Twice a month to receive a ticket! The audit report of Kaidi Ecology did not fulfill its responsibilities and issued an audit report with false records

On August 30, it was learned from the Hubei Securities Regulatory Bureau that the audit report issued by China Audit Zhonghuan Accounting Firm (Special General Partnership) (hereinafter referred to as Zhongjian Zhonghuan) was fined for failing to exercise due diligence in the 2016 audit process for Kaidi Ecology.

Ascertained by the Hubei Securities Regulatory Bureau, the specific illegal facts involved in the trial are as follows:

<b>There are false statements</b>. In the 2016 annual report, Kaidi Ecology has inflated the construction in progress, falsely reduced financial expenses, and inflated the total profit of a total of 273 million yuan. Zhongjian Zhonghuan is the audit institution of Kaidi Ecology's 2016 annual report, and the audit business fee is 4 million yuan. In the audit business, Zhongjian Zhonghuan issued a standard unqualified audit report, and the certified public accountants who signed the audit report were Tang Jiajun and Peng Cong.

On the other hand, the <b>audit process was not diligent and conscientious</b>. The Hubei Securities Regulatory Bureau said that Zhongjiu Zhonghuan did not fully and properly implement risk assessment and risk response procedures, and did not implement adequate and appropriate audit procedures for the capitalization of construction in progress and borrowing costs.

According to the Hubei Securities Regulatory Bureau, the above-mentioned acts of Zhongjian Zhonghuan constituted an illegal act of "the securities service agency failed to exercise due diligence and the documents produced and issued had false records". The signatory certified public accountants Tang Jiajun and Peng Cong are the supervisors directly responsible for the above acts.

The Zhongjian Zhonghuan, Tang Jiajun and Peng Cong argued that the responsibility for the false records lies with Kaidi Ecology, and that zhongxin Zhonghuan has implemented the corresponding audit procedures for the matters that the regulatory authorities have paid attention to, and believes that the Kaidi Ecological Management and related personnel conspired to implement them, false records, and concealed them, and that there was no intentional or gross negligence in the story office. After review by the Hubei Securities Regulatory Bureau, the defense opinions of the central trial zhonghuan were not adopted.

In accordance with relevant laws and regulations, the Hubei Securities Regulatory Bureau decided to confiscate 4 million yuan of the income from the audit business of Zhongjiu Zhonghuan and impose a fine of 4 million yuan; Tang Jiajun and Peng Cong were given warnings and fined 50,000 yuan each.

Just on August 17, Zhonghuan and two certified public accountants were just issued a warning letter by the Fujian Securities Regulatory Bureau. The Fujian Securities Regulatory Bureau said that during the 2019 audit and practice quality inspection of Fujian Fusheng, it was found that there were problems such as the lack of implementation of audit procedures and incomplete records of audit papers, and decided to take administrative supervision measures of issuing warning letters to The Central Audit Zhonghuan and the signatory certified public accountants Chen Jiazuo and Ruan Chaohong.

According to public information, Zhongjian Zhonghuan was established in 1987 and is one of the first large-scale accounting firms in China to obtain the national approval to engage in securities and futures-related business qualifications and financial business audit qualifications. As of June 2021, Zhongjian Zhonghuan has established 38 total branches in Chinese mainland, more than 180 A-share listed companies and more than 30 first-class central enterprise customers in the annual report audit. According to the 2020 annual report, Zhongjian Zhonghuan achieved business income of 1.946 billion yuan in the whole year. In the list of business income of accounting firms in Hainan Province in 2020 issued by the Hainan Provincial Annotation Association, Zhonghuan ranked first with an annual income of 38.3622 million yuan.

Recently, many listed companies such as Grandbuy Shares, Guilian Holdings, Evergreen Shares, and Kangzhi Pharmaceutical have renewed the appointment of Zhongjian Zhonghuan as the 2021 review agency. On August 11, Zhongjian Zhonghuan just resigned as the auditor of Anyu Asia Group.