HUNAN DEVELOPMENT(SZ:000722) Zheng Quan Zhi Xing·2025-08-25 17:26Audit Opinion - The audit report states that the financial statements of Hunan Xiangtou Qingshui Pond Hydropower Development Co., Ltd. fairly reflect its financial position as of December 31, 2023, December 31, 2024, and March 31, 2025, as well as its operating results and cash flows for the years 2023, 2024, and the first three months of 2025 [2][3]. Key Audit Matters - Revenue recognition is identified as a key audit matter due to the inherent risk of management potentially using inappropriate revenue recognition to meet specific targets [3][4]. - The company’s operating revenue primarily comes from electricity sales, with reported revenues of RMB 28,000 million for 2023, RMB 30,000 million for 2024, and RMB 7,000 million for the first quarter of 2025 [3]. - Fixed assets are also a key audit matter, with net book values of RMB 910.95 million, RMB 876.64 million, and RMB 865.44 million as of the respective dates, representing 96.33%, 95.65%, and 92.85% of total assets [4]. Management Responsibilities - Management is responsible for preparing financial statements in accordance with accounting standards and ensuring that internal controls are designed and maintained to prevent material misstatements due to fraud or error [5][6]. - The governance layer is tasked with overseeing the financial reporting process of the company [5]. Financial Reporting Basis - The financial statements are prepared on a going concern basis, with no significant doubts regarding the company's ability to continue operations in the next 12 months [9][10]. Important Accounting Policies - The company has established specific accounting policies and estimates for financial instruments, inventory, fixed asset depreciation, construction in progress, intangible assets, and revenue recognition [9][10]. - The company adheres to the principle of materiality in preparing and disclosing financial statements, with specific thresholds set for recognizing significant receivables and other financial items [11][12]. Revenue Recognition - Revenue is recognized based on the assessment of contracts at the start date, identifying performance obligations, and determining whether they are satisfied over time or at a point in time [33][34]. - For performance obligations satisfied over time, revenue is recognized based on the progress towards completion, while for those satisfied at a point in time, revenue is recognized when control of the goods or services is transferred to the customer [34][35].