China fines auditing firm Deloitte $30.8 million for missing financial reporting obligations

BEIJING, China: Following the inability of China Huarong Asset Management Co LtdHuarong Asset Management Co Ltd to release financial reporting obligations in 2020, China fined auditing firm Deloitte $30.8 million, claiming it didn't properly evaluate the quality of the assets of Huarong.

It was made on the finance ministry's website last week.

Beijing fined China Huarong's investment arms due to internal governance lapses, risk control failures and severe inaccuracies in its accounting information from 2014 to 2019, according to the ministry's statement.

After the fines were imposed, Huarong officials said it would strengthen its internal controls and risk management systems.

The finance ministry blamed Deloitte for failing to determine the true situation of the company's assets in its audits and ignoring the correct approval compliance that normally leads Huarong's major investment matters.

China also charged that Deloitte did not issue proper audit opinions after identifying abnormal transactions by Huarong, and did not seek appropriate evidence regarding financial concerns during its audits, it added.

Huarong, a state-owned distressed-debt manager, did not release its 2020 earnings on time. It reported a significant loss only after it reported.

In this matter, the MOF considers that certain aspects of our work fell below the required auditing standards, Deloitte said in a statement.

Huarong said the company and its seven subsidiaries had each received a $14,500 fine.