Sacking of auditor prompts fresh worries across industry
Concerns have been voiced by the governing body of China's chartered accountants over the sacking of an accountancy firm by a Shanghai-listed company for failure to agree on an audit opinion.
Shenzhen Tianjian Xinde Certified Accountant, one of the largest audit firms in town, was sacked last Friday by its longstanding client Tonmac International, a mainland machine-tool company.
'We have noticed that some accountancy firms have been fired as they insisted on their rightful opinions,' said Chen Yugui, general secretary of the Chinese Institute of Certified Public Accountants (Cicpa). 'We pay close attention to this type of 'malignant sacking' of auditors. We want to make sure that the unreasonable demands of clients won't get by by switching auditors.'
The termination is the latest in a series that has affected a number of accountancy firms, sacked over disagreements concerning financial statements for last year.
The emergence of accounting irregularities in the United States has prompted concerns over the accuracy and reliability of financial data provided by publicly listed companies to investors.
Zhongtian Huazheng CPA suffered the same fate as Tianjian Xinde in April, when it failed to see eye-to-eye with its client, Shenzhen-listed Neimengu Hongfeng Industry.
Tonmac has yet to issue its 2001 financial statement, more than six months after the financial year's end.
According to a statement last Friday by Cai Chunming, audit partner at Tianjian Xinde, the accountancy firm had twice declined to give an opinion on the financial statement. Ms Cai said Tonmac's 2001 and 2000 sales income had been overstated and the company used the money raised from issuing new shares last year in security trading and asset management, violating the issue prospectus.
'The scope of audit has been seriously limited by the company,' the statement concluded.
'Therefore, we cannot issue an opinion over the fairness and completeness of the financial statements and their notes,' Ms Cai said.
Tonmac suffered a serious setback this year when its main account was frozen. This happened because Tonmac's biggest shareholder, Jiangsu Technology Export and Import, had its assets auctioned off to pay outstanding debt.
Cicpa released guidelines on July 1 in an effort to raise the industry standard and promote quality, which has often been sacrificed in the intense competition for clients.
