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another accounting firm was heavily fined for financial fraud of a listed company.

recently, due to the hongtu hi-tech fraud case, the china securities regulatory commission imposed administrative penalties on suya jincheng accounting firm (special general partnership) (hereinafter referred to as "suya jincheng"), confiscating 19.5 million yuan and suspending securities business for 6 months. the six signed certified public accountants were all to blame and were fined by the china securities regulatory commission, and three of them were banned from the market.

according to the statistics of oriental fortune choice data compiled by china securities journal, suya jincheng has a total of 30 audit projects for listed companies, ranking among the top 30 in the industry. it is a small and medium-sized accounting firm. considering that the above-mentioned securities business suspension period spans the new year and covers the audit work of listed companies in 2024, it is expected that suya jincheng’s existing listed company customers will be lost.

from the perspective of projects under review, china securities journal’s statistics found that there are 5 equity financing projects under review, and they will face suspension of review in the future.

since the beginning of this year, four accounting firms, including su yajincheng, have been fined to suspend relevant business for six months, including many large firms, such as pricewaterhousecoopers and dahua. as supervision cracks down on financial fraud, fraudulent issuance and other "cancers" of the capital market, the market deterrence effect is significant. regulatory authorities have stated that severe punishment of intermediaries that fail to perform their duties is to make the regulatory attitude and determination clear to the market. make good use of "qualification penalties" to effectively increase the cost of violating laws and regulations.

the fine involves financial fraud case

according to the administrative penalty decision recently disclosed by the china securities regulatory commission, hongtu high-tech’s annual reports from 2017 to 2021 contained false records such as inflated revenue, profits and unrecorded liabilities, and suya jincheng provided audit services for hongtu high-tech’s annual reports during this period. there are many illegal facts.

the china securities regulatory commission pointed out that suya jincheng failed to fully implement risk assessment audit procedures; failed to maintain due professional prudence and professional skepticism; and had major flaws in the confirmation procedures implemented for accounts receivable, other receivables, and prepaid accounts.

the china securities regulatory commission also stated that when suya jincheng discovered that the accounting records of hongtu high-tech's liability accounts were inconsistent with the credit report, he did not identify the reasons, and further did not require hongtu high-tech to make accounting adjustments, nor did he further expand the audit procedures to evaluate whether hongtu high-tech there is a risk of material misstatement. in addition, suya jincheng’s bank confirmation procedures had major flaws.

regarding the above-mentioned illegal situations, the china securities regulatory commission ordered su yajincheng to make corrections, confiscated business income of 3.25 million yuan, imposed a fine of 16.25 million yuan, and suspended securities business for 6 months.

six relevant signing certified public accountants were also fined in varying amounts, totaling 1.6 million yuan.

among them, guo zhidong, as the signing cpa for hongtu hi-tech's audit project from 2017 to 2018, failed to maintain control over the correspondence confirmation in accordance with the requirements of the auditing standards. when he found that there were inconsistencies between the company's book numbers and credit reports, he failed to identify the reasons, and then failed to the company was required to make accounting adjustments and failed to further expand the audit procedures, which seriously violated the provisions of the auditing standards. the violation was serious and the company was banned from the market for five years.

lin lei, as the signing certified public accountant and project partner of hongtu high-tech’s audit project from 2017 to 2019, failed to guide, supervise, and perform the audit business in accordance with professional standards and laws and regulations, which resulted in su yajincheng’s serious failure to perform due diligence as mentioned above, and the illegal behavior was relatively serious seriously, he was banned from the market for 7 years.

li laimin, as the signing certified public accountant of hongtu high-tech's 2020 to 2021 audit project, failed to maintain control over the confirmation letter in accordance with the requirements of the auditing standards, and did not find any abnormalities in the bank's confirmation letter reply; as a quality control review in 2017 and 2018 the person failed to effectively implement the review, and the violation was serious, and he was banned from the market for three years.

what is the impact on existing customers?

according to the official website of suya jincheng, its predecessor was jiangsu suya audit firm, which was established in may 1996 (formerly affiliated to the jiangsu provincial audit office). in july 2000, it was merged to establish jiangsu suya jincheng accounting firm co., ltd. in november 2013 the jiangsu provincial department of finance approved the transformation into a special general partnership.

suya jincheng has more than 1,000 employees, including 358 certified public accountants (including 15 senior certified public accountants) and 20 registered consulting experts. the above-mentioned accounting firm has 11 branches in beijing, lianyungang, yangzhou, changzhou, zhenjiang, suzhou, wuxi, anhui, yancheng, hainan, and sichuan.

the impact of the above fines on su yajincheng has attracted market attention. compared with dahua accounting firm's business restriction period until the end of this year, suya jincheng's suspension period spans the new year, just as listed companies start their 2024 audit work. this means that suya jincheng’s 2024 annual report audit business may face an impact, and it is expected that there will be “lost orders” in the future.

oriental fortune choice data shows that the company is currently providing annual report audit services for 30 listed companies, including beijing culture, guoxuan hi-tech, gcl integration, kangni electrical and mechanical, etc.

in terms of projects under review, su yajincheng only has a small number of projects. according to statistics from china securities journal, there are a total of 5 ipo projects under review, including 1 ipo of jiangsu kunshan rural commercial bank, and 4 ipos of beijiao, namely jinkang precision, feiyu technology, sanxie electric, and greenstone.

in terms of review progress, feiyu technology’s beijing stock exchange ipo project is progressing relatively quickly and has entered the registration stage. jinkang precision’s ipo project on the beijing stock exchange has also passed the listing committee meeting.

according to previous interviews with securities firm investment bankers and a review of the process of projects under review by dahua accounting firm, brokerage china reporters found that such equity financing projects under review that are affected by intermediaries can only advance to the next step of review progress through "exchange of exchanges", otherwise they will continue to be in the process of review. aborted status.

increase efforts to crack down on audit institutions that fail to perform their duties diligently

since this year, many accounting firms have faced "qualification penalties" and related businesses have been suspended for half a year, demonstrating the determination of strict supervision to tighten the responsibilities of intermediaries.

on may 13, the jiangsu securities regulatory bureau announced that it had confiscated dahua accounting firm’s business income of 6.8868 million yuan, imposed a fine of 34.434 million yuan, and suspended the securities service business for 6 months.

it is reported that during the six-year financial fraud period of the listed company jin tongling, dahua accounting firm, as jin tongling's audit agency, has always issued standard unqualified audit reports. the jiangsu securities regulatory bureau stated that dahua had problems such as “major deficiencies in risk assessment and internal control testing procedures”, “failure to take appropriate audit measures to deal with fraud risks” and “major deficiencies in substantive procedures”.

on august 16, baker tilly international accounting firm (special general partnership) (hereinafter referred to as "berry tilly international") was fined and confiscated by the china securities regulatory commission for more than two days for failing to perform its due diligence during the audit of qixin holdings' annual report and for forging, tampering with, and damaging audit working papers. ten million, and was suspended from engaging in securities services business for 6 months.

on september 13, the ministry of finance and the china securities regulatory commission issued administrative penalties against pricewaterhousecoopers. due to illegal activities involving evergrande real estate’s 2018 audit project, the ministry of finance imposed an administrative penalty of confiscating illegal gains and imposing a fine of 116 million yuan on pwc. at the same time, pwc was given a warning, suspended its business operations for six months, and the administrative penalty of pwc guangzhou branch was revoked. the china securities regulatory commission confiscated all business income of 27.74 million yuan from pricewaterhousecoopers during the period involved in the case, and imposed a maximum fine of 297 million yuan, for a total fine of 325 million yuan.

the ministry of finance stated that it will continue to increase financial accounting supervision and crack down on financial fraud and audit fraud to provide strong support for maintaining social fairness and justice, standardizing market economic order, and promoting high-quality economic development.

the china securities regulatory commission pointed out that it will continue to resolutely implement the "thorny" and angular requirements of supervision, highlight strict supervision and management, continue to increase the investigation and crackdown on financial fraud in the capital market and the failure of audit institutions to perform their duties diligently, and make every effort to safeguard the the capital market operates smoothly, fully protecting the legitimate rights and interests of investors, and providing a strong guarantee for the high-quality development of the capital market.