In a statement to the Hong Kong Stock Exchange, China’s Bank of Jinzhou announced that EY firm Ernst & Young Hua Ming Certified Public Accountants and Ernst & Young had collectively resigned as the bank’s auditor, having been hired in May 2018.
Previously on 1 April the bank had warned that publication of its annual results for 2018 would be delayed ‘as the auditor of the bank requires additional information and documents in relation to the commercial basis and accounting treatment of certain financing activities between the group and certain of its customers…’ Trading in the bank’s shares has been suspended since 1 April.
It followed up this statement on 14 May, saying ‘Such information and documents are mainly in relation to certain loans granted by the Bank to its institutional customers…[and that it was being] required to further elaborate on and substantiate the business rationale and the existence and reasonableness of such trades as well as the source of repayment of such loans… [so that it could reach agreement] on the plans for making provisions of the relevant assets’.
In the resignation letter, EY said that during the performance of the audit of the Bank’s consolidated financial statements for the year ended 31 December 2018, it noted there are indications that the actual usage of proceeds of certain loans granted by the bank to its institutional customers were not consistent with the purpose stated in their loan documents. In view of this, EY requested for additional supporting documents to evidence the customers’ ability to service the loans, particularly the collateral that could be enforced, and the actual usage of such loans in order to assess the recoverability of such loans.
The bank said it had been working closely with EY to provide additional information and had several discussions with the auditor. However, the audit remains unfinished and incomplete.. In its statement to the Hong Kong stock market the bank said EY confirmed in its letter of resignation that there are no other circumstances connected with the resignation which EY considers should be brought to the attention of the Shareholders or creditors.
Bank of Jinzhou was established in 1997 in Liaoning province in China and listed on the Hong Kong Stock Exchange in December 2015. Crowe (HK) CPA has been appointed auditor to fill the casual vacancy following the resignation of EY and to hold the office until the conclusion of the bank’s 2018 annual general meeting. The bank now expects to publish its 2018 results by end-August