China's Ministry of Finance has imposed an administrative penalty on China Huarong Asset Management Co., Ltd. (China Huarong) and its auditor Deloitte for severe distortion of accounting information and serious auditing defects, respectively.
The penalty was imposed according to relevant Chinese laws and regulations based on the outcome of extensive on-site investigations and rounds of argumentation on problems found, according to the ministry.
From 2014 to 2019, China Huarong had problems including the failure of internal and risk controls and the serious distortion of accounting information.
When providing auditing services to China Huarong, Deloitte failed to perform its duty in objectively evaluating the quality of China Huarong's assets. It did not effectively implement the necessary auditing procedures nor obtain sufficient and appropriate audit evidence, and showed serious auditing defects, said the ministry.
The ministry said it will strictly crack down on violations of laws and regulations in the fields of accounting and auditing. While protecting the lawful rights and interests of enterprises and intermediaries according to law, it will strengthen law enforcement and the accountability of relevant persons.