the financial statements, (1) Company signed a Settlement Agreement and a Supplementary Agreement to the Settlement Agreement with Shenzhen Darrouy Import and Export Trading Co., Ltd., and the Company failed to fulfill its payment obligations on time as agreed. As of 20 15, 12 and 3 1, the Company and Shenzhen Darrouy Import and Export Trading Co., Ltd. have not settled their debts. (2) At present, the company's income source is only operating property rental income, and the company's operating difficulties lack development potential. In 20 15 years, the sustainable development strategy of the company's main business transformation failed to be realized. The net profit attributable to the parent company of Shanshui Culture Company in that year was-1, 6 108900 yuan, and the accumulated loss was -46 168900 yuan; Overdue loan and interest 190453500 yuan; Investment real estate of 456,847,900 yuan, fixed assets of 865,438 yuan and intangible assets of 665,438 yuan are in the state of being sealed up by the court. These conditions show that there is great uncertainty in the sustainable operation ability of Shanshui Culture Company, and it may not be possible to realize the realization of assets and pay off debts in the normal operation process. Although Shanshui Culture Company put forward improvement measures in the notes, there are still great uncertainties, which may have great doubts about the company's ability to continue to operate.

The result is very uncertain.

1.*ST Chengcheng (audited by accounting firm of Asia Pacific Group). On March 4, 20 14, May 26, 20/kloc-0, and June 9, 20/kloc-0, respectively, the CSRC filed an investigation on Chengcheng shares on the grounds of suspected violation of securities laws and regulations and suspected illegal information disclosure. As of the audit report date, the investigation by China Securities Regulatory Commission is still in progress and no final conclusion has been reached.

2. Shenhuafa A (audited by Yongxin Yongzhonghe Certified Public Accountants). (1) In February, April and June of 20 15, Zhongheng Fahua Company paid Wuhan Hengsheng Optoelectronic Industry Co., Ltd. 3.7 million yuan,/kloc-0.0 million yuan and 250,000 yuan in advance, totaling103.99 as of 20/kloc-0.5. Due to the limited audit scope, it is impossible to implement alternative audit procedures for the economic substance of the related party's procurement business to obtain sufficient and appropriate audit evidence. Therefore, certified public accountants can't determine whether it is necessary to adjust items such as prepayments in financial statements, nor can they determine the amount that needs to be adjusted. (2) On 20 16 18+08, Zhongheng Fahua Company received the Notice of Investigation from China Securities Regulatory Commission and decided to initiate an investigation on the company. As of the date of issuance of this audit report, the investigation by the China Securities Regulatory Commission has not ended, and the certified public accountants cannot judge the possible impact of the investigation conclusion of the China Securities Regulatory Commission on the financial statements of Zhongheng Fahua Company.

The other 3 people

1. Century Cruises (audited by Ruihua Certified Public Accountants). As stated in the notes to the financial statements, Chongqing Yu Hui Real Estate Development Co., Ltd., a subsidiary of Century Cruises Company, holds the land use right of Wansheng District in Chongqing of 92,636,5438+0,965,438+02.23 yuan. According to the original transfer contract, it needs to be completed before April 30, 20 15. Limited by the information of Century Cruise Company, the certified public accountant can't obtain sufficient and appropriate audit evidence for the book value of the land, and can't determine whether it is necessary to adjust the amount.

2. Deng Yun shares (audited by Yongzhonghe Certified Public Accountants). As stated in the notes to the financial statements, Huaiji Deng Yun Auto Parts Co., Ltd. confirmed the three-guarantee claim fee and made provision for bad debts of accounts receivable that are difficult to recover because of the dispute over the three-guarantee claim fee. Therefore, certified public accountants can't obtain sufficient and appropriate audit evidence to confirm the ownership period and completeness of the three guarantees claim fee and whether the provision for bad debts of accounts receivable is sufficient and appropriate.

3.*ST Mengfa (audited by Dahua Certified Public Accountants). In 20 15, Inner Mongolia Development Company made full provision for bad debts for the receivables of Shanghai Cangsu Iron and Steel Co., Ltd., Shanghai Yongxian Metal Material Co., Ltd., Shanghai Mao Yi Industrial Co., Ltd., Shanghai Fudun Industrial Co., Ltd., Xinjiang Tianfeng Taifu Trading Co., Ltd. and Beijing Zhongkaixin Anjin Export Trading Co., Ltd., resulting in a 303% decrease in the net profit attributable to the parent company in this period. Although the certified public accountant has carried out necessary audit procedures such as correspondence, visit and access to relevant documents, the certified public accountant is still unable to judge whether there are other factors affecting the determination of the above accounts receivable and whether it is reasonable to withdraw the full provision for bad debts.

Unable to express an opinion on the audit report of financial statements.

1 Unable to obtain sufficient audit evidence.

1. Xintai Electric (audited by Huapu Tian Jian Certified Public Accountants). (1) By the end of 20 15, 12 and 3 1, the balance of accounts receivable of Xintai Electric Company to Daqing Xintai Electric Co., Ltd. and Daqing Xinheng Petroleum Machinery Equipment Co., Ltd. was14,656,045.64 yuan and/respectively. Certified public accountants have carried out necessary audit procedures, such as correspondence, field visits and industrial and commercial file inquiries. However, due to the contradiction and uncertainty between the audit evidences, the CPA can't implement further audit procedures to confirm the recoverability of the above accounts receivable at the end of the period and its influence on the financial status and operating results of Xintai Electric Company. (2) The other receivables of Xintai Electric Company at 20 14 12 3 1 day and 20 15 12 3 1 day are 450.27 yuan and 46547 yuan respectively. Certified public accountants can not obtain sufficient and appropriate audit evidence to reasonably judge the nature of the above funds and their impact on the financial situation and operating results of Xintai Electric Company.

2. Yingfangwei (audited by Tong Accounting Firm). (1) For Infront Micro's technical services and chip business, certified public accountants can't implement satisfactory audit procedures for some businesses, and can't obtain sufficient and appropriate audit evidence for some businesses to judge the essence of the transaction; (2) Due to the failure to obtain an effective confirmation reply and implement a satisfactory alternative audit procedure, the certified public accountant cannot obtain sufficient and appropriate audit evidence for the receivables of Yingfangwei Company as of 20 15 12 3 1; (3) The confirmation and measurement of construction in progress, intangible assets and development expenditure of Yingfangwei Company, the audit procedures implemented by certified public accountants and the audit evidence obtained are not satisfactory.

There is great uncertainty in the ability of going concern.

*ST Chuanhua (audited by Sichuan Huaxin Certified Public Accountants). As stated in the notes to the financial statements, Chuanhua shares have suffered losses for three consecutive fiscal years, and their financial situation has seriously deteriorated. As of 20 15 12 3 1, the net assets attributable to the parent company in the consolidated statement of Chuanhua shares were negative 1423 177800 yuan, with a cumulative loss of 29892658. The loss in 20 15 was RMB 565,356,5438+04,000, of which urea, synthetic ammonia, ammonium nitrate and other major chemical fertilizers and melamine production facilities were completely stopped for a long time. Chuanhua Co., Ltd. was insolvent due to its inability to repay its due debts, and was applied for bankruptcy and reorganization by its creditors. It was accepted by Chengdu Intermediate People's Court on March 24, 20 16. As of the date when the financial report was approved for publication, the restructuring is still in progress, and there is great uncertainty in the restructuring. Chuanhua Co., Ltd. faces the risk of being declared bankrupt by the court because of the failure of reorganization. Based on the above situation, there is great uncertainty in the sustainable operation ability of Chuanhua Co., Ltd. Although Chuanhua Co., Ltd. evaluated its sustainable operation ability, it failed to provide sufficient and appropriate evidence for its future response plan related to the evaluation of its sustainable operation ability. Therefore, the CPA can't judge whether it is appropriate for Sichuan Chemical Industry Co., Ltd. to use the going concern assumption to prepare the 20 15 annual financial statements.

The result is very uncertain.

Jinya Technology (audited by Zhongxinghua Certified Public Accountants). (1) Jinya Technology corrected the major accounting errors in the previous period and adjusted the financial statements of 20 14 by retrospective restatement. In 2004, the total assets decreased by 328,960,335.26 yuan, the liabilities decreased by 3,960,486.89 yuan and the net assets decreased by 324,999,848.37 yuan. Due to the failure of Jinya Technology to provide complete financial information, certified public accountants cannot implement effective audit procedures to obtain sufficient and appropriate audit evidence, so as to confirm the accuracy and completeness of the correction of major accounting errors. (2) Jinya Technology received RMB 65,438+077,570,437.53 from its major shareholder Zhou Xuhui in 2065,438+04,65,438+02,365,438+0 and RMB 2065,438+05,654,38+. Due to the failure of Jinya Technology to provide complete financial information, certified public accountants cannot implement effective audit procedures to obtain sufficient and appropriate audit evidence to confirm their dealings with major shareholders. (3) Jinya Technology holds 34.99% equity of the joint venture Beijing Minghe Minghe Culture Media Co., Ltd., and its net profit in 20 15 is-80,709,941.09 yuan, of which the net profit attributable to the parent company is-47,684,916.09 yuan. Because the joint venture Beijing Minghe Minghe Culture Media Co., Ltd. failed to provide complete financial information, and the certified public accountants failed to implement effective audit procedures to obtain sufficient and appropriate audit evidence, the certified public accountants could not determine whether the financial statements of the joint venture reflected accurately and completely, so they could not confirm the correctness of Jinya Technology's accounting investment income and the ending value of long-term equity investment. (4) Jinya Technology and its actual controller Zhou Xuhui received the Notice of Investigation from China Securities Regulatory Commission on June 4, 2065438 and June 5, 2005 respectively (No.:Ji Cheng Tiaotongzi). 151003,15004). Because the company and its actual controller are suspected of violating securities laws and regulations, according to the investigation of Jinya Technology by the relevant departments of China, the final conclusion has not been reached, and the certified public accountant cannot judge the impact of the investigation results on the financial statements of Jinya Technology.

Unqualified internal control audit report with emphasized matters

The ability of 1 to continue operation is very uncertain.

1. China a (audited by Ruihua Certified Public Accountants). As of the date of the audit report, China Bicycle Company has not introduced a restructuring party, and all its operating income comes from the bicycle business of its subsidiary, so its profitability is meager. Therefore, there is uncertainty in the sustainable operation ability of bicycle companies. Certified public accountants remind users of internal control audit reports to pay attention to the above matters.

2. China Zhong Yi (audited by Ruihua Certified Public Accountants). 2065438+Since August 2005, Zhao Lixin, vice chairman of China No.1 Heavy Machinery Co., Ltd., has served as the chairman. As of the reporting date, the chairman has not been appointed, which may adversely affect the stable operation of the company. Certified public accountants remind users of internal control audit reports to pay attention to the above matters.

2 the construction of internal control system is not perfect

1.WISCO shares (audited by Lixin Certified Public Accountants). 20 14 12 3 1, Wuhan iron and steel co., ltd. holds 77.6 & shares and the controlling shareholder Wuhan iron and steel (group) company (hereinafter referred to as? WISCO group? Wuhan Iron and Steel Group International Economic and Trade Co., Ltd. (hereinafter referred to as? WISCO international trade? ) 100% of the shares are exchanged for the equivalent value. After the completion of the asset replacement transaction, WISCO International Trade was changed into a wholly-owned subsidiary of WISCO Co., Ltd. Due to the influence of business reasons such as time lease signed by the company in the past, as of February 314,61,WISCO Group and its subsidiaries had formed a capital occupation of 20 million yuan for WISCO International Trade. By the end of 20 15, 12, and 3 1, the above-mentioned funds between WISCO Group and its subsidiaries and WISCO International Trade totaled 3,878,487,885.08 yuan, and the increase in this period was mainly due to the impact of the time lease contract. Before the date of issuance of this report, WISCO Group has returned all the above funds to WISCO International Trade in cash. The management of some related party transactions in WISCO Co., Ltd. lacks a mechanism to actively identify, obtain, distinguish and solve the non-operating and operating capital transactions of related parties. From 2065438 to April 2006, WISCO Co., Ltd. rectified the above internal control defects, but the control operation time after rectification was not long. Certified public accountants remind users of internal control audit reports to pay attention to the above matters.

2.*ST Jianji (audited by Sigma Certified Public Accountants). According to the resolution of the 20th14 Annual General Meeting of Shareholders held by *ST Construction Machinery Co., Ltd. on March 5th, and the Reply on Approving Shaanxi Construction Machinery Co., Ltd. to Issue Shares to Chai and Raise Matching Funds, Pangyuan Lease was made according to the documentNo. [20 15]1849 of China Securities Regulatory Commission. ) and Zigong Tiancheng Construction Machinery Co., Ltd. (hereinafter referred to as? Tiancheng machinery? ) 100% equity. The above two companies completed the equity delivery in August 2065438+2005 and included it in the consolidated statement of *ST Construction Machinery Company. As Pangyuan Leasing and Tiancheng Machinery were included in the incomplete financial reporting year, and the internal control system of financial reporting consistent with *ST Construction Machinery Company was still being established as of 2015123/KLOC-0, the internal control audit related to financial reporting this year did not include the above two new M&A companies. Certified public accountants remind users of internal control audit reports to pay attention to the above matters.

The other 3 people

1.*ST Chuanhua (audited by Sichuan Huaxin Certified Public Accountants). CPAs remind users of internal control audit reports that Sichuan Chemical Company failed to reconcile with suppliers (constructors) in time, resulting in the company's omission of assets, liabilities and costs, which constituted the correction of accounting errors in the previous period for the 20 15 financial statements.

2. Peking University Medicine (audited by Tian Jian Certified Public Accountants). On 20141kloc-0/8+00, Peking University Pharmaceutical Company received the notice of investigation from China Securities Regulatory Commission. As Peking University Pharmaceutical Company is suspected of violating securities laws and regulations, according to the relevant provisions of the Securities Law of People's Republic of China (PRC). As of the date of this audit report, China Securities Regulatory Commission is still investigating Peking University Pharmaceutical Company's alleged violation of securities laws and regulations. Certified public accountants remind users of internal control audit reports to pay attention to the above matters.

3. Zhejiang Guangsha (audited by Tian Jian Certified Public Accountants). In 20 14, 90% of the equity of Zhejiang Guangsha Atomic Company Shaanxi Guangfu Real Estate Development Co., Ltd. was transferred to Shaanxi Boda Investment Management Co., Ltd., and the company failed to fulfill the related party transaction decision-making procedures and the obligation of temporary announcement disclosure, and the relevant internal control system had important defects. From August, 2065438 to August, 2005, the board of directors of Zhejiang Guangsha Company deliberated and passed the above-mentioned related party transaction proposal, and conducted a comprehensive self-examination on the related party transaction decision-making system, working capital management system and information disclosure affairs management system, further improving the related party transaction, capital use and information disclosure system, and enhancing the execution. Certified public accountants remind users of internal control audit reports to pay attention to the above matters.

Negative opinion internal control audit report

1 Major internal control defects

1. Hejia shares (audited by Beijing Tianyuan Quan Certified Public Accountants). The control system of actively identifying, obtaining and confirming related party information in the company's related party transaction management has not been effectively implemented, resulting in the following related party transactions of Yunnan Yuzhong Supply Chain Management Co., Ltd. and Shenzhen Yuzhong Commercial Factoring Co., Ltd. controlled by the company not being identified in time. Failure to fulfill relevant approval and disclosure matters: In (1)20 15, Yunnan Dianzhong Supply Chain Management Co., Ltd., a holding subsidiary, had related transactions with coal mining enterprises under Guizhou Tunan Mining (Group) Co., Ltd. and coal mining enterprises under Yunnan Industrial Investment Group Power Blending Co., Ltd. 1620297400 yuan; (2) Shenzhen Dianzhong Commercial Factoring Co., Ltd., a holding subsidiary, has related transactions with Yunnan Jiutian Investment Holding Group Co., Ltd. and Yunnan Industrial Investment Group Power Coal Blending Co., Ltd. amounting to RMB2,445,224,200. The above internal control defects have affected the integrity and disclosure accuracy of related parties and related parties in financial statements, and the internal control related to financial reports has not been effectively implemented.

2. Qiulin Group (audited by Ruihua Certified Public Accountants). In this internal control audit, the certified public accountant noticed the following major defects in the internal control of financial reporting of Qiulin Group: (1) As stated in the notes to the financial statements of Qiulin Group in 20 15, there was a transaction between Qiulin Group and its related party Huangjia Precious Metals Management Co., Ltd. with sales revenue (including tax) of 20,000,000.00 yuan. However, the above transactions failed to fulfill the decision-making and authorization procedures in accordance with the related management system of related party transactions. (2) Lin Qiu (Tianjin) Jewelry Sales Co., Ltd., the grandson company of Qiulin Group, received money through the cashier's personal bank account on 20 15, which violated the relevant fund management system.

3. Xuefeng Technology (audited by Dahua Certified Public Accountants). Xuefeng Technology and Related Party Xinjiang Xuefeng Investment Holdings Co., Ltd. Xuefeng Investment Holdings? ) There have been many fund transactions. In 20 15 years, the accumulated fund borrowing amount was 483 million yuan, and the transaction balance reached 263 million yuan, all of which failed to fulfill the pre-approval of fund payment. The matter failed to fulfill the decision-making procedures of the board of directors, the shareholders' meeting and the Listing Rules on the above-mentioned related-party capital borrowing in accordance with the Company Law, the Articles of Association and the Related Party Transaction Decision-making System, and failed to fulfill the obligation of information disclosure on the above-mentioned related-party capital borrowing in time. Xuefeng Technology rectified the above-mentioned internal control with major defects from March 2065438 to March 2006, but the control operation time after rectification was not long.

2 internal control execution failed

1. Liu Hua shares (audited by Daxin Certified Public Accountants). In the year of 20 15, the non-operating funds of Liu Hua co., ltd. and its controlling shareholder Liuzhou chemical group co., ltd., its ultimate controlling shareholder Guangxi Liuzhou chemical holding co., ltd. and its Hunan Liuhua Guicheng chemical co., ltd. totaled 1 15995050 yuan. These matters do not conform to the provisions of the Notice on Regulating the Capital Exchange between Listed Companies and Related Parties and the Notice on Several Issues Concerning External Guarantee of Listed Companies. The company failed to perform the corresponding decision-making approval procedures in accordance with the internal control system such as the Measures for the Administration of Related Party Transactions, and the internal supervision was invalid. The above defects indicate that the relevant internal control operations are invalid.

2. Shenhuafa A (audited by Yongxin Yongzhonghe Certified Public Accountants). Zhongheng Fahua Company has the following matters: (1) prepay the related party Wuhan Hengsheng Optoelectronics Industry Co., Ltd. in full according to the total contract purchase amount; (2) Restatement of financial statement 20 14 to correct material misstatement caused by fraud or error; (3) Being investigated by the China Securities Regulatory Commission on suspicion of illegal information disclosure. Zhongheng Fahua Company's internal control over relevant financial reports is invalid, and there are major defects in internal control.