The post audit of the 2016 annual report of A-share companies has been concluded. According to information from the Shanghai Stock Exchange, during the audit process, a few companies exposed six issues in accounting treatment, including doubts about the reasonableness of surprise trading confirmations.

As of the end of May, the Shanghai Stock Exchange has basically completed the annual report review of Shanghai listed companies. The relevant person in charge of the Shanghai Stock Exchange stated that the vast majority of listed companies can prudently implement accounting treatment in accordance with the requirements of the Enterprise Accounting Standards, and the operating performance reported to investors is also relatively true and reliable. However, at the same time, a few companies are exposed to problems in accounting treatment, mainly concentrated in six aspects:

One is the rationality of confirming surprise transactions. A small number of risk companies achieve profits through year-end surprise trades, but such abnormal trades have not improved the company's ability to sustain operations and have even become an important means for some zombie companies to maintain their long-term shell. The audit found that there are doubts about the fairness of pricing, commercial rationality, legality of funds, and related financial treatment of some company transactions. If a company in a certain industry is experiencing a downturn and transfers its related assets or products to related or suspected related parties at a high premium, there are significant doubts about the reasonableness of the transaction.

The second is the appropriateness of the provision for impairment. Under the downward pressure of business operations, some companies have used the "big bath" method to achieve a turnaround in future financial statements in order to avoid continuous losses. This is mainly reflected in the provision of large impairment losses in one year, which will be reversed in the next year to achieve profitability in the financial statements. This audit found that there are doubts about the consistency, rationality, and adequacy of the company's impairment provision in the early and later stages. If some companies have ceased production in previous years, but the provision for impairment of related assets is made in subsequent years.