Securities Times reporter Ruan Runsheng Li Manning
Entering the annual report disclosure season, it has become a perennial "routine" for listed companies to change their audit institutions.
Securities Times reporters found by keyword statistics that from December 1, 2021 to February 28, 2022, a total of 110 listed companies (including 1 B-share company) plan to change their audit institutions in 2021, a year-on-year decrease. trend.
Among them, a total of 90 listed companies with a market value of less than 10 billion have become the main body of exchange, accounting for more than 80%.
However, since the implementation of the new "Securities Law" two years ago, with the upgrading of supervision, the audit game between listed companies and accounting firms is constantly escalating.
The Securities Times reporter noticed that, on the one hand, traditional head audit institutions are more active in screening customers, even bluntly speaking about audit pain points, or taking the initiative to "break up" with listed companies; The "gatekeepers" have come into battle intensively, which has aroused great attention from supervision.
Small and medium-sized companies dominate the "exchange"
During the disclosure period of the 2021 annual report, listed companies once again set off a wave of "exchange".
Usually, the audit institution will be stationed in the listed company before the end of the year to carry out the pre-audit work. After that, the listed company generally does not easily change the annual report audit institution.
The person in charge of a Big Four accounting firm told the Securities Times reporter that before the annual report was disclosed, the reason for the listed company's "change" is usually that the auditor and the company did not reach an unanimous audit opinion; "It is more common for A-share companies to change their audit institutions. In Hong Kong stocks, there are fewer changes, and there is usually a worry that frequent changes of auditors will affect the market’s confidence in the company.”
Liu Zhigeng, a well-known financial and tax audit expert and senior certified public accountant, also told reporters that accounting firms are very cautious about the potential risks of listed companies, and listed companies cannot accept the adjustment opinions or suggestions of accounting firms, or unqualified audit opinions. As a result, the two sides could not reach an agreement and eventually the talks collapsed.
This is the main reason for listed companies to change accounting firms, especially in ST companies.
Other common reasons include: listed companies "buy" the audit opinions they need; price competition among accounting firms; accounting firms' own optimization and adjustment to clients; accounting firms' own manpower and time arrangements cannot meet the audit work needs and so on.
The Shanghai and Shenzhen Stock Exchanges are also highly concerned about the tide of listed companies changing their exchanges.
In the past three months, about one-third of listed companies that have exchanged exchanges have been inquired, especially listed companies that have exchanged exchanges with high frequency. .
Statistics on the securities audit market released by the China Securities Regulatory Commission in recent years show that in 2018, 2019, and 2020, there were 294, 717 and 398 listed companies involved in exchange exchanges, respectively.
Among them, 2019 became the peak period for changing firms. The main reason was that the former audit institution was put on file for investigation, accounting for more than half. The remaining reasons included the flow of audit team personnel, the requirements of the actual controller of listed companies, or the change of firms in accordance with the rotation regulations of state-owned enterprises, etc. .
In contrast, the number of listed companies planning to change their audit institutions in 2021 has a further downward trend.
Securities Times reporters found that, from December 1, 2021 to February 28, 2022, a total of 109 A-share listed companies plan to change their audit institutions in 2021 according to the keyword "change of accounting firm".
Among them, listed companies with a market value of less than 10 billion are the main body, accounting for more than 80%.
On the other hand, 26 of the listed companies that disclosed the exchange of exchanges were warned by risks, and 34 of them were issued non-standard audit opinions for their 2020 annual reports; in addition, among the above listed companies that have disclosed their performance forecasts, 50 companies It is expected that the performance in 2021 will decline or lose money, accounting for about 60%.
According to the statistics of the China Securities Regulatory Commission, among the exchange-exchange companies in 2020, 69 companies were issued non-standard opinions, accounting for 17.3% of the total number of exchange-exchange companies, far higher than the overall proportion of non-standard opinions of listed companies (5.9%). It involves issues such as doubts about continuing operations, capital occupation by related parties and illegal guarantees, asset impairment, case filing and investigation, and estimated liabilities.
In the inquiry letter involving exchange, the Shanghai and Shenzhen stock exchanges usually require the listed company to explain the elimination of non-standard opinions in the previous year.
Liu Zhigeng said that since the operating situation, process and results of listed companies are changing every year, various new situations and new problems may arise, and the certified public accountants need to re-analyze and judge these new situations and new problems. Inevitably, there will be situations where the certified public accountant thinks that the audited unit needs to make adjustments. If the listed company does not agree to the adjustment, the certified public accountant will issue non-standard opinions in order to prevent and reduce the audit risk.
"However, whether it is an audit adjustment or an unqualified opinion, it will have a certain or even greater impact or loss on the listed company, and the listed company's goal is to ensure that the audit adjustment has the least impact on itself and maximizes the benefits. Satisfactory audit opinion." Liu Zhigeng pointed out that in this case, it is easy for the two parties to have different understandings or conflicts, and disagreements are inevitable. If they cannot reach an agreement, both parties may propose to terminate the business agreement.
The new delisting regulations introduced at the end of 2020 have further increased the "discourse power" of audit reports.
In the financial delisting regulations, the newly added delisting risk warning company is issued a qualified opinion, and the audit opinion and other financial indicators are cross-applied; in other risk warnings, the newly added internal control is issued a disclaimer or negative opinion Opinions, losses for three consecutive years, and the audit report shows that the ability to continue as a going concern is doubtful.
However, for the A-share market, frequent exchange exchanges usually do not constitute the primary reference standard for investing in listed companies.
A person engaged in private equity investment told reporters: "Listed companies such as the resignation of the chief financial officer, the change of audit institutions, and the late financial report should be vigilant. However, if investors are too strict in the selection of investment targets, there will be many fewer investment opportunities, and it is difficult to obtain excess funds. Profits.” In the long run, the strength of regulatory enforcement still depends on the specific implementation of the subsequent delisting.
Increased game level
The number of A-share companies changing audit institutions in 2021 has a downward trend, but the game between listed companies and audit institutions in this round has increased significantly, and the number of "break-up" cases proposed by audit institutions has increased significantly, and some audit institutions are even willing to breach the contract. Terminate the contract with the customer.
On January 6, 2022, ST Guangyi announced that based on the actual situation such as the audit workload and project schedule of the financial report in 2021, Zhonghua Certified Public Accountants proposed that it would not continue to serve as the company's audit agency in 2021, and the company planned to hire Shenzhen Jiu'an Certified Public Accountants. As the 2021 auditor of the year.
Regarding the details of the change, ST Guangyi complained about Zhonghua's "change in the face" in response to the regulatory inquiry: originally at the 2020 general meeting of shareholders, the listed company had passed the re-appointment of Zhonghuahui, but it will not be accepted until December 14, 2021. Send a letter to Zhonghua Institute, informing that it will not continue to serve as the auditor of the listed company in 2021.
In this regard, ST Guangyi expressed the hope to continue to maintain cooperation, and promised to fully cooperate with the audit of the 2021 financial report of Zhonghua Institute; at the same time, he also stated that from the perspective of contract performance, Zhonghua Institute may face the temporary proposal not to serve as a listed company. Corresponding risks caused by audit institutions in 2021.
However, after receiving the reply letter from the listed company, Zhonghua still insisted that it would not continue to serve as the audit institution.
The reason given by Zhonghua is based on the consideration of risk factors and working time arrangement, and proposed to no longer serve as the auditor in 2021; China Exchange stated that there are no unresolved disputes with the company.
Zhonghua Institute issued an audit report with a qualified opinion on the 2020 financial report of the listed company, mainly because it could not judge the recoverability of the occupied funds and the accuracy of bad debt provision by Jiangsu Guangyi Investment Management Co., Ltd., the controlling shareholder of ST Guangyi Company. Impact on the company's financial statements.
In addition to taking the initiative to break up, the audit institution will also face the audit differences with the listed company.
On January 21, Cedar Development disclosed that it plans to change the original 2021 annual report audit institution, Zhongxinghua Certified Public Accountants, to Zhongxi Certified Public Accountants.
The reason is that ZTE has different opinions on the determination of the company's main business and the determination of the new regulations on revenue deduction, and the chief reviewer of the original project team has also changed. Both sides parted amicably.
Specifically, in 2020, Cedar Development’s supply chain business achieved operating income of 512 million yuan, accounting for 33.57% of operating income; from January to June 2021, the company’s supply chain business achieved operating income of 785 million yuan, accounting for 81.82% of operating income.
The listed company believes that the supply chain business has become one of the main businesses and accounts for the largest proportion of operating income, and should not be a revenue deduction item identified in the "Revenue Deduction Guidelines". The listed company and Zhongxinghua have differences in this judgment.
Earlier, the Securities Times reported that some products of Cedar Trust were overdue, and the supply chain business related to its underlying assets was suspected of "idling" trade.
The compliance of Cedar's development-related supply chain business has also been inquired by regulators.
The points of disagreement between listed companies and auditors also spread to the costs involved in other businesses.
For example, Xinyan Co., Ltd. changed the original Lixin Accounting Firm to Asia Pacific (Group) Accounting Firm. One of the points of disagreement is that the listed company still owes 700,000 yuan in service fees.
The novice "gatekeeper" debuts
Under the background of the game upgrade between listed companies and audit institutions, new formats are also being built.
Since the annual report season, "one institution is difficult to hire" has repeatedly appeared. Listed companies such as *ST Xinyi have been urged by the exchange to hire audit institutions in a timely manner. The "gatekeeper" figure.
ST Tianrun announced on the evening of February 15 that it plans to appoint Hunan Rongxin Certified Public Accountants (general partnership) as the company's 2021 annual audit accounting firm.
Hunan Rongxin has just completed the filing of the securities service business, and the previous securities business income was zero.
On February 11, the China Securities Regulatory Commission announced the latest filing list of accounting firms engaged in securities services, including four accounting firms including Hunan Rongxin.
On March 1, 2020, the revised "Securities Law" was officially implemented, and accounting firms engaged in securities services from administrative licensing to filing management, ending the securities business qualification licensing system.
Since then, the number of filing audit institutions has proliferated.
Up to now, the number of accounting firms engaged in securities service business has been expanded from 40 before the filing to 84.
Nearly two years after the implementation of the new regulations, more small and medium-sized firms have been activated with the lowering of the industry's entry barriers.
In the audit of the 2021 A-share annual report, according to incomplete statistics from Securities Times reporters, Hunan Rongxin, Zhongruicheng Accounting Firm, Pengsheng Accounting Firm, Xutai Accounting Firm, Zhejiang Tianping Accounting Firm, Shenzhen Jiu'an Accounting Firm A group of audit institutions, including Guangdong Heng'an Certified Public Accountants, Guangdong Si Nong Certified Public Accountants, and Unity Zhenqing, made their debut.
Among them, Unitai Zhenqing has taken over three 2021 annual report auditing services of Zhongjia Bochuang, *ST Soling and *ST Xiamen China.
The reporter sorted out and found that there are usually two types of A-share annual audit business orders received by the above-mentioned small and medium-sized firms. Place.
For example, ST Tianrun stated that the audit team of the former accounting firm joined the accounting firm to be changed. In order to ensure the continuity of auditing, the auditing institution for the financial statements of the current year was planned to be changed.
The announcement shows that 3 of the project team members arranged by Hunan Rongxin participated in the annual review of ST Tianrun in the previous year.
In addition, ST Lianjian also hired Guangdong Heng'an Accounting Firm for the same reason.
The firm was established on March 3, 2021, and completed the securities service business accounting firm filing on November 30, 2021.
More than 2 months after the appointment of Guangdong Heng'an Certified Public Accountants, ST Lianjian announced the change of the signed CPA.
Second, if the reason for giving up the audit business is due to "their own reasons and the planning and arrangement of the annual audit task", the new firm will accept the order.
However, under this type, most companies with high audit business risk.
For example, in the annual audit business of *ST Danbang and *ST Huaxun undertaken by Xutai Certified Public Accountants, the audit opinion types of the two companies' 2020 annual reports are "incapable of expressing opinions".
In addition, more new business departments have changed hands many times.
In September 2021, *ST Soling announced that, taking into account the company's business development and auditing needs, the company plans to hire Shanghui Certified Public Accountants as the company's 2021 audit agency.
The reporter noticed that in the previous year, the audit opinion type for 2020 issued by Asia Pacific (Group) Accounting Firm for the company was "qualified opinion".
On January 28 this year, *ST Soling once again issued an announcement of exchange, saying that due to the heavy audit task and personnel transfer of the Shanghai Conference, after careful review of personnel and time arrangements, in order to ensure the quality of the audit, after full communication and consultation with the Shanghai Conference, both parties Unanimously agreed to terminate the service agreement.
At the same time, it is planned to re-employ Unitai Zhenqing.
"In fact, since the previous auditing market has already been divided, the newly filed small and medium accounting firms can basically only cooperate with listed companies that cannot find accounting firms, and these listed companies basically have various Such serious problems, such as the audit risk is very high, the original accounting firm gave up." Liu Zhigeng said.
Lowering the threshold does not mean lowering responsibilities. The new securities law has also greatly increased the illegal cost of audit failures. For accounting firms, the securities service business is still a high-risk business.
According to the report of the China Securities Regulatory Commission, since 2019, a total of 24 accounting firms have been investigated and dealt with illegal cases.
In 2021, the CSRC will file and investigate 39 illegal cases of intermediary agencies according to law, more than double the number of the same period in 2020, and transfer or notify the public security organs of clues in 2 cases.
Liu Zhigeng believes that judging from the actual situation that the new securities law has been implemented for less than two years, it is indeed difficult for these small and medium-sized accounting firms to undertake listed companies with "better quality", and they often have various legacy or serious problems. And it is difficult to handle, which is called "hot potato" in the industry.
In fact, the securities regulatory authorities have long been "caring" for these "hot potatoes", which makes it even more difficult for the relevant small and medium-sized firms.
Regarding the investment risks related to the listed companies that have rehired to the new firm, financial expert Fang Lie told reporters that the new accounting firm usually lacks understanding of the relevant companies. Once the audit finds that the company has problems, they will be cautious; Gao, in addition to the old ones who know the basics, the new ones are generally invisible in a short time, so it is not necessarily a short-term thunderstorm.
According to the statistics of the China Securities Regulatory Commission, the proportion of non-standard reports issued by leading accounting firms in 2020 is lower than that of other accounting firms. The latter issued 141 non-standard reports, accounting for 12.7% of the non-standard reports.
From the perspective of customer risk structure, the top accounting firm ST companies accounted for only 3.5% of the customers, and other accounting firms ST companies accounted for 10.9% of the customers, reflecting the trend of risk companies to small and medium accounting firms agglomeration.
Therefore, inexperienced novice "gatekeepers" need to be better prepared.