2020 Annual Financial Settlement Report
1. Audit Report
- Audit Opinion Type: Unable to express an opinion
- Audit Report Signing Date: June 25, 2021
- Audit Institution Name: Pengsheng Accounting Firm (Special General Partnership)
- Audit Report Number: Pengsheng A Audit No. [2021] 30
- Certified Public Accountants: Yu Zibin, Fang Pengxiang
Audit Report Pengsheng A Audit No. [2021] 30
To all shareholders of Beixun Group Co., Ltd.:
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Unable to express an opinion We accepted the commission to audit the financial statements of Beixun Group Co., Ltd. (hereinafter referred to as "Beixun Group"), including the consolidated and company balance sheets as of December 31, 2020, the consolidated and company income statements for the year 2020, the consolidated and company cash flow statements, the consolidated and company statements of changes in shareholders' equity, and the related notes to the financial statements. We do not express an audit opinion on the attached financial statements of Beixun Group. Due to the significance of the matters described in the "Basis for Unable to Express an Opinion" section, we were unable to obtain sufficient and appropriate audit evidence to serve as a basis for expressing an audit opinion on the financial statements.
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Basis for Unable to Express an Opinion
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Multiple significant uncertainties related to going concern Beixun Group has incurred losses for three consecutive years in 2018, 2019, and 2020, with reported losses exceeding 4.9 billion yuan. As of December 31, 2020, overdue debts exceeded 5.1 billion yuan. Beixun Group is unable to repay its due debts, faces numerous unresolved lawsuits, and has many bank accounts, subsidiary equity, and some engineering materials frozen. Some subsidiary properties have been auctioned, and inventory materials have been seized; the company is unable to pay base station rent and electricity fees, leading to a large-scale shutdown of its operational base stations and the cessation of network services, with its telecommunications segment now inactive. These matters indicate multiple significant uncertainties that have a substantial impact on the overall financial statements. Although the reasons for the significant doubts about the ability to continue as a going concern and the proposed improvement measures have been disclosed in notes two and thirteen, (3), as of the date of approval of the financial report, we were unable to obtain sufficient and appropriate audit evidence regarding Beixun Group's measures related to improving its ability to continue as a going concern, and thus we cannot assess the appropriateness of management's use of the going concern assumption in preparing the 2020 financial statements.
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Serious failure of internal control over financial reporting Due to debt defaults, Beixun Group is involved in numerous lawsuits, has many bank accounts frozen, owes employee wages, and has stopped paying employee social security, leading to severe personnel loss, including significant vacancies in key positions. The internal control related to financial reporting at Beixun Group has seriously failed, making it impossible to effectively reduce the misstatement risks of operating revenue, operating costs, monetary funds, inventory, fixed assets, construction in progress, goodwill, estimated liabilities, and contingent matters. We were unable to perform necessary audit procedures such as confirmations, monitoring, interviews, and original document inspections effectively. As of the date of approval of the financial report, we were unable to obtain sufficient and appropriate audit evidence to determine whether there are significant misstatements in the relevant financial statement items and could not ascertain whether adjustments are necessary or the amounts to be adjusted. The related circumstances have a significant and widespread impact on the financial statements.