Chung Fu International's Restated FY114 Financial Report Receives Unqualified Audit Opinion

1. Date of Fact: 115/06/15

2. Full Auditor's Audit Opinion:
To the Shareholders of Chung Fu International Co., Ltd.:

Audit Opinion
The restated balance sheets of Chung Fu International Co., Ltd. as of December 31, Years 114 and 113, and the restated consolidated statements of comprehensive income, changes in equity, cash flows, and notes to the financial statements (including a summary of significant accounting policies) for the years from January 1 to December 31, Years 114 and 113, have been audited by this auditor.

In our opinion, the aforementioned financial statements have been prepared in all material respects in accordance with the Financial Reporting Standards for Securities Issuers and present fairly, in all material aspects, the financial position of Chung Fu International Co., Ltd. as of December 31, Years 114 and 113, and the financial performance and cash flows for the periods from January 1 to December 31, Years 114 and 113.

Basis for Audit Opinion
We conducted our audit in accordance with the Rules Governing Auditors' Engagement for Auditing Financial Statements and auditing standards. Our responsibilities under these standards are further described in the Auditor's Responsibility for the Audit of the Financial Statements section. Personnel subject to independence requirements at our affiliated firm have maintained independence from Chung Fu International Co., Ltd. in accordance with the Code of Professional Ethics for Accountants and have fulfilled other related responsibilities. We believe that we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

Other Matters – Updated Opinion
On March 31, Year 115, we previously issued a qualified audit report on Chung Fu International Co., Ltd.'s pre-restatement financial statements for Year 114 because we were unable to access financial information from Fu Hsing Investment Co., Ltd., an equity-method investee. As a result, we could not obtain sufficient and appropriate audit evidence regarding the equity-method investment amounts and could not determine whether adjustments were necessary. However, as disclosed in Note 12(2) to the financial statements, Chung Fu International Co., Ltd. has now provided the financial information of Fu Hsing Investment Co., Ltd. and restated its Year 114 financial statements. Therefore, in this report, we have updated our opinion on the restated Year 114 financial statements, and this opinion differs from the one previously expressed.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the Year 114 financial statements of Chung Fu International Co., Ltd. These matters were addressed in the context of the overall audit of the financial statements and the formation of our audit opinion, and we do not provide a separate opinion on these matters.

The key audit matters for the Year 114 financial statements of Chung Fu International Co., Ltd. are described below:

Existence of Investment Property
As of December 31, Year 114, the carrying amount of investment property of Chung Fu International Co., Ltd. was NT$513,456 thousand, representing approximately 44% of total assets. Given the materiality of both the amount and the ratio, the existence of investment property has been identified as a key audit matter.

Our procedures to test the existence of the aforementioned investment property included:
1. Understanding the design and operation of key internal controls over the acquisition and disposal of investment property.
2. Observing the actual operational status of the investment properties and performing sample checks against relevant documents to verify ownership and any mortgage or pledge arrangements.

Management’s and Governance’s Responsibility for the Financial Statements
Management is responsible for preparing financial statements that present fairly in accordance with the Financial Reporting Standards for Securities Issuers and for maintaining internal controls related to financial statement preparation to ensure that the financial statements are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is also responsible for assessing the company’s ability to continue as a going concern, disclosing relevant matters, and using the going concern basis of accounting unless management intends to liquidate the company or cease operations, or there is no other viable alternative.

The governance body of Chung Fu International Co., Ltd. (including the audit committee) is responsible for overseeing the financial reporting process.

Auditor’s Responsibility for the Audit of the Financial Statements
The objective of our audit of the financial statements is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report. Reasonable assurance is a high level of assurance, but an audit conducted in accordance with auditing standards cannot guarantee that all material misstatements will be detected. Misstatements may arise from fraud or error. A misstatement is considered material if its size or cumulative effect could reasonably be expected to influence the economic decisions of users of the financial statements.

In conducting our audit in accordance with auditing standards, we apply professional judgment and maintain professional skepticism. We also perform the following:
1. Identify and assess the risks of material misstatement of the financial statements due to fraud or error; design and perform appropriate responses to those assessed risks; and obtain sufficient and appropriate audit evidence as a basis for our audit opinion. Because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or circumvention of internal controls, the risk of not detecting material misstatements due to fraud is higher than due to error.
2. Obtain an understanding of internal controls relevant to the audit to design audit procedures appropriate to the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal controls.
3. Evaluate the appropriateness of accounting policies adopted by management and the reasonableness of accounting estimates and related disclosures.
4. Based on the audit evidence obtained, conclude on the appropriateness of management’s use of the going concern basis of accounting and whether events or conditions exist that may cast significant doubt on the company’s ability to continue as a going concern, resulting in material uncertainty. If we conclude that such uncertainties exist, we are required to draw attention in our audit report to the related disclosures in the financial statements or modify our audit opinion if the disclosures are inadequate. Our conclusions are based on the audit evidence available up to the date of the audit report. However, future events or conditions may cause the company to cease operations.
5. Evaluate the overall presentation, structure, and content of the financial statements (including related notes) and whether the financial statements appropriately represent the underlying transactions and events.
6. Obtain sufficient and appropriate audit evidence regarding financial information of components within Chung Fu International Co., Ltd. to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of the audit engagement and for forming the audit opinion.

We communicate with the governance body matters related to the audit, including the planned scope and timing of the audit and significant audit findings (including significant deficiencies in internal control identified during the audit).

We also provide the governance body with a statement that personnel subject to independence requirements at our affiliated firm have complied with the independence requirements in the Code of Professional Ethics for Accountants and communicate all relationships and other matters that may be perceived to affect independence (including related safeguards).

From matters communicated with the governance body, we determine the key audit matters for the audit of the Year 114 financial statements of Chung Fu International Co., Ltd. We describe these matters in our audit report unless laws or regulations prohibit public disclosure of specific matters, or in extremely rare circumstances, we determine that not communicating a matter is appropriate because the negative consequences of doing so would reasonably be expected to outweigh the public interest benefits.

3. Name of Accounting Firm: Kuan Heng & Associates Certified Public Accountants

4. Name of Signing Auditor and Approval Number 1: Jin-De Zhang / (079) MOF Sec (1) No. 00351 Letter

5. Name of Signing Auditor and Approval Number 2: Shu-Mei Chu / FSC Sec No. 8492 Letter

6. Auditor’s Audit (Review) Report Date: 115/06/15

7. Mitigation Measures:
The restated financial report for Year 114 has been approved by the board of directors and re-announced and re-submitted in accordance with the law.

8. Other Matters to be Disclosed: None