GP Certified Public Accountants, the auditor of an embattled pharmaceutical company, has been placed under investigation by the country’s securities regulator, after the drugmaker was suspected of fabricating a financial report, according to Caixin Global.
Shanghai-listed traditional Chinese medicine supplier Kangmei Pharmaceutical Co. Ltd., has itself been under investigation by the China Securities Regulatory Commission (CSRC) since late December for allegedly violating information disclosure laws and rules.
The pharmaceutical company announced at the end of last month that it was making massive corrections to its financial report for 2017, including an overstatement of RMB29.9 billion (US$4.4 billion) in the company’s cash holdings.
The discrepancy has put the company’s auditor GP Certified under enormous pressure to give reasonable answers to many detailed questions.
GP Certified has been Kangmei’s auditor since it went public in 2001. The firm is the largest auditing company in Guangdong and ranked 22nd in China in 2017 with revenues of RMB492 million. Kangmei paid the accounting firm a total of RMB37 million for services over the past decade, higher than the average paid by listed companies in the country. GP Certified audits another 86 Chinese listed companies, most of which are local firms in Guangdong.