CDT(SZ:300344) Mei Ri Jing Ji Xin Wen·2025-12-31 09:56Core Viewpoint - The crisis faced by Zhongxing Caiguanghua Accounting Firm is unprecedented due to the administrative penalty imposed by the China Securities Regulatory Commission (CSRC) on Lifang Shuke for financial fraud, leading to a mass termination of contracts by numerous companies with the firm [1][4][10]. Group 1: Impact of CSRC Investigation - On November 28, the CSRC announced an administrative penalty against Lifang Shuke for inflating revenues and costs over three consecutive years, prompting the Shenzhen Stock Exchange to initiate delisting procedures [1][4]. - Following the announcement, 52 A-share companies terminated their contracts with Zhongxing Caiguanghua between November 28 and December 30, with a total of 61 companies having done so since October [1][10]. - The firm lost nearly 70% of its A-share clients, which is considered a "fatal blow" for any accounting firm [1][10]. Group 2: Client Transition and Market Dynamics - The latest company to terminate its contract with Zhongxing Caiguanghua is Yunding Technology, citing internal resource optimization and personnel changes as reasons for the inability to provide qualified audit personnel [2]. - A significant number of companies in the New Third Board have also switched from Zhongxing Caiguanghua, with 91 companies reported to have terminated their contracts since November [2][12]. - Many companies are experiencing a "change of firm but not of auditor" phenomenon, where the signing auditors remain the same despite the change in the accounting firm [2][22]. Group 3: Historical Context and Previous Penalties - This is not the first time Zhongxing Caiguanghua has faced scrutiny; the firm has been penalized six times and subjected to 25 supervisory measures in the past three years [4][5]. - The firm was previously investigated for failing to exercise due diligence in audits for companies like Shihang High-Tech, which led to significant financial discrepancies [4][5]. - The firm has been involved in multiple cases of regulatory violations, including the "Blue Mountain Technology Fraud" case, which was highlighted as a typical case of fraud in the New Third Board [5]. Group 4: Operational Changes and Future Outlook - Following the investigation, Zhongxing Caiguanghua has significantly reduced its registered capital from 38.5 million to 16.3 million, a decrease of 57.7% [13]. - The firm has also seen a reduction in its partner count, with the number dropping from 187 to around 160, indicating a contraction in its operational capacity [19]. - The firm has emphasized the need to improve audit quality in light of the current challenges, as stated by its chief partner during a recent partners' meeting [19].