Kang Dexin’s alleged inflated profits of 11.9 billion yuan caused widespread concern. And because of Kangdexin’s fraud,Ruihua Certified Public Accountants, the auditing agency, has been put on file for investigation by CSRC..
Accounting firms, originally gatekeepers of financial authenticity of listed companies, should be responsible to investors.
What is the current situation of Ruihua Certified Public Accountants after this investigation? The reporter investigated Ruihua Certified Public Accountants involved.
Ruihua Certified Public Accountants was placed on file for investigation.
What is the operating status of Ruihua Certified Public Accountants after the CSRC said it would file an investigation?
The reporter came to Ruihua Certified Public Accountants and saw people coming in and out, and everything was as usual.
The auditor involved has not been suspended
Inquiring about Kangdexin’s annual report from 2014 to 2017, Ruihua’s audit opinions are all "standard without reservation", involving four signed auditors, one of whom is Zheng Longxing. The reporter inquired that his work place is Shenzhen, Guangdong.
The reporter asked the staff of Ruihua Certified Public Accountants Shenzhen Branch: "Is an accountant named Zheng Longxing our accountant? Is he still working here now? "
The staff replied: "Yes, I haven’t seen him these two days."
The reporter also asked about Zheng Longxing’s work status, and the front desk staff said that he was still working on other projects and should be out of office. According to the staff, the accountants involved are still working normally. Has the accounting firm given an internal education warning?
The staff of Ruihua Certified Public Accountants Shenzhen Branch replied: "It seems that there isno."
Lawyer: Ruihua should pay compensation for its responsibility.
So, how did Ruihua Certified Public Accountants pass the false financial reports of listed companies? Should they bear corresponding responsibilities to investors?
Since 2012, Kangdexin’s annual reports have been audited by Ruihua. In the four years suspected of financial fraud,The total audit cost is 8.4 million..
Zeng Tieshan, Executive Partner of Guangdong Huashang Law FirmIn general, if intermediaries and responsible persons violate the provisions of the Securities Law and make false statements, thus causing losses to investors, they shall be liable for compensation for their responsibilities.
According to the determination of the CSRC, from January 2015 to December 2018, Kangdexin inflated its operating income through fictitious sales business, and inflated its operating costs, R&D expenses and sales expenses through fictitious procurement, production, R&D expenses and product transportation expenses. In the annual report from 2015 to 2018,The inflated profits were 2.381 billion yuan, 3.089 billion yuan, 3.974 billion yuan and 2.477 billion yuan respectively, with a total inflated profit of 11.921 billion yuan..
Ruihua issued three annual reports in 2015, 2016 and 2017 in four consecutive annual reports of Kangdexin.Standard unqualified opinion",issued for the 2018 annual report is"Unable to express an opinion”。 At this time, Kangdexin has been in deep crisis, and the CSRC has filed an investigation on Kangdexin.
Yang Zixiao, Managing Director of Lotus Capital ConsultingIn fact, it didn’t play the role of warning risks, so it didn’t fulfill its responsibility, so it is reasonable for the CSRC to file a case against it.
Ruihua Certified Public Accountants has repeatedly received fines from CSRC in recent years.
In recent years, Ruihua Certified Public Accountants has repeatedly received fines from the Securities and Futures Commission, and even once suspended its undertaking of new securities business.Why do you repeatedly investigate and commit crimes? What is the problem?
Ruihua Certified Public Accountants is one of the largest accounting firms in China, and its business volume is also considerable in the industry. On its official website, we can see that as of May 31, 2019, there were 316 A-share listed companies audited by it. Since the news that Ruihua Certified Public Accountants was investigated by the Securities and Futures Commission broke out, some listed companies provided by Ruihua Certified Public Accountants indicated that they would reconsider their auditing business.
Relevant person in charge of client enterprise of Ruihua Certified Public Accountants.Finally, according to the review results of the regulatory authorities, accountants have accounting standards. Anyway, everyone follows the standards. If the regulatory authorities question their qualifications in all aspects, the final result must be considered.
This is not the first time that Ruihua Certified Public Accountants has received a fine from the regulatory authorities. In the past few years, Ruihua Certified Public Accountants has been punished by the Securities and Futures Commission for failing to be diligent and conscientious in the audit process and issuing false records in the audit reports.
Yang Zixiao, Managing Director of Blue Lotus Capital ConsultantIt may have had some problems in the past few years, which proves that in fact, there are some problems in the punishment and implementation of the whole audit industry, including the quality of issuing audit reports.
Although the CSRC has issued administrative penalty notices for many times, the ticket on record can only be said to be a cup of fine wine. The reporter’s inquiry found that the corresponding punishment was only confiscation of business income and a fine ranging from several hundred thousand yuan to several million yuan in view of the firm’s repeated failure to perform its duties diligently and issue audit reports with false records.
According to industry insiders,Such punishment is far from enough to protect investors..
Zeng Tieshan, executive partner of Guangdong Huashang Law Firm: At present, the protection of investors abroad is still very strict. Judging from the cases we searched for in the past two years, the punishment for audit institutions, including law firms and accounting firms, is very strong, and some cases with the amount as high as tens of millions or hundreds of millions of dollars exist.
Short comments on finance and economics: "recidivist" should be severely punished and pursued.
Ruihua Certified Public Accountants, which is supposed to exercise the supervision function, has become a recidivist who has repeatedly violated the laws and regulations of the capital market, even a recidivist.
We have always said that professionals should be allowed to do professional things, but now, where does this so-called professional guarantee come from? Where should the trust of investors and markets be invested? Perhaps, our supervision system still needs to be upgraded, at least for such institutions with criminal records, it should be severely punished and pursued.
Interfere with the securities market many times,
The punishment!