From Lantian to Aon Technology, from Qin Feng Agriculture to Kelon Electric Appliances, in recent years, a number of listed companies have been exposed for being suspected of financial fraud scandals, and there is always a "conspirator" behind the scenes: accounting firms of all sizes.
"Ten Fakes and Nine Plots" in the Fraud Case of Listed Companies
Warren Certified Public Accountants, which plays an important role in concocting the blue sky myth, is neither the first case nor the last case in which an intermediary agency was accused of false statements. In the civil compensation cases of securities such as Dongfang Electronics, st Jiuzhou, Jinzhou Port and Kelon Electric Appliances, there are accounting firms.
In early July, Zhang Aiping, a minority shareholder, sued Kelon Electric and Deloitte Touche Tohmatsu Certified Public Accountants for false securities information, which was accepted by the Guangzhou Intermediate People's Court. At the end of July, 59 lawyers from all over the country formed the "National Lawyers' Rights Protection Group for Civil Compensation Cases of False Statements by Kelon and Deloitte Securities", and held a meeting to discuss the legal issues and coordinate actions in Deloitte's "false statements" lawsuit.
Lawyer Song Yixin said that the judgment of Lantian case shows that as long as the false statement exists, shareholders can list Deloitte as the second defendant and demand joint liability.
This is not the first time that Deloitte, one of the four largest accounting firms in the world, has been questioned in China. Previously, when the Audit Commission inspected the audit quality of 16 accounting firms with the qualification of auditing listed companies, it was found that Deloitte Touche Tohmatsu had found out that Anhui Gu Jing Winery Co., Ltd. had underpaid corporate income tax in the audit, but it was "not specified". Zhu Defeng, deputy director of Shanghai Qinye Certified Public Accountants, said: "This shows that Deloitte's professional ethics is problematic, which is the most serious problem of the accounting firm."
Accounting firms are suspected of conspiring with listed companies to falsify, which has long been a "window paper". On April 10 this year, Huayuan Pharmaceutical announced that "the company does have problems such as distorted financial data, improper accounting treatment, false income and inflated profits". The company's net profit in 200 1, 2002 and 2004 should be negative, but under the audit of Shanghai Donghua Certified Public Accountants, the result was a "profit" of 49.46 million yuan.
Similar fraud cases of listed companies that surfaced also clearly showed the characteristics of "ten fakes and nine similarities". Since 2000, there has been a problem accounting firm behind almost every fake company: Hainan Zhonghua Accounting Firm in Qiongminyuan Incident, Shenzhen Zhongtianqin Accounting Firm in Yinguangxia Incident and Zhengzhou Accounting Firm in Zhengbaiwen Incident. ...
Intermediaries involved in fraud are rooted in poor supervision.
"Honesty-based, morality first, following standards and not making false accounts" are the basic principles and bottom line that accountants should follow. But in reality, why do "police" and "thieves" collude with each other?
The supervision is not strict, and the laws are not complied with. Lu Changjiang, a professor at Fudan University, said: "Only one thief in 100 can be caught, and the other 99 are unscathed." The falsity of laws and regulations and the absence of supervision lead to the financial fraud of listed companies being found to be a "small probability" event. Lu Changjiang pointed out that it is common for mainland accounting firms to issue false audit reports. More than 80% of the financial audit reports issued by accounting firms for listed companies are "unqualified opinions", and only 20% of the reports may point out some problems.
Poor punishment and lack of integrity. Tu Yong, a lawyer of Shanghai Guangming Law Firm, said that although the Securities Law and the Certified Public Accountant Law prohibit the issuance of false audit reports, the relevant laws and regulations are not matched, and there are legal application problems in civil compensation and criminal investigation, mainly administrative punishment, and civil compensation is rarely realized through judicial channels. For example, Hubei Lihua Certified Public Accountants compiled a "myth of excellent performance" and issued false performance statements for five listed companies, including Xinghua and Vitality 28, which were merged afterwards.
If the prosecution is not accepted, the case will not be heard, the court will not make a judgment, and the judgment will not be executed. This strange situation frequently occurs in civil compensation cases of securities such as Yinguangxia, Jinzhou Port and Dongfang Electronics, while accounting firms, as accomplices of listed companies, are at large, and the expected benefits of fraud far exceed the illegal costs.
Lu Changjiang pointed out that poor supervision and punishment are objectively equivalent to conniving at violations. Even internationally renowned accounting firms are constantly encountering credibility crisis in the Mainland. For example, KPMG was accused by informed criticism, the Ministry of Finance, of litigating the Jinzhou Port case; PricewaterhouseCoopers was ordered by the Ministry of Finance to rectify within a time limit; Deloitte is deeply involved in the "Cologne Gate" and so on. But in the end, these events also went away.