The first accounting firm involved in bribery, the actual controller of Zhongzhun Shandong Branch was sentenced to 6 months; 80% of listed companies' audit business is in Northeast
as a window to understand the company, and financial information is particularly important. Recently, a reporter from the Beijing News found a previously undisclosed verdict on the judicial documents website, showing that details of the bribery case of former employee of Zhongzhuan Accounting Firm to the Minister of Finance of a State-owned Enterprise were made public. The Shandong Branch of Zhongzhuan Accounting Firm and Guo Xiaoxia were suspected of bribery by the company and have bribed Lu, the director of the Financial Budget Department of a certain group company, on many occasions. The case has been ruled by the Wulian County People's Court of Shandong Province. The defendant Guo was sentenced to six months in prison and one year of probation for bribery in the unit.
According to the data from the Judgment Document Network, Zhongzhun Accounting Firm is the only accounting firm affected by the crime of bribery by the unit. As of September 18, Zhongzhun Accounting Firm served as an auditing agency for 20 listed companies, mostly distributed in the Northeast region. Previously, Zhongzhun was criticized by the China Certified Public Certification Association for multiple violations of practice and ordered to rectify it.
It is worth noting that non-compliance is no longer an isolated case, and the entire accounting industry is experiencing a crisis of trust. From the perspective of foreign companies, none of the four major accounting firms, including , PwC, and KPMG, have been spared from receiving tickets one after another, and their image as professional accounting firms is collapsed. Similarly, domestic accounting firms are not spared. In June this year, the China Securities Regulatory Commission suspended the acceptance of initial public offering and refinancing project information from the six major domestic accounting firms Lixin, Ruihua, Zhonghua, Xinghua, Zhitong and Dahua. Analysts believe that this may be related to previous business violations of some accounting firms.
Zhongzhun former employee was sentenced to bribe the director of the corporate finance department
Recently, a reporter from the Beijing News found a judgment that had not been published before on the judgment document website. The verdict, which was published on May 24 this year, announced the details of the bribery case involved in the Shandong Branch of Zhongzhuan Accounting Firm: The Wulian County People's Procuratorate of Shandong Province accused that from the end of 2008 to the second half of 2014, Guo, the actual controller of the Shandong Branch of a certain accounting firm (later renamed to the Shandong Branch of a certain accounting firm (special general partnership)), gave it to Lu, director of the financial budget department of a certain group company (later renamed to the Shandong Branch of a certain accounting firm (special general partnership)), many times, in order to undertake the audit business of a certain group company and gain a competitive advantage in the process of paying audit fees, he gave it to Lu, director of the Financial Budget Department of a certain group company, a total of RMB 820,000 and a shopping card of 10,000 yuan.
According to the testimony of witness Lu, from 2009 to 2015, the annual report audit business and most of the special audit business of a group company and its subsidiaries were undertaken by a Shandong branch of an accounting firm.
Because a certain group company is a state-owned enterprise, it mainly plays a suggestive role in a certain audit business.
In the end, the Wulian County People's Court of Shandong Province determined that a Shandong branch of an accounting firm obtained audit business through improper means and sought improper benefits. The circumstances were serious and constituted the crime of bribery in the unit. As the direct responsible person, the defendant Guo was sentenced to six months in prison and one year of probation for bribery in the unit.
In response to this, certified public accountant , who has been in an accounting firm for many years, told the Beijing News reporter that the incident caused a great shock in the industry. The bribery incident of Zhongzhuan Accounting Firm Shandong Branch violated professional ethics and the Certified Public Accountant Law, and even violated the principle of independence. The principle of independence requires that the accounting firm does not favor either party. The bribery incident of Zhongzhuan Accounting Firm Shandong Branch had an impact on the authenticity of its audit financial report, and thus Zhongzhuan Accounting Firm Shandong Branch was cancelled. Zhongzhuan Accounting Firm is also the first accounting firm in China to be punished for a unit bribery case.
Zhongzhuan listed companies' audit business is concentrated in Northeast
According to Tonghuashun iQiancai data, Zhongzhuan Accounting Firm is currently serving as the auditing agency of 20 listed companies. These 20 listed companies are Jilin Chemical Fiber, Jilin Aodong, Tianxia Wisdom, Jinhong Holdings, Northeast Securities , Tonghua Jinma, Zixin Pharmaceutical , Liyuan Refining, Jiyao Holdings, Jiayu Shares, Harbin Hi-Tech, Guozhong Water, Huazi Industrial, Tongpu Shares, *ST Fugang, *ST Gongxin, Dalian Thermal Power, Tonghua Dongbao, Yatai Group, and Longyun Shares.
From a regional perspective, among the 20 listed companies, 16 are from the Northeast.
Certified accountant Li Li told the Beijing News reporter that when a listed company chooses an accounting firm, it usually depends on interpersonal relationships at first, and then continues, and the risks and pros and cons must be weighed in the middle. "Overall, we will choose the top accounting firm. After doing an IPO, we will do a follow-up audit. We will not easily change the accounting firm. It is also troublesome to change the firm. The audit is discontinuous and the workload is very heavy." He believes that the top accounting firms have branches in various provincial capital cities and will not be concentrated in a certain region. It is not common for 80% of listed companies such as Zhongzhun to be concentrated in the Northeast.
An important function of an accounting firm is to audit the financial statements of listed companies. The audit opinions for financial statements include five types, namely, the standard unqualified opinions, the unqualified opinions with emphasis on matters, the reservation opinions, the negative opinions, and the inability to express opinions. The last four types are "non-standard" audit opinions.
Judging from the relevant situation of the 20 listed companies reviewed by Zhongzhong Accounting Firm, Zhongzhong Accounting Firm issued an audit report that could not express opinions for *ST Fugang's 2017 annual report, and issued an audit report that could not express opinions for *ST Gongxin's 2017 annual report. The remaining 18 listed companies audited by Zhongzhong Accounting Firm issued standard unqualified opinions.
. The Shanghai Stock Exchange stipulates that the financial accounting report of a listed company in the latest fiscal year, , will be issued by an audit report that cannot express an opinion or a negative opinion in the non-standard opinion by the accounting firm, and will be subject to a delisting risk warning. If an audit report that cannot express an opinion or neglects continues to be issued in the following year, it will be suspended from listing. After the company's stock is suspended from listing, the company's financial accounting report for the most recent fiscal year disclosed by the company will be issued an audit report with reservations, inability to express opinions, and negative opinions, and the company's stock will be forced to be delisted (i.e. forced delisting). The regulations of the Shenzhen Stock Exchange main board and the SME board are also roughly similar.
Recently, the CSRC's supervision of audit institutions that hold the "power of life and death" of listed companies has gradually become stricter. In this regard, senior accountant Tian Gang believes that "audience technology has developed for hundreds of years and is already very mature. The key is that those who do auditing cannot be obsessed with profit, can't be accustomed to tigers, and can't pretend to be confused when they understand. The CSRC should have strictly supervised audit institutions. Compared with foreign countries, domestic supervision is still much looser. It should improve audit responsibility prosecution, lifelong occupational ban, subrogation compensation, etc.."
was once trapped in the vortex of Zixin Pharmaceutical's performance fraud and was ordered to rectify
In January this year, during the random inspection of the China Association of Certified Public Accountants (hereinafter referred to as the "China Certified Public Accountants"), the problems were found and ordered to rectify. Previously, Zhongzhuan Accounting Firm was involved in the Zixin Pharmaceutical's financial fraud case and was ordered to rectify it.
In August 2011, some media questioned that Zixin Pharmaceutical had self-buying and selling related transactions and false transactions. Zhongzhuan Accounting Firm, as the audit agency of Zixin Pharmaceutical, was also pushed to the forefront. The China Certified Public Accountants conducted a special inspection on the annual report audit of Zixin Pharmaceutical carried out by Zhongzhuan from August to November 2011.
In the inspection of Zixin Pharmaceutical's 2010 annual report audit project, the CPA found that the signed certified public accountant did not maintain his due professional skepticism during the project audit process, and there was improperness in the planning and implementation of the audit procedures, the acquisition of audit evidence, and the formation of audit conclusions. There are mainly shortcomings in the implementation of preliminary business activities and risk assessment procedures, and insufficient and appropriate audit evidence is not obtained for advance payments, income, related parties and their transactions, especially in the audit of related parties and their transactions, which violates the Chinese Certified Public Accountant Audit Standards and Code of Professional Ethics.
On February 17, 2012, in accordance with the "Regulations on Punishment of Violations of Practice of Members of the China Certified Public Accountants Association", the China Certified Public Accountants' Association decided to issue criticism to Liu Kun and Zhang Zhongwei, the signature certified public accountants of the Zixin Pharmaceutical Audit Project of Zhongzhuan Institute.The China CPA will instruct the Zhongzhuan Institute to strengthen the construction of the quality control system, strengthen the management of the branch offices, and carry out rectification within a specified period of time. The China CPA will follow up and inspect its rectification situation.
is crucial for investors. Financial data is crucial. Investor Chen Xing (pseudonym) told a reporter from Xinjing, "We need to understand the financial status of the company, estimate the previous financial data, and make investment decisions. If the audit report issued by the audit agency is false, or even financial fraud, the stock price will usually suffer a heavy blow and may face the risk of delisting. For investors with leveraged investment, it will suffer heavy losses." After
was fined for Zixin Pharmaceutical's cross-link transaction, Zhongzhuan Accounting Firm was criticized again on January 22, 2018 for practicing quality inspection in the accounting firm. Among them, the major practice violations of a certain company's 2016 financial statement audit by Wen Yanbing and Liu Wei, a certified public accountant of Zhongzhuan Accounting Firm; the major practice violations of a certain company's 2016 financial statement audit by Liu Kun and Chang Ming, a certified public accountant, issued a rectification notice to him, ordering him to make rectification within a time limit and submit a rectification report. The reporter asked for verification of relevant matters by Zhongju Accounting Firm, and the other staff did not respond on the grounds that he was a new employee.
version edited/Beijing News reporter Zhang Yandi
