Deloitte’s China unit has been fined by the country’s finance ministry over failures related to its audit work with bad debt manager China Huarong Asset Management.
Deloitte Hua Yong, the China unit of the ‘big four' accounting firm, received a 212 million yuan ($31 million) fine due to failures in audit work conducted at Huarong Asset Management from 2014 to 2019, according to a statement from the country’s finance ministry.
Deloitte’s Beijing branch has also been banned from conducting business for three months and its «illegal income» has been «confiscated». Two licenses of two certified accountants were suspended with others instructed to pause accounting services for either one year or six months.
Hong Kong-listed Huarong and seven of its seven subsidiaries were also fined 100,000 yuan for ineffective internal risk controls and «severely distorted» accounting data.
Fine Response
«To be clear, there is no suggestion by the [ministry] that either Deloitte Hua Yong, its Beijing branch, or any of its people have done anything unethical,» Deloitte responded in a statement.
«We respect and accept the penalty decision. We regret that, in this matter, the [ministry] considers certain aspects of our work fell below the required auditing standards.»
Huarong is one of China’s four large bad debt managers alongside Cinda, China Great Wall Asset Management and China Orient Asset Management. It faced major pressures that led to losses of 109.2 billion yuan in 2020 and a government bailout in 2021.
