According to the Zhitong Finance App, Feilixin (300287.SZ) announced that the company, Yang Zhenhua, and Cao Xinjun recently received the “Decision on Administrative Supervision Measures against Beijing Feilixin Technology Co., Ltd., Yang Zhenhua, and Cao Xinjun” issued by the Beijing Regulatory Bureau of the China Securities Regulatory Commission. The warning letter indicates that the company has the following issues:

The mix of credit risk has not been properly assessed and divided. For some accounts receivable with clearly different credit risk characteristics, credit risk combinations were not properly assessed and classified, and anticipated credit losses were calculated.

Credit impairment losses are calculated inaccurately. First, there is an error in the age of individual accounts receivable; second, the accounting treatment for direct write-off of individual accounts receivable is inappropriate. Some accounts receivable that are still in the process of litigation and are not yet truly recoverable are directly written off. As a result, the calculation of related credit impairment losses was not accurate.

The accounting treatment of long-term receivables is inappropriate. The transfer of part of long-term receivables to accounts receivable accounting resulted in inaccurate presentation of non-current asset balances and accounts receivable balances due within one year. For some long-term receivables with clearly different credit risk characteristics, credit risk combinations were not properly assessed and classified, and anticipated credit losses were calculated.

There was an error in the previous period accrued amounts for individual projects in the notes to the 2022 financial statements. For example, if depreciation and amortization of usage rights assets are included in the “rent” sub-item of costs and expenses, unconfirmed financing expenses for related payments using installment payment methods are included in the “interest expenses” sub-item of financial expenses.

Some projects are not managed in place. For some of the projects requiring acceptance to confirm revenue, the company internally recorded that the project had been completed, confirmed the revenue when payment was received, and was unable to obtain the acceptance slip in a timely manner.