Listed company ST Juewei has been caught in revenue fraud, putting auditing firm RSM China in a precarious position.
On September 20, Juewei Food announced that the listed company would be subject to other risk warnings, with its stock code changed to ST Juewei. The day before, ST Juewei received a "Notice" from the Hunan Securities Regulatory Bureau, imposing a total fine of 8.5 million yuan on the company and related responsible persons for suspected violations in information disclosure.
The Notice stated that from 2017 to 2021, ST Juewei failed to recognize revenue from franchise store renovation business, resulting in underreported operating revenue in annual reports. The company's annual reports from 2017 to 2021 did not truthfully disclose operating revenue, with statistics showing approximately 724 million yuan in concealed revenue over the five-year period.
During these five years, RSM China CPA (LLP) served as the auditing firm responsible for ST Juewei's annual financial report audits. As ST Juewei's domestic accounting firm, questions arise about whether the relevant auditing institution will be affected by the company's underreporting of annual revenue.
**Five Consecutive Years of "Standard Unqualified Opinions" with 7 Million Yuan in Total Fees**
According to ST Juewei's financial reports, from 2017 to 2021, the company's domestic accounting firm was consistently RSM China CPA (LLP). Moreover, RSM China issued "standard unqualified opinions" for all five years of ST Juewei's annual reports.
Notably, four registered accountants issued audit opinions for ST Juewei's annual reports from 2017 to 2021. Fu Chenggang, Kang Daian, and Zhang Yuchen served as registered accountants for ST Juewei's reports from 2017 to 2020, while the 2021 annual report saw significant changes, with Kang Daian remaining, Fu Chenggang and Zhang Yuchen no longer involved, and Chen En added as a new registered accountant.
Regarding audit fees, from 2017 to 2021, RSM China, as ST Juewei's appointed domestic accounting firm, received compensation of 1.2 million yuan, 1.2 million yuan, 1.2 million yuan, 1.3 million yuan, and 1.3 million yuan respectively. From 2018 to 2021, as ST Juewei's internal control audit accounting firm, RSM China received 200,000 yuan annually. Over five years, RSM China collected a total of 7 million yuan in fees from ST Juewei.
Currently, RSM China's audit fees for ST Juewei continue to rise. According to a related announcement issued by ST Juewei in April 2025, the company plans to renew RSM China as its 2025 audit institution. RSM China possesses relevant qualifications with no major violations in the past three years. The 2024 audit fee was 2 million yuan, including 1.8 million yuan for financial reports and 200,000 yuan for internal control. This proposal has been approved by the board of directors and awaits shareholder approval.
**Previously "Stepped on Landmine" with Qixin, Fined Over 27 Million Yuan and Suspended from Securities Services for Six Months**
Besides ST Juewei, RSM China also "stepped on a landmine" with Qixin in 2024.
On August 16, 2024, the China Securities Regulatory Commission disclosed a penalty decision, fining RSM China CPA (LLP) over 27 million yuan and suspending it from securities services for six months.
Investigation revealed RSM China's following violations: First, RSM China failed to exercise due diligence in Qixin's annual report audit, producing audit reports with false statements; Second, RSM China forged, tampered with, and destroyed audit working papers.
Specifically, Qixin's annual reports from 2015 to 2019 contained information disclosure violations including inflated revenue and total profit. RSM China provided audit services for Qixin's financial statements, earning a total audit business income of 3,679,245.28 yuan (after tax). RSM China issued standard unqualified audit opinions for all years, which contained false statements. RSM China failed to exercise due diligence in Qixin's annual report audits, including inadequate risk identification and assessment procedures, defective monetary fund substantive procedures, defective notes payable substantive procedures, and defective engineering cost audit procedures.
Additionally, RSM China engaged in forging, tampering with, and destroying audit working papers. In January 2022, the Shenzhen Securities Regulatory Bureau served RSM China with a "Supervision and Inspection Notice," requesting Qixin's financial statement audit working papers. After receiving the notice, relevant personnel at RSM China's Shenzhen branch forged, tampered with, and destroyed Qixin's related financial statement audit working papers. RSM China submitted these papers to regulatory authorities while making false guarantees about their authenticity, accuracy, and completeness. The forging, tampering, and destruction mainly included: altering materiality levels and sampling standards for various detailed tests, deleting and modifying confirmation letter records, forging unexecuted audit procedures, deleting and modifying voucher examination records for large fund receipts and payments, and deleting perfunctory audit explanations from working papers.
According to statistics, as a leading domestic accounting firm, RSM China had 154 A-share annual report audit clients in 2024, making it one of the domestic accounting firms with the most clients conducting A-share annual report audits.
After being penalized for the Qixin case and suspended from securities services for six months, RSM China resumed operations on February 1, 2025, after completing its penalty period.
Despite consecutive "landmine" incidents with Qixin and ST Juewei, as a leading domestic audit institution, RSM China's business remains strong since August 2025. Four listed companies - Hainan Airport Infrastructure Co.,Ltd., Qinghai Yanhu Industry Co.,Ltd., Zhuzhou Smelter Group Co.,Ltd., and Baic Bluepark New Energy Technology Co.,Ltd. - have successively announced hiring RSM China as their 2025 annual report audit institution.
Currently, RSM China must abandon quick-profit thinking. To achieve long-term development, it must consider how to stabilize its industry reputation and maintain business compliance standards.
Comments