Mainland Ruihua CPA firm recently issued an announcement, the firm’s annual audit clients only one left, the loss of certified public accountants, various branches have been written off. The outside world predicts that Ruihua, which is on the verge of closing down, is afraid of financial liquidation and cancellation.
Once compared to the world’s Big Four accounting firms, Ruihua accounting firm, which issued the company’s audit report, bore the brunt of the huge financial fraud case that erupted in 2019 because of Kangde Xin, and the listed companies that terminated their contracts with Ruihua grew larger and larger like a snowball, finally taking the road of no return.
Interface News reported that CSR and Crowe Horwath jointly established Ruihua CPA in April 2013, and were the first batch of institutions to be granted audit qualifications for A+H share companies and the first batch to complete the conversion of special general partnerships. According to the CICPA, the business revenue and talent scale of Ruihua firm is one of the top two in the mainland market, second only to the first place PricewaterhouseCoopers (PwC), which is the first mainland domestic firm.
However, in 2019, a huge financial fraud case broke out in Kangde Xin, which, according to the Mainland Securities Regulatory Commission, allegedly inflated operating revenues by fictitious sales operations and other means, and inflated operating costs, R&D expenses and sales expenses by fictitious procurement, production, R&D expenses, and product transportation expenses, for a total of RMB 11.9 billion in inflated profits between 2015 and 2018.
Affected by the Kangde Xin case, Ruihua Firm was punished by regulation for issuing audit reports with false records. And there was a big increase in the number of listed companies that terminated their contracts with Ruihua.
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