Core Viewpoint - The 2025 Sustainable Global Leaders Conference highlighted the significant differences in ESG (Environmental, Social, and Governance) development across various regions in China, with major cities like Beijing, Shanghai, and Hong Kong leading in ESG understanding and management [1] ESG Disclosure Rates - Shanghai has an ESG disclosure rate of 57%, while Beijing also shows a very high disclosure rate, making these two cities national leaders in ESG practices [1] - Hong Kong-listed companies have nearly achieved 100% ESG disclosure [1] Regional Differences in ESG Practices - There is a notable contrast in ESG practices between first-tier cities (Beijing, Shanghai, Guangzhou, Shenzhen) and inland regions, with coastal cities being more receptive to international information and advanced experiences [1] - Inland companies are often still focused on meeting compliance requirements rather than fully embracing ESG management [1] Global Perspective on Chinese Companies' ESG Levels - From a global standpoint, Chinese companies are not lagging in ESG levels, with many new standards being introduced this year [1] - Policy guidance is contributing to the steady improvement of ESG management levels among Chinese enterprises, with aspirations for them to become global leaders in ESG and green finance [1] ESG as a Management Tool - ESG should be viewed as a management tool rather than merely an information disclosure tool, as it can modernize corporate governance [1]

Core Points - The China Securities Regulatory Commission (CSRC) has imposed penalties on Zhihong Accounting Firm and its auditors for failing to perform due diligence in the audit of ST Zhizhi's financial statements from 2019 to 2021 [1][2] - The audit reports issued by Zhihong for New Intelligence's financial statements contained false records, with identified issues including inflated revenue and profits [1][2] - The total audit revenue for Zhihong from these services amounted to 5.1 million yuan [1] Summary by Sections Audit Failures - Zhihong failed to effectively identify and assess risks related to financial statement fraud during the audits of New Intelligence for the years 2019, 2020, and 2021 [2] - Specific deficiencies included not recognizing contradictions in revenue, accounts receivable, and sales expenses, as well as failing to address large transactions near the fiscal year-end [2] - The firm also did not adequately execute internal control tests and substantive procedures related to inventory and revenue [2] Penalties Imposed - The CSRC ordered Zhihong to correct its practices, confiscate 5.1 million yuan in business income, and pay a fine of 10.2 million yuan [2] - Individual penalties included warnings and fines for the auditors involved: Liu Junshan (400,000 yuan), Zhao Leili (300,000 yuan), and Wang Zhenjun (200,000 yuan) [2] Previous Violations - Zhihong was recently penalized for similar violations in the audit of Hongxiang Co. for the year 2018, where it was found to have issued false audit reports [3] - The penalties included a business income confiscation of 3.58 million yuan and a fine of 6.47 million yuan [3]

Core Points - Shanghai Industrial Holdings (00363.HK) announced the replacement of its auditor due to the mandatory rotation requirement after the audit service period reached its limit [3][7][9] - Deloitte Touche Tohmatsu has resigned as the company's auditor effective October 10, 2025, after the board's decision to appoint a successor auditor [3][7][19] - Ernst & Young has been appointed as the new auditor, effective until the conclusion of the next annual general meeting [9][21][22] Summary by Sections Auditor Resignation - The resignation of Deloitte was prompted by the expiration of the maximum term for audit services as mandated by Chinese regulations [3][7] - Deloitte confirmed that there were no disagreements with the company and no issues that needed to be brought to the attention of shareholders or creditors [7][19] - The company anticipates that the change in auditors will not significantly impact the audit of the consolidated financial statements for the fiscal year ending December 31, 2025 [19] Appointment of New Auditor - The board, upon the recommendation of the audit committee, has appointed Ernst & Young as the new auditor to fill the vacancy left by Deloitte [9][21] - The audit committee evaluated Ernst & Young based on several factors, including audit proposals, fees, experience with listed companies, and independence [21][22] - The board expressed confidence in Ernst & Young's qualifications and suitability for the role [22][23] Financial Information - For the fiscal year 2024, the company paid Deloitte an audit fee of HKD 20,994,000 (approximately RMB 19.24 million) [10] - The company also incurred additional non-audit service fees totaling HKD 4,909,000 (approximately RMB 4.45 million) for various services [11]

Core Points - Shanghai Industrial Holdings (00363.HK) announced the decision to change its auditor due to the expiration of the term with Deloitte [1] - Deloitte has decided to resign as the company's auditor effective October 10, 2025, citing difficulties in maintaining a professional relationship following the board's decision to appoint a successor [1] - The board has resolved to appoint Ernst & Young as the new auditor to fill the vacancy left by Deloitte, with Ernst & Young's term lasting until the conclusion of the next annual general meeting [1]

Core Insights - In the first nine months of 2025, a total of 78 companies were listed on the A-share market, representing a year-on-year increase of 13.04% compared to 69 companies in the same period last year [1] - The total fees charged by IPO intermediaries for these listings amounted to 5.599 billion yuan, with underwriting and sponsorship fees accounting for 3.884 billion yuan, legal fees for 564 million yuan, and audit fees for 1.151 billion yuan [1] Segment Analysis Underwriting and Sponsorship Fees - The total underwriting and sponsorship fees were highest in the ChiNext board, followed by the Shanghai Main Board, Sci-Tech Innovation Board, Shenzhen Main Board, and Beijing Stock Exchange [1] - The leading underwriting institution by total fees was Guotai Junan, with 501 million yuan from 9 deals, followed by CITIC Securities and Huatai United Securities with 486 million yuan and 404 million yuan respectively [5][7] Legal Fees - The top three law firms by total fees were Shanghai Jintiancheng, Shanghai Tongli, and Beijing Guofeng, with total fees of 89.3 million yuan, 49.9 million yuan, and 47.7 million yuan respectively [8][10] - The average legal fee was highest for the Shanghai Main Board at 837.58 thousand yuan, while the lowest was for the Beijing Stock Exchange at 391.07 thousand yuan [3][4] Audit Fees - The leading audit firms by total fees were Rongcheng, Tianjian, and Zhonghui, with total fees of 270 million yuan, 221 million yuan, and 151 million yuan respectively [11][13] - The average audit fee was highest for the Shanghai Main Board at 1.990 million yuan, and lowest for the Beijing Stock Exchange at 667.14 thousand yuan [3][4]

Core Viewpoint - The China Securities Regulatory Commission (CSRC) emphasizes the importance of high-quality development and comprehensive reform in the capital market during the "14th Five-Year Plan" period, focusing on enhancing market attractiveness and competitiveness through specific reforms and initiatives [1][2]. Group 1: Key Points from the Meeting - The CSRC Chairman, Wu Qing, highlighted six principles for advancing the "14th Five-Year Plan" for the capital market, including adherence to the Party's leadership and promoting high-quality development [1]. - The meeting discussed the need to deepen reforms in areas such as issuance, refinancing, and mergers and acquisitions to enhance the capital market's appeal and inclusivity [1]. - There is a call for listed companies to improve their quality and investment value by increasing dividend payouts and buybacks, while also enhancing the role of institutional investors in corporate governance [1]. Group 2: Future Directions for the Capital Market - Participants agreed that during the "14th Five-Year Plan," China's capital market has seen both scale and quality improvements, particularly following the implementation of the new "National Nine Articles" and the "1+N" policy framework [2]. - The meeting proposed supporting high-quality securities and fund companies to develop into top-tier investment banks and institutions, while also promoting the high-quality development of intermediary institutions like accounting and law firms [1]. - There is an emphasis on enriching the A-share market product system, including indices, ETFs, and derivatives, to better serve the wealth preservation and appreciation needs of residents [1].

Core Viewpoint - The article outlines the "Management Measures for Anti-Money Laundering Work of Accounting Firms," which aims to strengthen and standardize the anti-money laundering obligations of accounting firms in accordance with the Anti-Money Laundering Law of the People's Republic of China [2][3]. Group 1: General Principles - The measures are established based on the Anti-Money Laundering Law and are applicable to accounting firms legally established within the territory of China [3]. - The State Council's financial department is responsible for the national supervision and management of accounting firms' anti-money laundering efforts, while provincial financial departments oversee local compliance [3]. Group 2: Anti-Money Laundering Obligations - Accounting firms must establish internal control systems for anti-money laundering that align with their risk profiles, including risk assessments, customer due diligence, and suspicious transaction reporting [4]. - Firms are required to regularly identify and assess money laundering risks and implement appropriate risk management measures based on these assessments [5]. - Customer due diligence must be completed before establishing business relationships, with firms allowed to finalize this within a reasonable timeframe before the conclusion of the entrusted matter [6]. Group 3: Customer Due Diligence - Firms must take reasonable measures to verify customer identities and understand the ownership and control structures of non-natural person clients [5][6]. - Continuous monitoring of customer relationships is mandated, with firms required to reassess customer risk profiles regularly [8]. - Enhanced due diligence measures must be applied to high-risk clients, including those from high-risk countries or involved in suspicious activities [10]. Group 4: Reporting and Record Keeping - Accounting firms must submit suspicious transaction reports if they suspect money laundering activities, regardless of the amount involved [16]. - Firms are required to maintain customer identity information and business records for at least ten years after the termination of the business relationship [20]. - Continuous training on anti-money laundering practices is necessary for firm personnel to ensure compliance and awareness [22]. Group 5: Supervision and Management - Provincial financial departments are tasked with supervising and inspecting the compliance of accounting firms with anti-money laundering obligations [23]. - The Chinese Institute of Certified Public Accountants is responsible for self-regulation within the industry, including the development of guidelines and the assessment of money laundering risks [24]. Group 6: Legal Responsibilities - Violations of the anti-money laundering law and the established measures can result in penalties as outlined in the law, with criminal liability for serious offenses [27][28].

Core Viewpoint - Private equity (PE) funds are increasingly investing in accounting firms globally, with half of the top 30 accounting firms in the U.S. accepting such investments to cover high costs associated with AI and other technologies [2][4]. Group 1: Investment Trends - In the U.S., Wipfli accounting firm announced it will accept an investment from New Mountain Capital, with the firm's economic value exceeding $1 billion and the fund's stake being approximately 40% [4]. - A survey by Koltin Consulting Group indicates that by 2025, 15 out of the top 30 accounting firms in the U.S. will have accepted private equity investments [4]. - In the UK, a survey by Kingsley Napley found that 27% of the 22 surveyed major accounting firms have accepted private equity funding [4]. Group 2: Structural Changes - Traditionally, accounting firms relied on personal investments from partners, with few examples of public listings [4]. - Private equity funds aim to recover their investments through options such as resale to other funds or initial public offerings (IPOs) [4]. - Restructuring through AI investments or mergers and acquisitions (M&A) can enhance economic value, allowing for profitable exits [4]. Group 3: Concerns and Regulatory Perspectives - There are concerns that accepting private equity funding may undermine the audit independence of accounting firms, as highlighted by executives from large auditing companies [5]. - In Japan, legal restrictions currently limit investments in audit firms to individual certified public accountants and tax accountants, suggesting that this trend may not extend to Japan [4][5].

Group 1 - The Hong Kong Accounting and Financial Reporting Council (AFRC) imposed penalties totaling HKD 1.912 million on Deloitte, Wang Tianze, and Mai Zhilong for multiple audit deficiencies related to revenue recognition and other violations [1] - Deloitte was responsible for the audit reports of Tianhe Chemical Group Limited and its subsidiaries for the years ending December 31, 2011, 2012, and 2013, as well as for Sander International Limited and its subsidiaries for the years ending December 31, 2012, and 2013 [1] - The AFRC found that the auditors failed to obtain sufficient appropriate audit evidence and lacked professional skepticism in addressing significant misstatement risks related to revenue [1] Group 2 - All three regulated parties admitted their violations and engaged in early settlement discussions with the AFRC, resulting in a 20% reduction in penalties for each case due to their cooperative attitude [2] - The final penalties were HKD 1.16 million for Deloitte, HKD 416,000 for Wang Tianze, and HKD 336,000 for Mai Zhilong [2] - This case marks the first disciplinary actions completed through cross-border regulatory cooperation, supported by the Ministry of Finance of the People's Republic of China, which involved obtaining audit working papers from the mainland [2]

Core Viewpoint - The Hong Kong Accounting and Financial Reporting Council (AFRC) has publicly reprimanded Deloitte, along with two partners, for multiple audit deficiencies related to revenue recognition in the audits of two former Hong Kong-listed companies, Tianhe Group and Sander International Group, resulting in a total fine of HKD 1,912,000 [1][2] Group 1: Audit Findings - The AFRC identified significant deficiencies in the audit procedures of Deloitte, including failures in revenue recognition and external confirmation processes, which led to insufficient audit evidence and a lack of professional skepticism regarding significant misstatement risks related to revenue [2][4] - Specific deficiencies included inadequate assessment of internal controls related to revenue cycles, failure to ensure the completeness of sales in testing, and not obtaining critical evidence for goods delivery and customer acceptance [4][5] Group 2: Tianhe Group Audit - Tianhe Group, primarily engaged in the production and sale of fine chemical products, had its revenue overstated by approximately 54% in its IPO prospectus, with sales figures for 2011, 2012, and 2013 reported as RMB 32 billion, 40.9 billion, and 48.4 billion, respectively [3][6] - Deloitte and partner Wang were responsible for auditing Tianhe Group's financial information for the fiscal years 2011, 2012, and 2013, where revenue was identified as a significant risk area with potential for material misstatement due to fraud [3][6] Group 3: Sander International Group Audit - Sander International Group, involved in water supply and sewage treatment, had its bank balances overstated by approximately RMB 2.1 billion and 2.7 billion for the years 2012 and 2013, respectively [6] - Deloitte and partner Mai conducted the audits for Sander International Group for the fiscal years 2012 and 2013, where significant misstatement risks were identified in revenue and bank balances [6]