Q8About the revenue recognition model and revenue verification
According to the application materials:(1) The revenue of the full-scale contact platform, secure computing platform, and cloud-network assistant service delivered in SaaS mode shall be temporarily estimated into the revenue in the current month according to the revenue amount calculated according to the usage of the revenue item, and the reconciliation difference shall be corrected according to the reconciliation results with the customer after the reconciliation with the customer is completed. The full contact platform delivered in the software sales model and the revenue of the platform are recognized when the service platform or software is delivered to the customer or developed, and the customer finally passes the final inspection.
(2) The sponsorship work report shows that during the reporting period, the company has not reconciled the provisional revenue with customers for a long time. As of May 18, 2023, the amount of accounts receivable that has not been reconciled in the accounts receivable at the end of 2022 of the issuer is 2,125640,000 yuan, mainly involving customers Shanghai Unicom and Sichuan Unicom.
(3) According to the sponsorship work report, some projects have situations such as the close distance between the signing time and the acceptance time, the inconsistency between the collection and the contract, and the failure to obtain the confirmation documents of the end user at the time of final inspection. In addition, the revenue recognition time of the four projects of Guomai Culture Pudong Development CCOD Project, China Unicom Digital-5G Smart Portal, China Unicom Digital Technology Volte Phase III, and Dalian 12345 Government Service System is in the fourth quarter of 2022, but the payment has not been received as of the first quarter of 2023. (4) In each period of the reporting period, the proportion of revenue recognized in the month when the contract was signed in the month in which the issuer delivered the business in the software sales model was as follows: 66%, and the proportion will increase rapidly in 2022.
(5) The extension project of the smart contact platform is mainly for the operation of rights and interests, and the revenue is recognized when users receive rights and interests or write off rights and interests. The sponsor work report shows that this type of business uses the gross method to recognize revenue.
(6) A large part of the issuer's direct customers have non-terminal customer income, such as China Unicom, China Mobile, and China Telecom's non-terminal revenue, which far exceeds their own required income. Issuer please:
1) Explain the internal and external evidence and reliability of various business revenue recognition, the frequency, cycle, payment and settlement method of reconciliation with customers, the differences between reconciliations in each period and their processing, and the proportion of customer signatures and seals in the relevant acceptance reports or documents of each period. (2) Explain the reasons for not reconciling with customers for a long time after the provisional valuation of revenue recognition, whether there is an impairment risk of the accounts receivable formed by the unreconciled income, the accuracy of the time point of revenue recognition, and the adequacy of the provision for expected credit losses.
3) Explain the reasons and reasonableness of the close distance between the signing time of the contract and the time point of revenue recognition for some projects, the matching between the actual implementation cycle and the acceptance cycle of the project and the contract, and whether there is any situation where the revenue is recognized in advance.
4) Explain whether there is a situation where the time of signing the contract is later than the entry time or the online time, and explain its compliance. (5) Combined with the terms of the contract and the main responsibilities undertaken by the issuer, explain the reasonableness of the use of the aggregate method of accounting for equity operation business, and whether it complies with the provisions of the accounting standards for business enterprises.
6) List the amount of terminal revenue and non-terminal revenue in each period, the amount and proportion of terminal revenue and non-terminal revenue among major customers, the situation of end customers corresponding to non-terminal revenue, the issuer's method of recognition of non-terminal revenue, the basis for recognition of relevant revenue, the reasons for purchasing a large number of non-self-use products from direct customers, and whether the relevant products have been used in the current period.
Please ask the sponsor and the reporting accountant to give a clear opinion and explain:(1) The verification method, verification process, verification ratio and verification conclusion of the authenticity and cut-off of income, including the verification of the statement and acceptance report.
2) Explain in detail the verification methods, verification evidence and verification conclusions of items (2), (3) and (4) in the question stem, and explain in detail the verification of the authenticity of sales revenue in the fourth quarter of 2022 in combination with the payment collection, contract and acceptance documents of specific projects.
3) Explain the statistical methods, verification methods and verification methods of non-terminal income in each period, and the adequacy and accuracy of verification whether the final use has been achieved.
The sponsor and the reporting accountant are requested to explain the quality control work and related quality control conclusions performed by the project team for the adequacy and effectiveness of the verification work carried out by the project team on the authenticity and accuracy of revenue recognition of the issuer's various incomes. Reply
5. Combined with the terms of the contract and the main responsibilities undertaken by the issuer, explain the reasonableness of the use of the gross amount method of accounting for equity operation business, and whether it complies with the provisions of the accounting standards for business enterprises
According to Article 34 of the Accounting Standard for Business Enterprises No. 14 - Revenue (2017), an enterprise should determine whether it is the main responsible person or the first person when it engages in the transaction according to whether it has control over the commodity before transferring it to the customer. If an enterprise is able to control the commodity before transferring it to a customer, the enterprise is the main responsible person and shall recognize the revenue according to the total amount of consideration received or receivable; Otherwise, the enterprise is a ** person and shall recognize its income according to the amount of commissions or handling fees that it is expected to be entitled to, which shall be determined according to the net amount of the total consideration received or receivable after deducting the price payable to other relevant parties, or according to the established commission amount or proportion. Circumstances in which a business can control a commodity before transferring it to a customer include:
1) After the enterprise obtains control of the goods or other assets from a third party, it is transferred to the customer;
2) the enterprise is able to lead the third party to provide services to customers on behalf of the enterprise; (3) After the enterprise obtains control of the commodity from a third party, it integrates the commodity with other commodities into a certain combination of output and transfers it to the customer by providing significant services. In determining whether a commodity is controlled before the transfer to a customer, the enterprise should not be limited to the legal form of the contract, but should take into account all relevant facts and circumstances, including:
1) The enterprise bears the main responsibility for the transfer of goods to the customer; (2) the enterprise assumes the inventory risk of the commodity before or after the transfer of the commodity;
3) Enterprises have the right to decide on their own the commodities they trade; 4) Other relevant facts and circumstances.
During the reporting period, the issuer mainly provided insurance rights and interests operation products for telecom operators. Combined with the provisions of the above-mentioned accounting standards and the equity operation business contract signed between the issuer and China Mobile, the analysis is as follows:
As can be seen from the above table, the issuer, as the main responsible person, provides China Mobile with all the services to complete the collection and redemption of rights, and in this process, it needs to provide China Mobile with an equity exchange platform and integrate resources such as insurance or other rights, which are independently purchased by the issuer from ** merchants, and the issuer is the main responsible person in this business. The issuer's recognition of revenue according to the gross amount method is consistent with the business situation, in line with the relevant provisions of the Accounting Standards for Business Enterprises.
7. The verification method, verification process, verification ratio and verification conclusion of the authenticity and cut-off of income, including the verification of the statement and acceptance report
(1) Verification methods, procedures, proportions, etcFor the authenticity and cut-off of income, the sponsor institution and the reporting accountant mainly performed the following verification procedures:
1. Understand the issuer's sales model and sales revenue recognition policy, and check the sales contracts of the issuer's major customers during the reporting period to check whether the revenue recognition method is in line with the actual operation of the issuer; Refer to the provisions related to revenue recognition in the Accounting Standards for Business Enterprises to verify whether the issuer's revenue recognition policy complies with the requirements of the Accounting Standards for Business Enterprises; 2. Understand the key internal controls related to revenue recognition, evaluate the rationality of their design, and select samples to test the effectiveness of their implementation;
3. Obtain the income statement, select samples to verify the authenticity of income, and check the revenue recognitionRelevant supporting documents, including sales contracts, statements, acceptance materials, invoices and bank receipts, etc., check the provisions of the contract on the acceptance clauses, contract performance obligations, reconciliation methods, periodicity and frequency, and verify whether the revenue recognition documents are consistent with the contract.
The specific verification of each period of the reporting period is as follows:
The samples were selected to inspect the sales contracts of each period, and the proportion of the inspection accounted for the operating income of each period. 07%, as follows:
Select large income items and randomly select small income items to check their acceptance forms and statements, and the inspection proportion accounts for the proportion of operating income in each period. 36% as follows:
Inspect the income collection flow and bank receipt of each period, mainly check the information of the customer name and amount involved in the payment flow and bank receipt, and the inspection ratio is respectively. 44%。4. Confirm the income, accounts receivable and advance receipts of major customers.
In each period of the reporting period, the proportion of the amount of operating income confirmed by customer reply and substitution test to the operating income of the current year was respectively. 09%, the specific letter and reply are as follows:
5. Select samples to visit customers with significant transaction amounts to understand the authenticity and reasonableness of customer needs, understand the main processes of business achievement and development, and verify the authenticity of business.
From 2020 to 2022, the proportion of the corresponding revenue amount of visited customers to the operating income of the current year is as follows: 67%；From January to June 2023, the top five customers in the current period were selected to conduct supplementary visits with branches with large transaction amounts with large transaction amounts, and new customers with large transaction amounts and direct customers corresponding to non-terminal revenue were selected to conduct supplementary visits, and the sales amount of the above-mentioned supplementary visits accounted for 4149%。
6. For the income of January, December, June 2023 and the next month after the reporting period, samples were selected for cut-off testing, and the details are as follows:(1) Business delivered in SaaS mode
For projects delivered in SaaS mode, revenue samples from January, December, June 2023 and the next month of the reporting period were selected for cut-off testing, and relevant supporting documents such as sales contracts, statements, invoices, and bank receipts were checked to evaluate whether the revenue was recognized in an appropriate period. The verification during the reporting period is as follows:
(2) Business delivered on a software sales model
For projects delivered in the software mode, due to the characteristics of the time when the final inspection time is used to recognize the revenue, the acceptance documents corresponding to most of the project contracts in each period of the reporting period are selected for verification to confirm the accuracy of the time point of revenue recognition, and the proportion of the verification amount to the revenue delivered in the software mode is respectively. 17%。