Third troubled Deloitte client in months
Trony Solar is the third mainland private enterprise client of auditor Deloitte Touche Tohmatsu to have run into accounting disclosure troubles in three months.
Trading of children's wear retailer Boshiwa International's shares has been halted since March 15, after Deloitte resigned as its auditor, sending its share price down by over a third. It was listed in September 2010.
Trading of Daqing Dairy has also been suspended, since March 22, after Deloitte resigned, citing an acknowledgement by Daqing management that certain transactions were fraudulent and difficulties in accessing the local branch of one of its banks. It was listed 21 months ago.
In October, Deloitte quit as Real Gold Mining's auditor following several corporate governance breaches, citing the miner's failure to disclose information that was 'highly material' to its 2010 financial statements, and saying its 2010 earnings report was not reliable. Real Gold was listed in February 2009, and trading has been halted since May last year.
A Deloitte China spokesman said the fact Boshiwa, Daqing and Trony had run into their own 'unique' accounting difficulties was 'a coincidence'. He said they accounted for only a 'minuscule proportion' of the firm's listed audit client portfolio.
Asked if Deloitte China sees room for improvement in being more selective when choosing clients, the spokesman said it never compromises its 'stringent client acceptance procedures, which are responsive to changes in the market environment'.
He said 'the fact that a client of an auditor runs into difficulties is not an indication of defective client acceptance procedures'.
Other firms with accounting problems, the auditors of which have quit and trading has been suspended, include China Forestry Holdings, which was listed in November 2009. Its auditor, KPMG, resigned in December. KPMG also resigned a year ago as the auditor of Qunxing Paper Holdings, which was listed in September 2007. HLM resigned as beauty products seller China Au Group Holdings' auditor last March.