Question 6Accuracy of revenue recognition and inventory valuation under the consignment model
According to the application documents, the issuer's sales through VMI (consignment model) during the reporting period were 11,007310,000 yuan, 15,144270,000 yuan, 12,770480,000 yuan, the company's inventory book value was 12,022690,000 yuan, 20,033$880,000 and $14,158390,000 yuan. The book value of the goods issued by the issuer was 32230,000 yuan, 203$530,000 and 0140,000 yuan, which is lower than the sales scale of VMI.
Issuers are requested to: (1) specify the timing and basis of revenue recognition for various businesses in conjunction with the contract; Whether there are different ways to confirm the same customer, if so, please explain the reason and reasonableness, and whether there is room for artificial adjustment. (2) Explain the main customers who recognize revenue through reconciliation, the reconciliation method, the reconciliation cycle, the specific basis for revenue recognition, explain the interval between the time of issuing the commodity and the subsequent settlement time, and whether the relevant time interval is stable. (3) whether the issuer has estimated the circumstances of revenue recognition, whether there is any discrepancy between the amount and amount of revenue recognized and the next month's statement, and the specific circumstances and impact on the performance of each period, and whether there are material differences between the specific method of revenue recognition and that of comparable companies; Explain whether the disclosure of the revenue recognition conditions for the consignment model is accurate. (4) Explain whether there is a difference and reasonableness between the amount of revenue recognition and the scale of the goods issued and those of comparable companies, the reasonableness of the low balance of the goods issued, and whether the revenue and carry-forward costs are recognized across periods. (5) Explain the design and operation of the internal control of the commodities issued under the consignment model, whether there is a situation where the customer has received it without notifying the issuer, and the implementation process of the issuer's inventory.
At the same time, (1) explain the verification procedures for the time point of recognition of consignment revenue, the specific type and coverage ratio of relevant evidence, and whether the income can be included in the correct accounting period and the timeliness and accuracy of the recognition. (2) Explain the scope of verification, specific verification methods and verification process adopted for the integrity of the issued goods, monitoring and reply, and whether the verification conclusion can be supported.
Reply
During the reporting period, the company's sales through VMI (consignment model) were 11,007310,000 yuan, 15,144270,000 yuan and 12,770RMB 480,000, mainly involving customers such as Lite-On Technology, LG Electronics, and Etek.
The above-mentioned customers are responsible for the management of the products sent to the customers by the company through the third-party warehouse of Haichen Logistics, Langyue Logistics and Bangtai Logistics, and the company has signed a warehouse management agreement with the above three warehousing companies, according to the agreement, the company will send the products to the VMI warehouse after the completion of production according to the needs of the customer's order, and the customer will receive it according to its specific needs, and the property rights of the relevant goods before being used belong to the company, and the risk of damage and loss of the goods has not been transferred to the customer, so it is still in the financial statements as "inventory goods" Presentation.
During the reporting period, the company's sales to major customers through VMI (consignment model), the closing balance and the ratio of ending inventory to sales are as follows:
During the reporting period, the company's VMI (consignment model) closing inventory accounted for the ratio of sales. 25% and 987%, showing an increasing trend, of which the increase in 2021 compared to 2020 was mainly due to the increase in the demand for consumer electronics due to the impact of the public health incident in 2021, which led to the increase in the demand for LITE-ON Technology's stocking for consumer electronics. The increase in 2022 compared to 2021 was mainly due to the change of the settlement model to VMI (consignment model) of the company's customer Airtec from July 2022.
1. Specify the time point and basis for revenue recognition of various businesses in combination with the contract agreement; Whether there are different ways to confirm the same customer, if so, please explain the reason and reasonableness, and whether there is room for artificial adjustment.
1. Specify the time point and basis for revenue recognition of various businesses in combination with the contract agreement;
During the reporting period, according to the different types of the company's business, it can be divided into domestic sales and export sales; Among them, domestic sales can be divided into consignment model (VMI) and non-VMI model, and the amount and proportion of various business revenues are as follows
During the reporting period, the specific circumstances of the timing and basis of revenue recognition for various businesses are as follows:
2) Whether there are different ways to confirm the same customer, if so, please explain the reason and reasonableness, and whether there is room for artificial adjustment
During the reporting period, there were no different revenue recognition methods for the same customer, except for the fact that Airtek changed from non-VMI mode to VMI mode after batch supply. Before the company and Etek supply in large quantities, the use of signature to confirm revenue; After the large-scale supply, based on the "Consignment Agreement" signed by both parties, the VMI mode was used for supply, and the company adjusted the revenue recognition method accordingly; The adjustment of Etek's revenue recognition method is based on business development, and there is no artificial adjustment.
According to the contract signed by the two parties in April 2021, "Party A shall organize production in the form of timely distribution and supply by a third-party logistics company." After Party A completes the first batch of sample approval, Party B shall take the initiative to sign the "Consignment Agreement" with Party A and the third-party logistics company, clarify the rights and obligations of the three parties, and ensure the stable and smooth batch supply of parts in accordance with the relevant rules and regulations of the "Consignment Agreement". ”
In April 2021, the company began supplying small batches to its non-VMI model, i.e. confirmation of receipt, with sales of 1,941080,000 yuan. After the approval of the first batch of prototypes, since the company's products have met the requirements of mass delivery, after negotiation between the two parties, Airtec began to adopt the VMI sales settlement model with the company in July 2022. The above-mentioned changes in the sales settlement model are made by the company and customers in the process of cooperation, based on the demands of different stages of cooperation, industry characteristics and trading habits, etc., which are commercially reasonable and there is no room for artificial adjustment.
2. Explain the main customers who recognize revenue through reconciliation, the reconciliation method, the reconciliation cycle, and the specific basis for revenue recognition, and explain the interval between the time of issuing goods and the subsequent settlement time, and whether the relevant time interval is stable.
During the reporting period, the company's sales through VMI (consignment model) were 11,007310,000 yuan, 15,144270,000 yuan and 12,770480,000 yuan, accounting for respectively. 63% and 1393%。The main customers are Lite-On Technology, LG Electronics, Etek, etc. Under the consignment model, the company takes the time point of customer receipt as the time point of revenue recognition, and the specific basis of reconciliation method, reconciliation cycle and revenue recognition of major customers is as follows:
For the above-mentioned major customers, the company signed a warehouse management agreement with a third-party warehousing company, and agreed that the third-party warehouse, that is, the consignment warehouse, was responsible for managing the company's products and sending them to customers. According to the warehouse management agreement, the company will send the products to the VMI warehouse according to the customer's order, and the customer will receive it according to the situation; The property rights of the relevant goods before they are used belong to the company, and the risk of damage or loss of the goods is not transferred to the customer, so the company lists the above-mentioned goods that are managed in the consignment warehouse but have not been collected by the customer as "inventory goods". For the goods that have been sent to the customer, but the customer has not yet received and has not signed for the confirmation of receipt, it is counted as the issued goods.
Therefore, the time between the company's delivery of goods and revenue recognition is shorter, usually 2-3 days. For the products that have been signed by the customer, from its revenue recognition to the subsequent settlement cycle, it is confirmed according to the credit period agreed in the contract, which is usually 90 days to 120 days after invoicing, and the relevant time interval is relatively stable.
3. Whether the issuer has estimated the circumstances of revenue recognition, whether there is any discrepancy between the amount and amount of revenue recognized and the next month's statement and the specific circumstances and the impact on the performance of each period, and whether there are material differences between the specific method of revenue recognition and that of comparable companies; Explain whether the disclosure of the revenue recognition conditions for the consignment model is accurate.
1) Whether the issuer has estimated the circumstances of recognizing revenue, whether there is a difference between the amount and amount of recognizable revenue and the next month's statement, and the specific circumstances and the impact on the performance of each period
Under the VMI (consignment model), the issuer has a situation where the revenue is estimated and recognized based on the number of customers received, mainly because some customer reconciliation cycles are not full Gregorian calendar months. The reconciliation cycle of the company's main consignment customers is usually from the 21st of the previous month to the 20th of this month, or from the 27th of the previous month to the 26th of this month, so 3-10 days after the end of the month, the issuer estimates and recognizes the revenue according to the amount of customers received.
During the reporting period, the amount of revenue recognized under the company's consignment model was estimated to be 220180,000 yuan, 323930,000 yuan and 384500,000 yuan, accounting for the proportion of operating income in each period. 32% and 040%。There is no material difference between the estimated number and amount of revenue recognized and the next month's statement, and the impact on the performance of each period is small.
2) There is no material difference between the specific method of revenue recognition and that of comparable companies, and the company discloses the conditions for revenue recognition of the consignment model accurately.
There is no material difference between the specific method of revenue recognition between the company and comparable companies and that of comparable companies, and the company discloses the conditions for revenue recognition of the consignment model accurately.
During the reporting period, under the consignment model, the specific method of revenue recognition of the company was similar to that of Mankun Technology and Wilgokee.
This is the same, and it is slightly different from the way Aohong Electronics, Jinlu Electronics and He Hong Electronics recognize revenue by statements. The revenue recognition method of both the Company and comparable companies is based on the acquisition of relevant commodity control by the customer after the customer has received it.
Revenue is recognized at the right point in time, and the specific method of revenue recognition is not materially different from that of comparable companies, and the consignment model is received.
Accurate disclosure of entry conditions.
4. Explain whether there are differences and reasonableness between the amount of revenue recognition and the scale of goods issued and those of comparable companies, the reasonableness of the low balance of goods issued, and whether the revenue and carry-forward costs are recognized across periods.
Under the VMI (consignment model), the company directly signs a warehouse management agreement with a third-party warehousing company, and stipulates that the third-party warehouse (consignment warehouse) is responsible for the management and delivery to the customer, so the company will list the above-mentioned goods that have been sent to the consignment warehouse but have not yet been collected by the customer as "inventory goods". For the goods that have been sent to the customer, but the customer has not yet received and has not signed for the confirmation of receipt, it is counted as the issued goods. As a result, the balance of the goods issued is low.
Comparable companies in the same industry, such as Aohong Electronics, Jinlu Electronics, Mankun Technology, Wilco and Hehong Electronics, directly send products to the customer's warehouse or the third-party logistics warehouse designated by the customer; Since the third-party logistics warehouse is under the control of the customer, the above-mentioned commodities that have been sent to the consignment warehouse but have not yet been reconciled or received by the customer are listed as "issued commodities"; For the sake of consistency, the company compares the amount of the VMI warehouse balance and the amount of goods shipped. The details are as follows:
Considering the VMI balance, the size of commodities issued by the issuer at the end of each period is lower than the average of comparable companies in the same industry, which is similar to that of Jinlu Electronics. The main reasons are: On the one hand, the company's sales through the VMI (consignment model) were 11,007310,000 yuan, 15,144270,000 yuan and 12,770480,000 yuan, accounting for respectively. 63% and 1393%, the sales amount and proportion are relatively low, so that the balance of the consignment warehouse is correspondingly low; On the other hand, the issuer's customers are mainly distributed in Jiangsu, Zhejiang and Shanghai, and the time interval between delivery and receipt is short.
In summary, due to the relatively low sales amount and proportion of the issuer under the consignment model, and the concentration of major customers in Jiangsu, Zhejiang and Shanghai, the time interval from delivery to receipt is short, so there is a difference between the amount of revenue recognition and the scale of goods issued by comparable companies. It is reasonable that the balance of the issued goods is low, and there is no situation where revenue is recognized and costs are carried forward across periods.
5. Explain the design and operation of the internal control of the goods issued under the consignment model, whether there is a situation where the customer has received it without notifying the issuer, and the implementation process of the issuer's inventory.
1) The design and operation of the internal control of the consignment model
The company transports the products to the third-party logistics warehouse or the customer's warehouse, and the warehouse management personnel of the other party when the goods are delivered.
Verify the model and quantity with the company's handling personnel, and enter it into the customer's business management system (or.
Tripartite logistics system), the company and each VMI customer have a fixed reconciliation time and reconciliation cycle, the reconciliation time is generally the end of each month, the two sides in the agreed reconciliation time to check the reconciliation cycle of the situation, according to the negotiation of the settlement unit price, the formation of a statement, after the company's business personnel check the quantity, settlement, financial personnel according to the statement to issue VAT invoices. The company conducts an inventory of the consignment inventory from time to time, finds out the causes of abnormal inventory, distinguishes responsibilities, and negotiates corrective measures.
2) Whether there is a situation where the customer has received the use without notifying the issuer
The company signed a warehouse management agreement with the VMI mode of consignment warehouse, for the company's inventory sub-location separate storage, when the inventory is warehoused, the use of unpacking view and scanning code point receipt, after the single goods match the timely warehousing return, scan the code automatic entry system, warehousing documents by the warehouse management, the company, the delivery party each hold a joint. The warehouse management prepares the goods after receiving the list of VMI end customers, scans the code and leaves the warehouse and automatically includes it in the system detailed outbound account.
The company can log in at any time to query the product delivery record or daily mail check the entry and exit records for the consignment warehouse, among which, Haichen warehouse opens the query window of the storage system, and the company can directly log in and check the entry and exit storage situation at any time; Langyue Cang and Bangtai Cang will notify the entry and exit inventory details by email every working day morning for Wanyuantong to inquire and check. In addition, the company's resident personnel will check the accounts with the three warehouse management personnel from time to time, and the company assigns financial personnel to the consignment warehouse at the end of half a year or the end of the year to ensure that the accounts are consistent. Therefore, there is no situation where the customer has received it without notifying Wanyuantong.