Hong Kong’s securities watchdog will be able to see audit papers kept on the mainland for investigations under an expanded cooperation accord that allows the city’s regulators to access mainland-based companies’ audit records, reports Caixin Global.
The Ministry of Finance, the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC) signed a memorandum of understanding Wednesday granting the Hong Kong securities regulator access to audit working papers on the mainland.
This is the second such agreement between institutions from the two sides. In May, the finance ministry’s Supervision and Evaluation Bureau signed a separate memorandum with the Hong Kong Financial Reporting Council, the city’s accountancy regulator, on cross-boundary collaboration of audit paper inspection. Under the agreement, the cooperation is limited to the two parties, and the Financial Reporting Council is not allowed to transfer the papers to any third parties, including the Hong Kong securities regulator.Read more.
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.