Two out of three state-owned firms posted inaccurate financial statements in 2000, said the Auditor General, Li Jinhua. A survey of 1,290 state-controlled firms found serious accounting problems at 68 per cent of them. Li said that some listed companies collaborated with brokerages to make up profits and manipulate share prices, and the problem was also rampant among non-listed firms.
His findings were reported one month after Premier Zhu Rongji told the National Accounting Institute that false accounting was a malignant tumour that threatened the market economy, South China Morning Post said. He added that accountants without a diploma from the institute would be sacked, thereby effectively raising the standard for practising accountants.
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