China suspends Deloitte’s Beijing office over Huarong audit ‘deficiencies’

China’s finance ministry has suspended operations at the Beijing arm of accounting firm Deloitte for three months after finding “deficiencies” in its auditing work for China Huarong Asset Management.

China Huarong, one of the country’s largest bad-debt managers, received a state-backed bailout in 2021 after delaying the announcement of a record Rmb103bn ($15bn) loss. A statement from the ministry on Friday said Deloitte had failed in its accounting duties, including in assessing the asset quality of the company.

Deloitte’s Beijing branch will also be fined Rmb211.9mn, while Huarong and its related investment companies were fined by the ministry for failures in risk control and distortion of accounting information.

Deloitte’s Beijing office did not immediately comment.