Once known as the “number one accounting firm” on the mainland, Ruihua Accounting Firm is on the verge of collapse, with accountants losing their jobs and branches being written off one after another. The firm was once a major player in the industry, and in 2019 sued the Chinese Communist Party‘s Securities Regulatory Commission.
The mainland media reported on Feb. 24 that, according to public information, Ruihua & Co. had canceled 19 branches as of Feb. 23, while 21 others were in existence or in operation.
But an employee of a branch revealed that the actual state of cancellation of more than 19 branches, 19 is the completion of the business registration cancellation procedures, many other branches are in the state of staff and client loss.
Ruihua Accounting Firm was established in April 2013, is a private enterprise, once the scenery. It has an internal Communist Party branch, with many serving as expert members of the Communist Party’s Ministry of Finance, the Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission, the Chinese Institute of Certified Public Accountants and other institutions, and its partner companies include more than 40 Communist Party central enterprises and more than 340 listed companies.
On February 9 the Beijing Institute of Certified Public Accountants issued an announcement saying, “It is agreed that Ruihua CPA Firm (Special Ordinary Partnership) withdraws its party committee and all organizational relations of the former affiliated party members are transferred to the party committee of Beijing Guofu CPA Firm (Special Ordinary Partnership).”
Interface News on the mainland quoted an insider at the Ruihua firm as saying, “People are almost gone, the party committee has no need to exist.”
The firm has been “angrily sued by the Communist Party of China Securities Regulatory Commission” for frequent fraud scandals.
The 2019 lawsuit by Ruihua Accounting Firm against the Communist Party’s Securities Regulatory Commission was a sensation. The case arose out of an investigation of Kangdexin Composite Materials Group Inc.
In October 2018, the Chinese Communist Party regulator said it would investigate the case of the major shareholder of Kangde Xin for misappropriation of funds, which triggered a flash crash of Kangde Xin’s share price; in early 2019, the Chinese Communist Party regulator changed its statement to say that Kangde Xin had committed financial fraud for four consecutive years, the major shareholder had illegally misappropriated funds and misrepresented securities, and its stock was suspended and faced delisting.
As Kangde Xin’s auditor, Ruihua & Partners said that according to the letter provided by Bank of Beijing, it proved that Kangde Xin’s deposits existed, but Bank of Beijing refused to publish the flow of the imputed funds.
Subsequently, the CPC Securities Regulatory Commission fined Ruihua & Partners RMB 5.2 million. The Ruihua Firm sued the CCP SEC and lost, and at the Time, an internet opinion said, “No one has been born yet that has won a lawsuit against the SEC.”
The Kangde Xin incident directly led to heavy losses for 135,000 small and medium-sized investors, with many investors having no way to complain and losing their money.
After the Kangde Xin incident, listed companies have terminated their contracts with Ruihua, reaching a peak at the end of 2019. wind data show that the A-share companies audited by Ruihua for their 2019 annual reports plummeted to 29 from 213 in 2018. As of now, only 1 A-share annual audit client of Ruihua firm remains.
As early as after 2017, the companies represented by Ruihua Firm have been exposed to financial fraud one after another. Relevant companies reported by mainland media only include Aerospace Communications, Asia Pacific Industries, Chinshang Optoelectronics, Zhenlong Specialties, Key Bridge Communications, Chengdu Huazhe Cobalt Nickel, Da Clan Laser, Xinqiu Agriculture, and Fu Ren Pharmaceutical.
Recent Comments