Furui Co., Ltd. (300049.SZ): Inner Mongolia Securities Regulatory Bureau ordered corrective measures against the company

Zhitong Finance App News, Furui Co., Ltd. (300049.SZ) announced that the company recently received the “Decision on Ordering Corrective Measures against Inner Mongolia Furui Medical Technology Co., Ltd. and Issuing Warning Letters to Relevant Responsible Personnel” issued by the Inner Mongolia Regulatory Bureau of the China Securities Regulatory Commission. The decision indicated that the company had the following problems:

1. The company's internal control over the management of overseas subsidiaries is inadequate. The company has not established an internal control and risk management system for important overseas subsidiaries by the parent company, the company's internal departments have not carried out inspections and supervision of overseas subsidiaries, and it does not comply with the provisions of Article 94 (1) of the “Governance Guidelines for Listed Companies” (Securities Regulatory Commission Notice (2018) No. 29) and Article 88 (1) of the “Listed Company Governance Guidelines” (Securities Regulatory Commission Notice (2025) No. 5).

2. The company's revenue accounting is not standardized. First, the company recognized revenue when drug sales were shipped out of the warehouse. As a result, the 2023 semi-annual report, 2023 annual report, 2024 semi-annual report, and 2024 annual report confirmed revenue of 2,408,900 yuan, 5.673 million yuan, and 1,341,700 yuan respectively, affecting the accuracy of financial information disclosure relating to the 2023 and 2024 regular reports, and did not meet the requirements of sections 4 and 13 of the “Corporate Accounting Standard No. 14 - Revenue”. Second, in June 2023, the company confirmed the full sales revenue of a drug with a sales refund clause. The drug was returned to storage in August, and the company did not account for that month. As a result of this incident, the disclosure of the 2023 semi-annual report was inaccurate and did not comply with section 32 of the “Accounting Standard for Enterprises No. 14 - Revenue” and section 62 of the “Rules on Information Disclosure and Compilation of Publicly Issued Securities No. 15 - General Provisions on Financial Reports” (Securities Regulatory Commission Notice [2014] No. 54). Third, during accounting in 2023 and 2024, the company did not reasonably estimate variable consideration such as sales discounts and sales rebates in drug sales contracts. Sales revenue was recognized in full, and sales revenue was reduced when paying customers variable consideration such as sales discounts and sales rebates, which did not comply with the provisions of Articles 15 and 16 of the “Enterprise Accounting Standard No. 14 - Revenue”.