Core Viewpoint - The company plans to appoint Ernst & Young Hua Ming as its new auditor for the 2025 fiscal year, replacing PwC Zhong Tian, to ensure the independence and objectivity of the audit process [1][7][8] Group 1: Auditor Change Details - The new auditor, Ernst & Young Hua Ming, was established in September 1992 and has over 1,700 certified public accountants, with more than 1,500 having experience in securities-related services [2][3] - Ernst & Young Hua Ming reported a total audited revenue of RMB 5.955 billion for 2023, with audit service revenue of RMB 5.585 billion and securities service revenue of RMB 2.438 billion [2] - The company plans to pay Ernst & Young Hua Ming a maximum of RMB 4.28 million for the 2025 financial statement and internal control audit, along with an additional RMB 400,000 for certain subsidiaries, totaling RMB 4.68 million [5][6] Group 2: Previous Auditor Information - The previous auditor, PwC Zhong Tian, provided audit services for 12 years and issued a standard unqualified opinion in the last audit [6][7] - The decision to change auditors was made to maintain the independence and objectivity of the audit process, following relevant regulations [7][8] Group 3: Approval Process - The audit committee and the board of directors have unanimously approved the appointment of Ernst & Young Hua Ming, with the board voting 9 in favor and none against [8] - The appointment is subject to approval at the company's 2025 annual shareholder meeting [2][8]

Core Points - The company intends to change its accounting firm from Zhonghui Certified Public Accountants to Zhongxing Cai Guanghua Certified Public Accountants for the 2025 financial year [3][7][9] - The change is aimed at ensuring the independence, objectivity, and fairness of the audit work [7][9] - The decision has been communicated with the previous accounting firm, which has no objections to the change [7][9] Summary by Sections Proposed Accounting Firm Information - The new accounting firm, Zhongxing Cai Guanghua, was established in January 1999 and has 2,898 employees, including 804 certified public accountants [1][3] - The firm has a total liability insurance coverage of 428 million yuan for 2024, which includes professional liability insurance and a professional risk fund [3] Previous Accounting Firm Information - The previous firm, Zhonghui, has provided audit services for several years and issued a standard unqualified audit report for the company's 2024 financial statements [6][7] - There were no disagreements between the company and Zhonghui regarding work arrangements or fees [7] Reasons for Change - The change is based on the need to maintain audit independence and is in accordance with relevant regulations [7] - The company has conducted a thorough communication process with both the outgoing and incoming firms regarding the change [7][8] Approval Process - The audit committee approved the proposal to change the accounting firm on May 20, 2025, and the board of directors also approved it [8][9] - The proposal will be submitted to the company's 2024 annual general meeting for final approval [9]

Core Viewpoint - The company Bertlant faced legal challenges after being delisted from the New Third Board due to audit failures, leading to lawsuits against three audit firms, which resulted in a complete loss in court [1][2][3]. Group 1: Business Model and Audit Disputes - Bertlant's business model relies on a two-tier application merchant sales system, where revenue is recognized upon the first-tier merchant's delivery rather than final sales, raising concerns about revenue authenticity [2]. - The audit firms issued "unable to express an opinion" reports for three consecutive years, primarily questioning the validity of terminal sales and the reasonableness of accounts receivable aging and bad debt provisions [2][3]. - The complexity and high-risk nature of the business model, including reliance on personal guarantees and lack of collateral, contributed to the difficulties in auditing and the subsequent legal losses [2][3]. Group 2: Legal Proceedings and Reasons for Loss - Bertlant claimed that the audit firms failed to perform their duties, leading to its delisting and financial losses, but the court found that the audit procedures adhered to professional standards [3]. - The audit firms identified significant misstatement risks and conducted standard procedures, but Bertlant failed to provide essential evidence, such as terminal sales data, which limited the audit's effectiveness [3]. - Previous court rulings in similar cases weakened Bertlant's claims, as it could not prove intentional misconduct or gross negligence by the audit firms [3]. Group 3: Corporate Governance and Capital Operation Risks - Governance issues were highlighted during the lawsuit, including frequent changes in audit firms, raising concerns about internal control effectiveness [4]. - The actual controller's aggressive capital operations and concentrated shareholding structure led to a lack of checks and balances in decision-making, potentially affecting the rationality of litigation strategies [4]. - These governance deficiencies diminished Bertlant's credibility in legal disputes and increased the risk of unfavorable outcomes [4]. Group 4: Capital Market Reputation and Future Implications - The series of legal defeats severely damaged Bertlant's reputation in the capital market, making it unlikely to return to public capital markets after delisting [5]. - The judicial confirmation of the audit firms' doubts about financial authenticity will impose stricter scrutiny on future financing and mergers [5]. - Investor confidence has been eroded, with previously ambitious revenue targets now viewed as unrealistic, further undermining market trust [5]. Group 5: Industry Warnings and Regulatory Insights - The case serves as a warning for companies to avoid overly complex business models that may lead to audit and regulatory risks [6]. - Audit firms should strictly apply professional skepticism when dealing with high-risk clients and consider terminating relationships to avoid liability [6]. - Regulatory bodies need to clarify information disclosure standards for over-the-counter markets to prevent regulatory arbitrage [6].

Core Viewpoint - The article highlights the significant issue of internal control failures in listed companies, which serve as a breeding ground for financial fraud, and emphasizes the need for a thorough examination of the auditing mechanisms and corporate governance systems in place [2][5]. Summary by Sections Financial Fraud Cases - Dongfang Group was fined millions by the CSRC for significant financial fraud, having inflated business revenue by over 16 billion yuan through fictitious business operations over four years [3]. - A staggering 80% of companies penalized by the CSRC had received unqualified audit opinions regarding their internal controls in the five years leading up to their penalties [4][8]. Audit Mechanisms and Internal Controls - The audit process is likened to a health check for a company, focusing on the compliance of financial reporting and internal controls [7]. - The Ministry of Finance and the CSRC issued guidelines in 2010 stating that any significant internal control deficiencies should lead to a negative audit opinion [7]. - Despite clear evidence of financial misconduct, many companies received standard unqualified opinions on their internal controls during the years of their violations [10][12]. Statistics on Audit Opinions - From 2022 onwards, 257 companies were penalized for financial reporting violations, with many having never received non-standard audit opinions in the five years prior [12][13]. - Among the companies that faced penalties, 178 had internal control audits that were deemed effective, despite their violations [13]. Discrepancies in Audit Findings - The article discusses the disconnect between audit opinions and regulatory penalties, attributing it to differences in the focus and capabilities of auditors versus regulatory bodies [17][18]. - Auditors often prioritize financial reporting over internal controls, leading to a lack of attention to potential internal control failures [18]. Recommendations for Improvement - To restore the credibility of audits, experts suggest enhancing auditor independence, adopting modern auditing techniques, and addressing low-cost competition that undermines audit quality [23][25][26]. - A comprehensive digital system is recommended to improve internal governance and reduce violations of internal control procedures [30]. - Cultivating a compliance culture within companies is essential, with suggestions for regular risk training and establishing a whistleblower system to encourage reporting of misconduct [31]. Conclusion - The article concludes that the effectiveness of internal controls is crucial for corporate governance, and there is an urgent need for companies to address the systemic issues that lead to audit failures and financial misconduct [28][29].