Deloitte has resigned as auditor of Hong
Kong-listed milk formula products maker Daqing Dairy Holdings only
days after quitting children’s clothing manufacturer Boshiwa
International Holdings.
Daqing Dairy Holding shares have been
suspended after falling 17% in the three days trading prior to its
suspension.
Due to client confidentiality, Deloitte said
it could not comment further on the reasons behind its
resignation.
Last week, Deloitte quit Chinese Boshiwa,
which manufactures Harry Potter merchandise, because the firm was
not satisfied with Boshiwa’s response to questions about certain
transactions.
An issue Deloitte cited was the “existence and
commercial substance of recorded prepayments of CYN392 million with
a supplier”.
Deloitte’s resignation knocked Boshiwa’s share
price down 42% before trading was suspended, placing serious doubts
over its future viability.
Deloitte has had several problems auditing
Chinese companies in the past years.
Last May, Deloitte was forced to quit as
auditor of US-listed Chinese technology company Longtop Financial
Technologies.
Following the resignation, Deloitte was in the
midst of a legal dispute as the US Securities and Exchange
Commission (SEC) attempted to force Deloitte’s Chinese firm to pass
over audit documentation but the firm was blocked from doing so by
Chinese laws.
Paul Gillis, a visiting professor of
accounting at Peking University’s Guanghua School of Management and
an expert on the Chinese audit profession warned more resignations
could occur in April when Chinese companies listed in the US are
due to file their annual report on Form 20F.
