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recently, the china securities regulatory commission announced the status of companies applying for public issuance of corporate (enterprise) bonds. as of september 5, 36 companies had their review suspended and 3 companies had their review terminated; among them, 29 companies applied for suspension of review by issuers and 3 companies applied for termination of review by issuers, the latter of which were all applications for termination of review by issuers. intermediary institutions were involved in penalties, and 7 companies had their review suspended in accordance with regulations.

a common feature of the seven companies whose reviews were suspended in accordance with regulations is that their accounting firms all involved tianzhi international accounting firm. tianzhi international accounting firm was suspended from engaging in securities services business for six months by the china securities regulatory commission in august this year.

the bond issuance business of 31 securities firms was affected, and the top five securities firms were citic securities (13 orders), citic construction investment (13 orders), guotai junan securities (11 orders), ping an securities (7 orders), and haitong securities (7 orders).

since last year, six accounting firms have had their operations suspended, including the aforementioned tianzhi international accounting firm, dahua, deloitte beijing branch, asia pacific branch, hexin and pricewaterhousecoopers. the results of the regulatory investigation into pricewaterhousecoopers were announced on september 13. the china securities regulatory commission confiscated all business income of 27.74 million yuan during the period and imposed a maximum fine of 297 million yuan, totaling 325 million yuan in fines and confiscations; the ministry of finance gave pricewaterhousecoopers a warning, suspended its business for 6 months, and revoked the administrative penalty of pricewaterhousecoopers guangzhou branch.

the risk of accounting firms being suspended from business has attracted great attention from enterprises and regulators, and all parties have taken active measures to prevent enterprises from being affected by the above risks. the china securities regulatory commission also mentioned in its punishment of pwc that it is necessary to punish one person to serve as a warning to others, and hopes that the majority of intermediary institutions will take this as a warning, be cautious and fulfill the obligations required by the law without compromise.

7 bond issuances suspended due to fines imposed on intermediaries

the projects of "intermediary institutions involved in penalties, suspension of review in accordance with regulations" all involve tianzhi international accounting firm, specifically:

the corporate bonds of suzhou hengtai holding group co., ltd. were issued by baker tilly international accounting firm;

the corporate bonds of powerchina leasing co., ltd. were issued by baker tilly international accounting firm;

corporate bonds of china huadian corporation, accounting firm is baker tilly international;

the company (enterprise) bonds of beijing zhongguancun science and technology entrepreneurship financial services group co., ltd., whose accounting firms are shinewing and baker tilly;

the corporate bonds of beijing capital group co., ltd. were issued by baker tilly international and grant thornton;

the corporate bonds of beijing capital group co., ltd. were issued by baker tilly international and grant thornton;

the corporate (enterprise) bonds of chongqing water group co., ltd. were issued by daxin accounting firm and tianzhi international accounting firm.

39 bond issuance projects that were terminated or suspended affected 31 securities firms, among which citic securities and citic construction investment had the most affected projects, with 13 projects; followed by guotai junan securities, with 11 projects; ping an securities and haitong securities had 7 projects, cicc and huatai securities had 6 projects, sino-german securities and boc securities had 4 projects, china merchants securities and gf securities had 3 projects, bohai securities, everbright securities, shenwan hongyuan securities, guotai junan securities and galaxy securities had 2 projects, and west china securities, southwest securities, dongxing securities, kaiyuan securities, century securities, huachuang securities, guosen securities, orient securities, xiangcai securities, china development bank securities, soochow securities, huafu securities, hsbc qianhai securities, huarong securities and huaying securities had 1 project.

6 accounting firms suspended from operations

since last year, many accounting firms have received "qualification penalties".

on september 13, the china securities regulatory commission and the ministry of finance jointly fined pricewaterhousecoopers a total of 441 million yuan. pricewaterhousecoopers was given an administrative penalty by the ministry of finance, including a warning, suspension of business for six months, and revocation of its guangzhou branch. four signing certified public accountants were given the penalty of revocation of their certified public accountant certificates, and seven certified public accountants who participated in the preparation of evergrande real estate's consolidated financial statements were given administrative penalties of warnings or fines.

on august 16, the csrc disclosed a penalty notice, ordering tianzhi international accounting firm to make corrections, given a warning, confiscated business income of 3.6792 million yuan, imposed a fine of 23.3962 million yuan, and suspended from engaging in securities services business for 6 months.

tianzhi international committed the following illegal acts: first, it failed to perform its duties diligently in the audit of qixin shares' annual report, and the audit report it produced and issued contained false records; second, tianzhi international forged, tampered with, and destroyed audit working papers.

on may 14, jiangsu securities regulatory bureau disclosed the penalty notice, which showed that dahua was ordered to make corrections, confiscated business income of 6.8868 million yuan, imposed a fine of 34.434 million yuan, and suspended from securities service business for 6 months; the penalty notices for the relevant responsible persons and the signing certified public accountants were as follows: fan rong was given a warning and fined 1.5 million yuan; yan lisheng was given a warning and fined 800,000 yuan; hu zhigang was given a warning and fined 400,000 yuan. in summary, the total amount of fines and confiscations was 44.0208 million yuan.

the jiangsu securities regulatory bureau believes that when dahua audited jintongling's annual financial statements from 2017 to 2022, there were major defects in the risk assessment and internal control testing procedures, it failed to take appropriate audit measures to address the risk of fraud, and there were major defects in the substantive procedures. it violated the relevant practice standards, failed to fulfill its obligations of due diligence, and the audit report issued contained false statements.

in march last year, the ministry of finance suspended the business of deloitte beijing branch for three months, confiscated the illegal gains of deloitte beijing branch and imposed a total fine of 212 million yuan;

in july last year, the ministry of finance suspended the operations of the asia-pacific institute and the hexin institute for three and two months respectively.

in addition, there have been rumors recently that due to its involvement in evergrande's financial fraud, the regulatory investigation results on pricewaterhousecoopers will soon be announced, and pricewaterhousecoopers may face a fine of up to 500 million yuan and a suspension of its mainland business for 6 months. at present, the above rumors have not been confirmed.

companies and regulators take preventive measures

after the accounting firm’s business was suspended, enterprises were greatly affected. for this reason, many companies have recently given “vaccinations” to applicants for accounting firm jobs.

on august 8, hunan bidding network published an announcement about the accounting firm for the public bidding of hunan ordnance ipo, which required that within one year from the date of the announcement of the bidding, the bidder would not be restricted by the csrc's suspension of acceptance or review of application materials, and would not be suspended from securities business qualifications. the bidder was required to provide a letter of commitment, which should include "if the above situation occurs, compensation will be paid at twice the amount of the fees paid by the bidder at that time." at that time, the auditing agency of the enterprise was shown as tianzhi international accounting firm. a week after the public bidding, tianzhi international accounting firm was fined.

after tianzhi international accounting firm was fined, on august 20, guangzhou bank, which was under ipo review, announced a tender notice for the selection of external audit institutions and invited lixin accounting firm, panjian accounting firm, xinyong zhonghe accounting firm, daxin accounting firm, and suya jincheng accounting firm to participate in the bidding. according to the requirements, three accounting firms will be purchased, one as the main supplier and two as alternative suppliers. if the winning firm is subject to regulatory penalties, resulting in special circumstances such as affecting its qualifications, the alternative firm will be automatically selected and replaced in order of the bid evaluation scores.

in order to avoid problems caused by changing intermediary institutions, regulators also put forward requirements for companies planning to go public.

in late august, the beijing stock exchange issued the "2024 issue 2 (total issue 10) of the issuance and listing review dynamics" to the industry. the beijing stock exchange pointed out that according to relevant regulations, if during the review period, "the issuer's sponsor and securities service institutions such as law firms and accounting firms are subject to measures such as restricting business activities, ordering them to suspend business for rectification, designating other institutions to take custody, taking over, etc. by the china securities regulatory commission in accordance with the law, or are subject to disciplinary sanctions by the stock exchanges and other national securities trading venues approved by the state council for not accepting relevant documents issued by them within a certain period of time, and the disciplinary sanctions have not yet been lifted", the beijing stock exchange will suspend the issuance and listing review. if the issuer needs to replace the sponsor or securities service institution according to regulations, it should pay attention to three major matters, including the replacement procedures, review requirements, special explanations and commitment letter requirements.