China fines Deloitte $31 million for negligence

BEIJING, March 17 (Reuters) – China’s finance ministry has fined accounting firm Deloitte 211.9 million yuan ($30.8 million) for failing to assess the quality of Chinese assets . Huarong Asset Management Co Ltd, according to a statement posted Friday on the ministry’s website.

Deloitte’s operations in Beijing will also be suspended for three months, the ministry said in a statement.

China Huarong and its investment subsidiaries were fined for failures in internal governance and risk control and gross inaccuracies in accounting data from 2014 to 2019, the statement added.

Deloitte said it respects and accepts the department’s decision, according to a statement posted on its website.

“We regret that in this matter the Department of Finance considers that certain aspects of our work did not meet the required auditing standards,” he said.

Deloitte also said it had not received any information from Huarong indicating that it intended to make any restatements of its past financial statements, and no changes to the relevant audit reports were deemed necessary.

The finance ministry said Deloitte failed to find out the true status of the underlying assets during its audit and ignored Huarong’s compliance with the approval of major investment matters.

The accounting firm failed to issue proper audit opinions on the abnormal transactions identified by Huarong and failed to obtain sufficient and appropriate evidence when providing audit services, he added.

(1 dollar = 6.8733 Chinese yuan renminbi)

(Reporting by Ella Cao and Ryan Woo; Writing by Meg Shen; Editing by Toby Chopra; Editing in Spanish by José Muñoz)