Lukang Culture (601599): Directors' Exposure To Financial Reports And Non Fidelity Annual Reports Are Highlighted By The Exchange.

Lukang culture (601599) released its earnings report in April 28th. However, the director Wu Yi chose the "self exposure" financial report which could not be fidelity, because the audit work of Zhejiang Tianyi film and Television Co., Ltd. in 2019 has not yet been completed. "In a diligent manner, it is temporarily impossible to report the authenticity, accuracy and completeness of the 2019 annual report of Jiangsu Lukang culture Limited by Share Ltd, and there is no false record. Comments on misleading statements or major omissions.

One stone stirred up thousands of waves, and at the same time, the Shanghai Stock Exchange issued a regulatory letter to the company, which mentioned that the company's earnings report would be "focused on Auditing".

Some accountants told the Securities Daily reporters that if the audit work of important subsidiaries was not completed, the listed companies could not disclose the annual financial reports. "Audit has not been completed, and the basis of financial reports is a problem." In response, the Securities Daily reporter called the Lukang culture as an investor. The staff said that Dong Mijun and Dai were not in the office and could not answer questions.

Wang Zhibin, a lawyer from Shanghai Ming Lun law firm, told the Securities Daily reporters that if there is evidence that the annual report contains the financial data of the unaudited subsidiary and the financial data is false, the listed company is suspected to constitute "false records" in the false statement.

Important subsidiaries have not completed the audit?

Lukang cultural results show that the director Wu Yi said, "because Zhejiang Tianyi film and Television Co., Ltd. in 2019 audit work has not yet been completed, and Zhejiang Tianyi film and Television Co., Ltd., the financial situation and operating results on Jiangsu Lukang culture Limited by Share Ltd annual report has a significant impact. Therefore, as a director, I am unable to comment on the truthfulness, accuracy and completeness of the annual report of the Jiangsu Lukang culture Limited by Share Ltd in 2019, and the fact that there are no false statements, misleading statements or major omissions. After I have finished the audit of Zhejiang Tianyi film and Television Co., Ltd., I will actively publish the opinions of the directors.

Tianyi film has an important influence on the financial reports of Lukang culture. According to the 2019 annual report released by Lukang culture, influenced by the environment of film and television, the company's film and television sector subsidiaries lost 95 million 789 thousand and 100 yuan, 353 million 359 thousand and 800 yuan and 213 million 976 thousand and 400 yuan respectively in the reporting period of Tianyi film, century long and Internet Movie and television, and the total loss of three movie and television companies was 671 million 51 thousand and 900 yuan.

Nowadays, there are directors' statements about the authenticity of financial reports, which makes the outside world doubt about the authenticity of these financial data.

However, all directors except Wu Yiwai signed written confirmation: "the company's 2019 annual report objectively reflects the company's financial situation and operating results for the whole year of 2019. There is no false record, misleading statement or major omission in the information contained in the company, and it bears individual and joint liabilities for the authenticity, accuracy and completeness of its contents."

However, the annual report also showed that Wu did not attend the board of directors, nor did anyone delegate to express their views. The "alternative" attitude has aroused investors' concern. The Securities Daily reporter called the company to consult relevant matters as an investor. However, the staff said, "the card generation and the secretaries are not in the office, and there is no way to answer the questions."

The exchange will focus on auditing.

Wu Yi's position triggered concern on the Shanghai stock exchange. At the same time, when the financial report was released, Lukang culture received the supervision letter from the Shanghai stock exchange.

The letter of supervision stated that Wu Yi, as a company director, should be diligent and conscientious in making clear opinions on the annual report of the company, and should provide a clear basis for the so-called "Tianyi" film and television that has not yet completed its audit work. In addition, the board of directors and all directors of the company (except Wu Yiwai) and the supervisor should make a careful verification of the objections made by the director Wu Yi to the annual report, explain the early communication on this matter, and make clear whether the company's annual report needs to be amended.

In addition, the supervision letter also requires the company to examine the objection of the accountant on the annual report issued by the director Wu Yi on a trial basis, clearly specifying whether the audit procedure performed by the Tianyi film and television company is compliant, whether the audit evidence obtained is sufficient, and whether the audit opinion is accurate. In addition, the exchange also noted that Wu Yi, director of the board, issued written confirmation opinions on the annual report and raised the above objection. However, he did not participate in the twenty-ninth meeting of the Fourth Board of directors of the company. He asked the company and Wu Yi to explain whether the board meeting had fulfilled the corresponding convening procedure and formed an effective resolution according to the law, and asked the company lawyer to give clear verification opinions.

The Shanghai stock exchange's regulatory letter also mentioned that "we will focus on the company's 2019 periodic report."

In response to this, Wang Zhibin, a lawyer from Shanghai Ming Lun law firm, told the Securities Daily reporter that "when a subsidiary in the consolidated financial statements fails to complete the audit, the listed company should make a special risk warning when issuing the annual report. If the listed company fails to make a risk warning, it will be suspected to constitute a "major omission" in the false statement. If there is evidence that the published annual report contains the financial data of the unaudited subsidiary and the financial data is false, the listed company is suspected to constitute a false record in the false statement. In the event of "omission" or "false record", the listed companies are faced with the legal risk of being punished by the Securities Regulatory Commission and large-scale investor litigation. At the same time, in the case of "false records" of financial data, accounting firms that issue false audit conclusions may also be identified as not diligent and conscientious by the regulatory authorities, and investors will have the right to place intermediary agencies as the second defendants in claims litigation.

In addition, Wang Zhibin also explained, "if the director's objection is not based on facts, if the director has no subjective intention, the company should maintain adequate tolerance for the objection raised by the director during his performance. However, if the director's objection is not based on facts and intentionally, the company may, in accordance with the provisions of the 149 law of the company law, investigate the director's legal liability.