According to the "Decision on Ordering Corrective Measures", the China Securities Regulatory Bureau believed that in the purchase and sale of cattle and cathode copper carried out by Xiamen Cinda and its subsidiaries in 2013, part of the business was agency business or did not bear the main risks and rewards of the goods, but was recognized as sales revenue on a total basis, resulting in the recognition of an additional 904 million yuan in sales revenue in 2013.
In this regard, Xiamen Cinda stated that due to the company’s insufficient understanding of the revenue recognition standards, an additional sales revenue of 904 million yuan was recognized in 2013, and a corresponding increase in sales costs was recognized (which had no impact on the net profit in 2013). The relevant departments of the company will comprehensively sort out the recognition of sales revenue based on the terms of the contract and the risks and rewards borne by the company, and recognize revenue in strict accordance with accounting standards.
Secondly, the "Decision" also held that on March 4, 2014, Fujian Xinda Optoelectronics Technology Co., Ltd., a subsidiary of Xiamen Xinda, received a financial subsidy of 30 million yuan from the "Three Science and Technology Projects" and fully included the financial subsidy into non-operating income in the first quarter of 2014. Since the subsidy is related to the subsidiary's LED packaging and application product project, the project has not yet started construction, and it is not standard enough to include it in the current profit and loss in one go.
In this regard, Xiamen Cinda stated that this was due to the company’s misunderstanding of the relevant provisions of the "Accounting Standards for Business Enterprises No. 16 - Government Subsidies", and when it received three technology subsidies of 30 million yuan, it was fully included in non-operating income at one time.
At present, the company has corrected the problem, and will confirm the three science and technology subsidies in a timely manner based on the project's construction, R&D investment, channel construction and other operating conditions in accordance with the provisions of the Accounting Standards for Business Enterprises and the results confirmed by the audit agency.
In addition, the "Decision" also believes that Xiamen Cinda's 2013 financial statement notes should disclose but did not disclose the situation and reasons why fixed assets such as the multi-story warehouse at No. 9 Xinglong Road, Xiamen City, and the building on the leased ground of the automobile 4S store were unable to obtain property rights certificates.
In this regard, the company stated that it has carefully inspected and reviewed the items in the notes to the statements and will make all corrections in the 2014 semi-annual report. The notes to the financial statements of the company's 2014 semi-annual report will disclose the inability to apply for property rights certificates and their reasons in accordance with relevant regulations such as the "Accounting Standards for Business Enterprises", "Information Disclosure and Preparation Rules No. 15 of Companies that Offer Securities to the Public - General Provisions on Financial Reports" (revised in 2010).
Xiamen Xinda stated that the company will take this opportunity to strengthen learning and further improve the company's internal control system to ensure the company's sustained, healthy and stable development.
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