(Yicai Global) March 17 -- China has fined Deloitte a record CNY212 million (USD30.8 million) for serious deficiencies in assessing the asset quality of China Huarong Asset Management, the country’s biggest state-owned bad loans manager, the finance ministry said.

The world-renowned auditing firm’s Beijing operation has also been suspended for three months, the ministry said in a statement on its website today.

Huarong suffered internal governance lapses, risk control failures, and serious accounting information distortion, to varying degrees from 2014 to 2019, the ministry said. Deloitte lacked professional skepticism in auditing, failed to effectively perform the necessary procedures, and did not obtain sufficient and appropriate evidence, leading to serious audit deficiencies, it added.

In addition, Deloitte paid insufficient attention to the substance of Huarong’s business, and failed to understand the true status of its assets, the ministry noted.

The firm also ignored approval compliance for major investment matters, did not properly issue audit opinions on identified unusual transactions, and failed to objectively evaluate the status of corporate assets, per the statement.

The ministry issued a warning to Deloitte’s head office, which was liable for its Beijing branch, and penalized 14 people, two of whom had their certified public accountant certificates revoked.

Huarong and its seven subsidiaries were fined CNY800,000 (USD116,374) in total, while 19 persons were fined between CNY10,000 and CNY50,000 each, the ministry said without providing further details.

Editor: Peter Thomas