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[June 21, 2014]
CNPC runs into accounting woes [China Daily: Hong Kong Edition]
(China Daily: Hong Kong Edition Via Acquire Media NewsEdge) Company units erred in natural gas sales income calculation, audit finds Oil and gas producer China National Petroleum Corp understated its profit for 2012 after 10 company units miscalculated natural gas sales income, the National Audit Office said on Friday.
After a thorough review of the company's 2012 financial results, the auditors said accounting errors were discovered in contracts with a total value of 26 billion yuan ($4.2 billion). The revenue miscalculation led to the group under-reporting some 603 million yuan in profit, the State auditor said on its website.
BDO China Shu Lun Pan Certified Public Accountants LLP reviewed CNPC's financial results and pointed out the problems to the NAO.
"CNPC has problems in production, operation and internal management. Some staff at the management level allegedly are in serious violation of laws and regulations," said the office in the statement.
To address the problems, the authorities have asked the company to inform the public about the correction and improvement in its auditing. Violations of law and regulations will be notified to the relevant departments for further investigation, it said.
In a statement on its website on Friday, the CNPC said it has corrected the accounting errors, including those that still need to be approved by the relevant authorities.
"The auditing report will not affect the company's overall performance and financial reports in general," it said. "The company will hold those who are involved as responsible." According to the NAO report, CNPC also violated the country's regulations by providing large-scale natural gas supplies to a liquefied natural gas producer. About 55 gas stations in a sales branch of CNPC in Sichuan failed to complete the due certification process required for operations, it said.
Between 2010 and 2012, a CNPC's subsidiary invested 2.24 billion yuan in a coal-fired power plant project which failed to get government approval before construction.
CNPC, also known as PetroChina, also built a 2.1 billion-yuan gas storage project in northeast China's Liaohe Oilfield in 2011 without approval. The company later got permission for the same in November 2013.
In Sichuan, PetroChina formed a joint venture to develop natural gas in December 2007 and failed to start commercial production as promised in 2009.
CNPC has been facing a series of investigations since last year after the central government decided to crackdown on corruption. Jiang Jiemin, former CNPC chairman and at least six other high-ranking officials are being investigated for corruption-related charges.
According to the NAO, about 190 people at 11 State-owned enterprises have been punished for policy breaches or mismanagement during the auditing survey.
China Resources' affiliates purchased vehicles at numbers and prices far beyond the stipulated limits, said the office. Song Lin, former China Resources chairman was investigated for "suspected disciplinary violations," in April.
A senior auditor with one of the big four audit firms, who declined to be named, said the report shows that CNPC lacks internal management and strict supervision of its subsidiaries.
"To prevent such things from happening, the company needs to strengthen its internal controls," he said. "The national auditor should also audit the firm in a timely manner." firstname.lastname@example.org (China Daily 06/21/2014 page9) (c) 2014 China Daily Information Company. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).
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