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China National Radio Beijing August 16th News (Reporter Sun Ruxiang)The China Securities Regulatory Commission recently imposed administrative penalties on Tianzhi International for failing to perform its duties diligently and forging, tampering with, and destroying audit working papers in the audit of Qixun Co., Ltd.'s annual report: Tianzhi International Accounting Firm (Special General Partnership) was ordered to make corrections, given a warning, had its business income of RMB 3,679,245.28 confiscated, was fined RMB 23,396,226.40, and was suspended from engaging in securities services business for 6 months.

In a statement on the 16th, Baker Tilly International said that it fully respects and sincerely accepts the penalty decision of the China Securities Regulatory Commission. Baker Tilly International feels deeply ashamed, sad and remorseful for the administrative penalty decision of the China Securities Regulatory Commission.

Baker Tilly International forged, tampered with, and destroyed audit working papers

The China Securities Regulatory Commission found that Tianzhi International had committed two illegal acts.

First, Tianzhi International failed to perform its duties diligently in the audit of Qixun’s annual report, and the audit report it produced and issued contained false statements.

According to another case, Qixin shares' annual reports from 2015 to 2019 contained illegal and irregular information disclosure such as inflated revenue and total profit. Tianzhi International provided audit services for Qixin shares' financial statements, with a total audit business income of 3,679,245.28 yuan (after tax). Tianzhi International issued a standard unqualified audit report with false records. Tianzhi International failed to perform its duties diligently in the audit of Qixin shares' annual report, which is mainly reflected in the following four aspects.

First, the risk identification and assessment procedures were not properly implemented. For example, the audit working papers did not include audit procedures for identifying and assessing the risk of material misstatement at the financial statement level, nor did they include audit procedures for determining whether the identified risks were special risks based on professional judgment. The audit procedures were not conducted based on the assumption that there was a risk of fraud in revenue recognition. Accounts receivable and bad debt reserves were identified as having a risk of fraud, but they were not considered special risks.