Inner Mongolia Furui Medical Science Co.,Ltd. (300049.SZ) Receives Rectification Order from Inner Mongolia Securities Regulatory Bureau

Stock News12-10

Inner Mongolia Furui Medical Science Co.,Ltd. (300049.SZ) announced that it recently received a rectification order from the Inner Mongolia Bureau of the China Securities Regulatory Commission (CSRC). The decision document identified the following issues:

1. **Inadequate Internal Controls for Overseas Subsidiaries**: The company failed to establish internal control and risk management systems for key overseas subsidiaries. Its internal departments did not conduct inspections or supervision of these subsidiaries, violating Article 94(1) of the "Guidelines for Corporate Governance of Listed Companies" (CSRC Announcement [2018] No. 29) and Article 88(1) of the updated guidelines (CSRC Announcement [2025] No. 5).

2. **Irregular Revenue Recognition Practices**: - The company recognized revenue upon product shipment, leading to premature revenue recognition of RMB 2.4089 million, RMB 2.881 million, RMB 5.6703 million, and RMB 1.3417 million in its 2023 interim report, 2023 annual report, 2024 interim report, and 2024 annual report, respectively. This affected the accuracy of financial disclosures in periodic reports for 2023 and 2024, contravening Articles 4 and 13 of "Accounting Standards for Business Enterprises No. 14 - Revenue." - In June 2023, the company fully recognized revenue for a drug sale with a return clause, despite the goods being returned in August. The company failed to make corresponding accounting adjustments, resulting in inaccurate 2023 interim reporting. This violated Article 32 of the same accounting standard and Article 62 of the "Rules for the Preparation of Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions for Financial Reports" (CSRC Announcement [2014] No. 54). - During 2023 and 2024, the company did not reasonably estimate variable considerations such as sales allowances and rebates in drug sales contracts. Instead, it recognized full revenue and later deducted these variable payments, breaching Articles 15 and 16 of the revenue accounting standard.

The CSRC has ordered corrective actions and issued warning letters to responsible personnel.

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