China’s securities regulator found five major accounting problems in an audit of listed companies’ annual reports for 2016, Caixin reports. The China Securities Regulatory Commission (CSRC) reviewed the annual reports and internal evaluations of 612 companies randomly selected from among the 3,050 listed on the Shanghai and Shenzhen stock exchanges. The problems found are: some firms incorrectly classified assets, failed to set aside enough money for asset depreciation and did not use appropriate methods for valuing assets; some companies failed to comply with standard accounting principles and information disclosure requirements; poor implementation of provisions related to deferred income tax, government subsidies and nonrecurring gains and losses; inadequate information disclosure for asset impairment, continuing operations and accounting policies; companies’ own internal evaluations and audits did not fully comply with requirements. Last year, the CSRC found 134 problems among 94 firms after it reviewed the annual reports of 563 listed companies.
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