China Orders Fourth Auditor This Year to Suspend Securities Business
Liao Shumin
DATE:  Nov 22 2019
/ SOURCE:  yicai
China Orders Fourth Auditor This Year to Suspend Securities Business China Orders Fourth Auditor This Year to Suspend Securities Business

(Yicai Global) Nov. 22 -- Two of China's financial regulators have ordered Zhonghua Certified Public Accountants, an auditor of 59 listed Chinese firms, to suspend its securities business, making the Hong Kong-based accountancy the fourth shut down by market watchdogs this year.

Zhonghua may not audit annual reports for listed corporations, firms whose shares float on the over-the-counter New Third Board, or companies looking to go public, the China Securities Regulatory Commission said in a statement yesterday with backing from the Ministry of Finance. The regulators have given Zhonghua two months to rectify errors.

The authorities have already handed out temporary suspensions to three other accountancies this year: Reanda CPAs, Ruihua CPAs and BDO China-Shu Lun Pan CPAs.

Zhonghua's suspension comes as a follow-on to the firm receiving two punishments in May and October this year for wrongdoings committed four years ago.

Jiangsu Yabaite Technology, audited by Zhonghua in 2015, faked overseas projects and revenue from construction material sales to add CNY260 million (USD37 million) to its bottom line, making up 73.1 percent of its profit that year, according to the regulator. It fined Zhonghua CNY1.7 million (USD250,000) and confiscated CNY540,000 of genuine income and CNY120,000 of its illicit earnings.

The same year, Zhonghua client Ningbo Sunlight Electric Appliance hid a loss by adding CNY15 million to its net profit in fake film and television copyright sales and financial subsidies. The watchdog fined Zhonghua CNY1.1 million and seized CNY350,000 of its revenue.

Editor: James Boynton

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Keywords:   Zhonghua Certified Public Accountants