Audit Report
To all shareholders of Wuxi Best Precision Machinery Co., Ltd.:
1. Audit Opinion
We have audited the financial statements of Wuxi Best Precision Machinery Co., Ltd. (hereinafter referred to as "Best"), including the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, consolidated and parent company cash flow statements, consolidated and parent company statements of changes in equity, and related notes to the financial statements. We believe that the attached financial statements are prepared in accordance with the provisions of enterprise accounting standards in all material respects and fairly present the financial position of Best as of December 31, 2025, as well as the operating results and cash flows for the year 2025.
2. Basis for Audit Opinion
We conducted our audit in accordance with the auditing standards for certified public accountants in China. The section "Responsibilities of Certified Public Accountants for Auditing Financial Statements" further elaborates on our responsibilities under these standards. In accordance with the Code of Ethics for Certified Public Accountants in China, we are independent of Best and have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our audit opinion.
3. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the current period. Our responses to these matters are in the context of our audit of the financial statements as a whole and in forming our audit opinion, and we do not express an opinion on these matters separately. We identified the following matters as key audit matters to be communicated in our audit report.
(1) Revenue Recognition
- Description of the Matter Best primarily engages in the production and sale of automotive parts and accessories, intelligent equipment, and tooling. As described in notes 3 and 32 "Specific Methods for Revenue Recognition" and notes 5, 5-35 "Operating Revenue and Operating Costs," the operating revenue recognized by Best for the year 2025 was RMB 1,503,941,983.27, representing a 10.82% increase from the previous year. Since revenue is one of Best's key performance indicators, there is an inherent risk that management may manipulate the timing of revenue recognition to achieve specific targets or expectations. Therefore, we identified revenue recognition as a key audit matter.
- Audit Response Our main audit procedures related to revenue recognition included:
- Understanding, evaluating, and testing the design and operating effectiveness of key internal controls related to revenue recognition by management;
- Selecting samples to examine sales contracts or orders, identifying contract terms and conditions related to the transfer of control of goods to customers, and evaluating whether Best's timing of revenue recognition complies with the requirements of enterprise accounting standards;
- Performing analytical procedures on revenue and costs, including analyzing monthly revenue, cost, and gross margin fluctuations by product category and comparing them with prior periods;
- Selecting samples of recorded revenue transactions for the year, verifying invoices, shipping documents, and customs declarations, and for export sales, reconciling sales records with export customs declarations, bills of lading, and sales invoices, as well as checking the inventory status of consignment customers to evaluate whether the related revenue recognition complies with Best's revenue recognition accounting policies;
- Selecting samples of revenue transactions recorded before and after the balance sheet date, verifying shipping documents and other supporting documents to evaluate whether revenue was recorded in the appropriate accounting period;
- Performing confirmation procedures based on the amounts of customer transactions to verify the accuracy of the balances of accounts receivable at the end of the period and the amount of revenue recognized during the period.