21st Century Business Herald reporter Han Yongxian reported in Beijing
Recently, according to insiders, the delisted "zombie stock" Huilu Ecology, which is preparing to be re-listed, has encountered major variables.
The accounting firm and accountant who led its re-listing were both fined for failing to exercise due diligence in providing audit annual report services to clients and issuing falsely recorded audit reports.
On July 4, 2005, Huilu Ecology was terminated by the Shenzhen Stock Exchange due to continuous losses and other reasons, and on August 20, 2021, the Shenzhen Stock Exchange issued an announcement that the application for re-listing of Huilu Ecology, which has been delisted for 16 years, was approved, and the "zombie stocks" in 16 years will be revived in the A-share market, triggering heated discussion in the market.
The 21st Century Business Herald reporter spent two weeks of field investigation and published the in-depth article "Huilu Ecological Field Investigation: Seedling Base is Also True and Illusory 16 Years of "Zombie Stock" Resurrection Doubtful Cloud", which exclusively revealed a number of business problems in Huilu Ecology, which aroused great concern from regulators and the market.
Now, at the critical juncture of the re-listing preparation period, Huilu Ecology has once again exposed that the accounting firms and accountants who re-listed the declaration have both been punished for false audits, and the authenticity and credibility of their resumption of listing operation data have been questioned by investors.
It is not certain that the regulator will investigate the possible fraud in the financial audit of Huilu Ecology as a result, but it can be determined that its previous smooth resumption of listing plan has been disrupted, and even the possibility of being completely ruined is not ruled out.
<h4>False audits involving accounting matters</h4>
According to the clues provided by the insiders, the 21st Century Business Herald reporter consulted a number of recent information notes submitted to the Shenzhen Stock Exchange by Huilu Ecological Intermediary Service Agency.
According to the explanation submitted by its sponsoring securities firm Tianfeng Securities on the intermediaries related to the re-listing of Huilu Ecology, Zhongjian Zhonghuan Accounting Firm (Special General Partnership) (hereinafter referred to as "Zhongjian Zhonghuan"), a relevant intermediary institution of Huilu Ecology's re-listing, received an administrative penalty from the Hubei Securities Regulatory Bureau on August 30, 2021 for failing to exercise due diligence and issue an audit report with false records in the process of providing audit services for the 2016 annual report of kaidi ecology of listed companies.
(Pictured: Hubei Securities Regulatory Bureau Administrative Penalty Decision)
In accordance with Article 223 of the 2005 Securities Law, the Hubei Securities Regulatory Bureau decided to confiscate 4 million yuan of the income from the audit business of Zhongwei Zhonghuan and impose a fine of 4 million yuan; tang jiajun and Peng Cong, the responsible accountants, gave warnings and imposed a fine of 50,000 yuan respectively.
However, Tianfeng Securities believes that the administrative penalty imposed by Zhongjian Zhonghuan was not due to the provision of audit services for the re-listing of Huilu Ecology. After verification, Huilu Ecology still meets the application conditions for re-listing on the Shenzhen Stock Exchange.
On the same day, Huilu Ecology submitted a fact sheet to the Shenzhen Stock Exchange, saying that the administrative penalties imposed by the Hubei Securities Regulatory Bureau on Zhonghuan, Tang Jiajun and Peng Cong were not because they provided audit services for the company's re-listing, so the company still met the conditions for re-listing applications.
Zhonghuan issued a special note on the re-listing of Huilu Ecology, and the Hubei Regulatory Bureau imposed administrative penalties on the firm and its signatory accountants Tang Jiajun and Peng Cong for failing to perform their duties diligently and diligently in the audit service of Kaidi Ecology's 2016 annual financial statements, and the 2016 annual audit report issued by the firm. However, the CSRC did not restrict the audit of the securities business of Zhongjian Zhonghuan, and the above matters did not constitute a substantial obstacle to the re-listing of Huilu Ecology.
However, the financial data of Huilu Ecology's re-listing declaration was endorsed by the zhongjian Zhonghuan, who was punished for false audits, and its credibility has been greatly reduced.
<h4>Resumption of listing or change of situation</h4>
During the critical period of re-listing, the reporting audit institution Zhongjiuhuan was exposed to a false audit scandal, which once again cast a shadow on the Huilu ecology that is about to return to the A-share market.
According to the announcement of the Shenzhen Stock Exchange on agreeing to the re-listing of Huilu Ecological shares, Huilu Ecology shall complete all preparatory work for re-listing and complete the listing transaction of the shares within three months from the date of the Shenzhen Stock Exchange as the decision to agree to its re-listing.
On August 20, 2021, the Shenzhen Stock Exchange issued a number of announcements and held a special press conference to answer relevant questions for the re-listing of Huilu Ecology, and wanted to re-list huilu ecology, conscientiously practice the policy of "building a system, non-intervention, zero tolerance" and the requirements of "four respects and one joint force", and said that it would adhere to the direction of marketization and rule of law, and arrange the re-listing of Huilu Ecology in a smooth and orderly manner after the company did follow-up work such as share confirmation, registration and trusteeship.
At the same time, the Shenzhen Stock Exchange said that it will continue to strictly control the market entrance gate, smooth the market export customs, strictly implement the delisting system, purify the market environment, maintain market order, focus on improving the overall quality of listed companies, and promote the construction of a benign market ecology that can enter and exit, advance and retreat in an orderly manner, and the survival of the fittest.
(Pictured: Shenzhen Stock Exchange agrees to huilu ecological re-listing announcement)
In less than 3 months, Huilu Ecology, which is preparing to re-list, and its audit agencies have continuously exposed a number of problems, and it has become unknown whether the regulatory authorities that have always emphasized "strict supervision" will release it as scheduled or has become unknown.
Since August 20, 2021, the Shenzhen Stock Exchange has agreed to the re-listing of Huilu Ecology shares for three months, but as of now, there has not been any public movement of Huilu Ecology.
The 21st Century Business Herald reporter noted that after the zhongjian Zhonghuan was fined, the investors of the huilu ecological stock bar have recently reported that "the re-listing of the huilu ecology has been urgently stopped by the exchange!" "", "3 months due, the exchange will not accept huilu ecology re-listing" and other rumors. Investors have different opinions, and some investors have suggested that everything should be subject to the company's announcement, and do not spread rumors.
After the re-listing of Huilu Ecology has been questioned by many parties, whether it will once again be affected by the penalty for the false audit of Zhonghuan zhonghuan is still inconclusive.
Huilu Ecology said in the previous indicative announcement on matters related to the re-listing that the company has no major illegal acts in the past three years, there are no false records in the financial accounting reports, and the company's financial accounting reports for the last three fiscal years have not been issued with unqualified opinions, unable to express opinions or negative opinions, and these audit reports are from the hands of Zhonghuan Accounting Firm.
At that time, Zhongjian Zhonghuan said that the company's financial statements for the last three years were audited, and an unqualified audit report was issued, and there was no false record in the financial accounting report.
According to the audit report issued by Zhongjian Zhonghuan, the operating income of Huilu Ecology from 2018 to 2020 was 741 million yuan, 769 million yuan and 814 million yuan, respectively, accumulating more than 300 million yuan, and the net profit was 80.9492 million yuan, 82.7554 million yuan and 86.7891 million yuan, all of which were positive and accumulated more than 30 million yuan.
Huilu Ecology's re-listing application has therefore been approved by the Shenzhen Stock Exchange, and in this process, the audit endorsement of the audit institution Zhongzhonghuan is undoubtedly an important condition, but now, can the endorsement provided by a "dishonest" audit service institution with a major stain be convincing?
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