The 2023 financial report audit time is approaching, and some listed companies are busy replacing their annual auditors.
According to incomplete statistics from the ** Times reporter, since October, hundreds of A-share listed companies have issued "exchange" announcements, including some delisting risk companies. The reasons for the "change of firms" of listed companies mainly include their own development and audit work needs, meeting regulatory rotation regulations, changing audit teams, and differences with previous accounting firms.
Generally speaking, the normal replacement of audit institutions by listed companies is conducive to maintaining the independence of auditing. However, from the perspective of the motivation for changing the audit institution, some ST companies may have hidden "cats" behind the change in order to achieve the purpose of protecting the shell.
A number of ST companies announced "exchange of offices".
Since October this year, many delisting risk companies have announced changes in accounting firms, which has also attracted the attention of regulators.
ST Weihai recently announced that considering the company's business development and audit needs, the company intends to appoint Zhongxing Cai Guanghua Certified Public Accountants (Special General Partnership) (hereinafter referred to as "Zhongxing Cai Guanghua") as the 2023 financial report auditor and internal control audit institution, and the original accounting firm is Zhongxinghua Certified Public Accountants (Special General Partnership) (hereinafter referred to as "Zhongxinghua").
It is worth mentioning that it is precisely because ZTE cannot express an opinion on the company's 2022 annual financial report that the company has been put on delisting risk warning. If the company's financial report in 2023 is still issued with a "non-standard" audit opinion, the company will touch the termination of listing.
In this regard, the Shenzhen Stock Exchange quickly issued a letter of concern, requiring the company to explain the specific reasons for the company's change of audit institutions in combination with specific business development, audit work needs, accounting firm personnel arrangements and work plans, etc., and explain whether there is a connection between the matter that ZTE will no longer serve as the company's auditor in 2023 and the company's 2022 financial report that cannot be expressed, and whether there is any dispute between the company and ZTE in the early communication.
It is reported that ZTE could not express an opinion on the issuance of the 2022 annual financial report of *ST Weihai, and the matters involved were related to the company's subsidiary Shanghai Millennium Urban Planning and Engineering Design Co., Ltd. *** hereinafter referred to as Shanghai Millennium): First, Shanghai Millennium did not recognize the project cost according to the accrual basis before 2020, which may lead to improper recognition of costs and net assets in previous years. At the same time, there were material inconsistencies between the information provided during the reconciliation period and the information provided by Shanghai Millennium management to the accountants during the previous annual audit, and there was no reasonable explanation. Second, the annual review agency failed to obtain sufficient and appropriate audit evidence on the authenticity and completeness of the costs in the Shanghai Millennium reporting period. Third, the annual review agency is unable to judge the reasonableness of the company's impairment provision for Shanghai Millennium Goodwill and the impairment amount of other non-current assets corresponding to the remaining equity.
Coincidentally, *ST Eye Medicine, *ST Tai'an and other companies have also recently issued announcements on the change of accounting firms. *ST announced that considering the company's business development and audit needs, the company plans to hire Unitax Zhenqing Certified Public Accountants (Special General Partnership) as the company's accounting firm in 2023, and the original accounting firm is Zhongxing Cai Guanghua Certified Public Accountants (Special General Partnership).
According to ST Tai'an's announcement, in view of the fact that Zhongxinghua Certified Public Accountants (Special General Partnership) has provided audit services for the company for many years, considering the company's own development and audit needs, the company plans to change the accounting firm and hire Sichuan Huaxin (Group) Accounting Firm (Special General Partnership) as the company's financial audit institution in 2023.
It is reported that *ST Tai'an was also issued an audit report by ZTE in the company's 2022 annual financial report that could not express an opinion, and the company was put on delisting risk warning by the Shenzhen Stock Exchange. If the 2023 annual financial report is still issued with a "non-standard" audit opinion, the company will touch the termination of listing.
The "audit opinion type" promotes the normalization of delisting
In recent years, the audit opinions of accounting firms on the financial statements of listed companies have become one of the main forces in building a normalized delisting mechanism.
At the end of 2020, the most stringent "new rules on delisting" in history were released, which increased the circumstances in which the delisting risk warning company was issued with a qualified opinion, an audit report that could not express an opinion or a negative opinion would trigger the delisting, and the audit opinion and other financial indicators were cross-applied, making the role of the audit opinion more important. As a result, the "type of audit opinion" has become an important indicator to trigger a company's delisting.
According to the "2022 ** Audit Market Analysis Report" (hereinafter referred to as the "Report") released by the China Securities Regulatory Commission in September this year, among the 44 delisted companies in 2023, 21 companies will be delisted due to hitting the financial delisting indicators, of which 17 will be delisted due to being issued with non-unqualified audit opinions, and the proportion of companies delisted with audit opinions will be 81%, compared with 72 in the previous year5% was further increased, and another 18 companies were implemented *ST because they were issued unable to express opinions, reflecting that relevant accounting firms can play the role of "gatekeepers" in the capital market, issue audit opinions independently, objectively and fairly, and help delisted companies to withdraw as much as possible and maintain the order of the capital market.
However, the report also mentions some first-class market audit practice problems, including insufficient identification of revenue-related fraud risks, failure to adequately respond to fraud risks related to the manipulation of profits by using accounting estimates such as asset impairment, and failure to adequately respond to fraud risks of underestimating liabilities and costs.
According to the CSRC, the relevant problems reflect the negligence of quality management on the part of some ** firms (accounting firms engaged in ** service business), the failure of some certified public accountants to maintain independence and professional skepticism, lack of professional competence, the failure to effectively identify and respond to the risk of material misstatement such as financial fraud, and the lack of rigor in audit opinions.
The China Securities Regulatory Commission will continue to strengthen the audit supervision, intensify the crackdown on financial fraud, strictly investigate and deal with the violations of laws and regulations of accounting firms, and strengthen the professional contact and regulatory cooperation with industry authorities and industry associations, and effectively supervise the practice of the first law firm to be diligent and responsible.
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