Audit Report
Audit No. (2024) 01110118
To all shareholders of Beijing Zuojiang Technology Co., Ltd.:
1. Inability to Express an Opinion
We have been entrusted to audit the financial statements of Beijing Zuojiang Technology Co., Ltd. (hereinafter referred to as "Zuojiang Technology"), including the consolidated and company balance sheets as of December 31, 2023, the consolidated and company income statements, consolidated and company cash flow statements, consolidated and company statements of changes in equity, and related financial statement notes. We do not express an audit opinion on the attached financial statements of Zuojiang Technology. Due to the significance of the matters described in the "Basis for Inability to Express an Opinion" section, we were unable to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion on the financial statements.
2. Basis for Inability to Express an Opinion
As of December 31, 2023, Zuojiang Technology had accounts receivable with a book balance of 301.57 million yuan and a provision for bad debts of 93.40 million yuan, resulting in a net book value of 208.17 million yuan. We were unable to conduct on-site interviews for some accounts receivable and could not obtain confirmation replies, involving a book balance of 201.25 million yuan, which accounts for 66.73% of the total accounts receivable balance at year-end. Due to significant audit procedures not being effectively executed, we could not obtain sufficient and appropriate audit evidence to assess the recoverability of the aforementioned accounts receivable.
On December 1, 2023, the company received a "Notice of Case Filing" (No. 0142023018) from the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure. On January 30, 2024, the CSRC released a report on the progress of the investigation into financial fraud at *ST Zuojiang. We cannot ascertain the impact of these matters on the company's financial statements.
3. Significant Uncertainties Related to Going Concern
We remind users of the financial statements to pay attention to the matters described in Note 2, 2, regarding going concern. Zuojiang Technology's consolidated operating revenue for 2023 was 53.25 million yuan, and the consolidated net loss was 245.34 million yuan, with net losses reported for the past two years. The net cash outflow from operating activities for 2023 was -24.38 million yuan. These matters, along with the ongoing investigation by the CSRC as indicated in Note 16, have led to the issuance of an audit report with an inability to express an opinion for 2023. The company's stock may be delisted from the Shenzhen Stock Exchange, indicating significant uncertainties regarding Zuojiang Technology's ability to continue as a going concern. This matter does not affect the previously issued audit opinion.
4. Responsibilities of Management and Governance for the Financial Statements
The management of Zuojiang Technology (hereinafter referred to as "management") is responsible for preparing the financial statements in accordance with the provisions of the Accounting Standards for Business Enterprises, ensuring they provide a fair representation, and designing, implementing, and maintaining necessary internal controls to prevent material misstatements due to fraud or error. In preparing the financial statements, management is responsible for assessing the company's ability to continue as a going concern, disclosing matters related to going concern (if applicable), and using the going concern assumption unless management intends to liquidate the company, cease operations, or has no other realistic alternatives.
5. Responsibilities of the Certified Public Accountant for the Audit of the Financial Statements
Our responsibility is to conduct an audit of Zuojiang Technology's financial statements in accordance with the requirements of the Chinese Certified Public Accountant Auditing Standards to issue an audit report. However, due to the matters described in the "Basis for Inability to Express an Opinion" section, we were unable to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion. In accordance with the Code of Ethics for Chinese Certified Public Accountants, we are independent of Zuojiang Technology and have fulfilled our other ethical responsibilities.