Accounting fraud meets heavy punishment: listed companies with high deposit and loan are facing key audits
Since 2019, the capital market has exposed a series of accounting fraud cases, which has attracted attention. The Ministry of Finance has put forward a series of requirements for accounting firms to improve the quality and level of audit services and do a good job in the audit of the 2019 annual report. In grasping the audit risk, it is required to strengthen the audit of "deposit and loan" listed companies, local financial institutions, local financing platforms and state-owned enterprises — —
In the new year, enterprises will release the results of the previous year one after another, and the annual report is highly concerned by the market. The authenticity and integrity of enterprise accounting information need the audit supervision of accounting firms.
On January 7, the Ministry of Finance held a video conference on the audit and supervision of enterprise annual reports, which put forward requirements for doing a good job in the audit of enterprise annual reports and made it clear that violations in the audit of annual reports would be severely punished.
Deep-seated problems need attention.
The quality of enterprise accounting information and the practice quality of intermediary institutions have always been concerned by society and market. Especially since 2019, the capital market has exposed a series of accounting fraud cases, such as Kangdexin and Kangmei Pharmaceutical. The audit of accounting firms failed to find problems or failed to issue appropriate audit opinions, which triggered heated discussions.
At the meeting, Liu Feng, the second inspector of the Supervision and Evaluation Bureau of the Ministry of Finance, reported the accounting supervision and inspection work in the past two years and the main problems found.
"Focus on the pain points of people’s livelihood and carry out in-depth inspection of accounting information quality in the pharmaceutical industry." Liu Feng said that the Ministry of Finance, together with the National Medical Insurance Bureau, selected 77 pharmaceutical enterprises to conduct penetrating inspection on the whole process of drug production, circulation, use and settlement in accordance with the requirements of "double randomness and one openness".
Focus on the key points of practice risks and earnestly do a good job in the quality inspection of accounting firms. Following the completion of a comprehensive survey of 40 certified public accounting firms in 2018, from 2019, the Ministry of Finance launched a second round of survey of certified public accounting firms, and selected four accounting firms to carry out practice quality inspection.
Focus on the blocking point of industry development and continuously manage the outstanding problems existing in the practice of non-securities qualified accounting firms. "Some non-securities qualified accounting firms excessively pursue economic interests, relax the quality management of practice, and damage the fair and honest image of the industry. The Supervision and Evaluation Bureau has organized local financial departments to carry out special rectification work for several consecutive years, and effectively managed problems such as nominal practice, selling reports, and low-price competition, and achieved good results. " Liu Feng said.
"In recent years, the risk awareness of accounting firms has increased, and the level of practice has improved. However, the inspection also found that some deep-seated problems in the CPA industry have not been effectively managed, which has seriously affected the quality of practice. " Liu Feng said.
According to the circular, these deep-seated problems include imperfect internal governance, failure to abide by independence, lax management of business undertaking, inadequate implementation of audit procedures, falling off the internal review barrier, non-securities qualified accounting firms practicing in name and "selling reports".
It is reported that some firms have turned a blind eye to the signs of fraud that have been concerned for reasons such as maintaining customer relations and ensuring the income of the firms, and lost their independence and professional ethics; In the year when the finance department of a province first carried out the work of "clearing the front name", 666 certified public accountants were cleared; The proportion of "selling reports" by individual firms exceeds 70% of the total amount reported by this firm.
Statistics show that in 2018, financial departments at all levels inspected 1,080 accounting firms and 18,476 enterprises and institutions. 88 accounting firms were punished, of which 21 were suspended from practice and 3 were revoked; 140 certified public accountants were punished, of which 53 were suspended and 5 were revoked. In 2019, the financial departments at all levels inspected 1,209 accounting firms and 23,922 enterprises and institutions, and the inspection work was basically finished, which is being followed up.
Severely crack down on accounting fraud
At present, the downward pressure on the economy has increased. Under this circumstance, the pressure on corporate performance is increasing and the motivation for fraud is rising. It is necessary for financial departments at all levels and accounting firms to work together to do a good job in auditing the 2019 annual report to ensure the truthfulness and integrity of corporate accounting information.
"In the current environment, severely punishing a few black sheep that disrupt the market order and have a strong social response is the best guarantee for the reputation of the industry and the best protection for the development of the industry." Qi Jinxing, director of the Supervision and Evaluation Bureau of the Ministry of Finance, said that in the next step, financial supervision and inspection institutions should earnestly perform their supervisory duties entrusted by law, crack down on accounting fraud, rectify and standardize market order, and enhance the social credibility of the industry.
It is reported that according to the regulatory requirements of the new Securities Law on "double filing", the Ministry of Finance will study and adjust the "peer-to-peer" division of labor, optimize the administrative supervision mechanism of accounting firms, fully mobilize the enthusiasm of the supervision bureau and the finance department (bureau), and jointly do a good job in accounting supervision.
"Highlight key points, severely punish heavy penalties, and further increase inspection and handling penalties." Gao Jinxing said that on the basis of continuing to push forward the comprehensive round-robin inspection of accounting firms, we should focus on increasing the intensity and frequency of inspection of accounting firms with large business scale, high practice risk and continuous administrative punishment, and promptly investigate and deal with major audit failure clues exposed by the media when problems such as "taking over the house", "changing the vest" and "selling reports" emerge; The practice of "double punishment in one case" will impose administrative penalties on accounting firms and certified public accountants with significant audit responsibilities.
The Ministry of Finance has put forward a series of requirements for accounting firms to improve the quality and level of audit services and do a good job in the audit of the 2019 annual report. In grasping the audit risk, it is required to strengthen the audit of "deposit and loan" listed companies, local financial institutions, local financing platforms and state-owned enterprises.
"For listed companies with high deposits and loans, focus on the authenticity of financial assets such as monetary funds and cash flow of enterprises, and increase the audit of bank deposits, operating income costs and large current accounts, especially related party transactions and overseas transactions." Liu Feng said.
At the same time, local supervision bureaus should follow up the whole process, understand the annual report audit of listed companies and key enterprises within their jurisdiction, remind and supervise accounting firms in time when finding doubts, and enhance the timeliness, pertinence and effectiveness of supervision. Local financial departments should continue to carry out special treatment of nominal practice and selling reports, intensify punishment, resolutely clean up the black sheep and constantly rectify the market order.