On February 4, Shanghai Kinlita Chemical Co., Ltd. announced its plan to appoint Yongxin Ruihe (Shenzhen) Accounting Firm as its financial report and internal control auditor for the 2025 fiscal year, with a one-year engagement term. This marks the fourth change of auditing firms by the company within a two-month period.
The company's history of auditor changes has been notably turbulent. On December 6, 2025, Shanghai Kinlita Chemical issued its first change announcement, stating that as the term of its previous auditor, Zhongxinghua Accounting Firm, had expired, it intended to appoint Beijing Zhengyuan Accounting Firm for the 2025 audit. However, on December 24 of the same year, the company terminated the agreement with Beijing Zhengyuan, citing prudent considerations and the need to protect the interests of minority investors following friendly consultations.
The changes continued into 2026. On January 12, the company announced its intention to engage Shandong Shuntian Xincheng Accounting Firm. Just 15 days later, on January 27, the company canceled an interim shareholders' meeting after receiving a notice from Shandong Shuntian Xincheng indicating that due to heavy audit workload and scheduling conflicts with other projects, the firm would be unable to undertake the audit and would no longer serve as the auditor.
Consequently, Shanghai Kinlita Chemical turned back to its former partner. On January 28, the company announced its third auditor change, planning to reappoint Zhongxinghua Accounting Firm. Unexpectedly, only seven days later, the company announced another switch, this time selecting Yongxin Ruihe Accounting Firm.
According to the announcements, each change was justified by the expiration of the previous auditor's term and the need to align with the company's business development and future audit requirements to ensure the successful completion of the 2025 audit. Each change was stated to comply with relevant regulations, with no objections raised by the company's board audit committee or the board of directors.
A critical concern is the tight timeline and heavy workload facing Shanghai Kinlita Chemical's audit process. The announcement highlighted that the appointment still requires approval at a shareholders' meeting, and its passage remains uncertain. If the company fails to formally appoint an accounting firm and disclose its audited 2025 annual report by April 30, 2026, its shares face the risk of being delisted.
Furthermore, the company's audit situation carries inherent risks. Its 2024 financial report received an audit opinion of "unable to express an opinion," while the internal control audit opinion was adverse. In 2024, the company paid a total of 1.089 million yuan in audit fees to Zhongxinghua Accounting Firm for its services.
Comments