Home  -  Publications  -  Audit Reports  -  2016 > text
No. 14 of 2016 (General Serial No. 245): The Audit Results of the Financial Revenues and Expenditures of China Petrochemical Corporation (SINOPEC) for
2017-06-08日   Soure : 【www.9455.com:International Coorperation Department】 :

No. 14 of 2016 (General Serial No. 245):

The Audit Results of the Financial Revenues and Expenditures of China Petrochemical Corporation (SINOPEC) for the Year 2014

In accordance with the stipulations of the Audit Law of the People’s Republic of China, in 2015 the National Audit Office (CNAO) conducted an audit over the financial revenues and expenditures of the year 2014 of China Petrochemical Corporation (hereinafter referred to as SINOPEC). The audit focused on the headquarters of SINOPEC and 4 sub-units including SINOPEC International Exploration and Production Corporation and SINOPEC Commercial Oil Reserve Corporation (hereinafter respectively referred to as International Exploration and Production Corporation and Commercial Oil Reserve Corporation respectively), with the extension and tracing back to relevant items.

I. Overview

SINOPEC was founded in July 1998. The main business areas it engages in include oil and gas exploration and development, oil refining, petrochemical, wholesale and retail of refined oil, and exploration, design and construction of petroleum and petrochemical projects etc.

As reflected in the consolidated financial statement, in the end of 2014, SINOPEC possessed 550 wholly-owned or holding subsidiaries and 819 shareholding companies; registered capital amounted to RMB274.867 billion, the total assets reached RMB2228.366 billion, the total liabilities was RMB1277.707 billion, owners’ equity was RMB950.659 billion and the asset-liability ratio was 57.34%; the realized operating revenue of the same year was RMB2889.934 billion, a net profit of RMB45.149 billion was earned, return on equity was 4.87% and the rate of the value maintenance and value increase of state-owned capital was 101.7%.

Entrusted by the SINOPEC, Zhitong Accounting Firm audited the consolidated financial statement of 2014 of the corporation and issued an unqualified audit report.

The audit results conducted by theCNAO indicated that SINOPEC has actively promoted the structural adjustment according to the six developmental strategies including resources, market, integration, internationalization, differentiation and green low carbon, promoted corporations on petroleum engineering and refining project to restructure for listing on the stock market, started and completed the mixed ownership reform of oil selling business, strengthened the construction of system at the same time, improved the rules and regulations on the management of bidding and tendering and further improved the corporate governance structure. The results also demonstrated that some problems still existed in fields such as financial management and accounting, major corporate decision making and management, development potential, professional ethics and the rectification on the problems found in previous years through the audit work on SINOPEC.

II. Major Problems Found in the Audit

(I) Financial management and accounting

uFrom 2011 to 2014, twelve corporations including the subunit Shandong Branch had firstly sold oil to outside units and then bought the oil back without the transfer of the real goods to make up the purchase and sale business of refined oil, which resulted in an overstatement of RMB20.219 billion revenues and an overstatement of RMB20.219 billion costs, among which the amount of 2014 was RMB3.271 billion.

uFrom 2011 to 2014, the headquarter of SINOPEC and its affiliated corporations had offset the non-business expenditures that should be used to offset the profits and loss in the previous years in the current period and failed to offset the internal sales profits according to the consistency principle during the consolidation of the accounting statement, resulting in an overstatement of RMB728 million profits.

uFrom 2011 to 2014, two corporations including the subunit China Petrochemical Refining Sales Corporation listed and paid for the staff housing subsidies in excess of the total wage, resulting in an overstatement of RMB16.6199 million costs, among which the amount of 2014 was RMB11.2155 million.

uFrom 2011 to 2014, the subunit Central China Branch directly paid RMB2.02 million bonus of the local government to the staff without accounting, among which the amount of 2014 was RMB510 thousand..

uFrom 2011 to 2014, the affiliated project department of the subunit Pipeline Storage and Transportation Corporation had irregularly disbursed bonus RMB8.5999 million without approval, among which the amount of 2014 was RMB1.074 million.

(II) Corporate decision-making and management

u From 2012 to 2014, SINOPEC irregularly had disbursed 2.6763 million tons of crude oil to a small oil refinery within the system that fell short of the standards.

uIn July 2012, SINOPEC invested RMB9.289 billion to purchase 49% equity of certain overseas project and because of an underestimate of projects’ risk factors, by the end of 2014, the total loss had amounted to RMB1.295 billion.

u In December 2012, SINOPEC invested RMB3.49 billion to purchase a office building without having a qualified intermediary agency conduct asset appraisal. By July 2015, the office building had already been in use. 

u Regarding the management and control for the subordinate enterprises

ü From August 2009 to October 2012, the subunit Jiangsu Branch had irregularly purchased 292,800 tons of refined oil from certain enterprise without the qualification to wholesale or produce refined oil product, involving an amount of RMB2.559 billion.

üFrom 2009 to 2014, the subunit Guangzhou Yanghua Real Estate Corporation disbursed RMB2.136 billion to purchase land and build houses for the staff, among which the amount of 2014 was RMB807 million. By the end of June 2015, RMB979 million still had not been recovered.

üSince 2012, in some overseas areas being explored and developed by the subunit International Exploration and Production Corporation, related assets had failed to be cleared in time in the case that RMB2.094 billion had already been invested and economically recoverable reserves had not been discovered.

ü From 2010 to 2013, three enterprises including the subunit Chongqing Branch had irregularly purchased 19 oil (gas) stations without the asset appraisal, involving an amount of RMB592 million. 

üIn the end of 2011, despite its feasibility study report indicated renting of the 4 oil stations’ franchise for 25 years faced the risk of loss, the subunit Henan Branch signed a contract to rent the above 4 oil stations and the contracted rent was RMB159 million. By July 2015, RMB95.232 million of rent had been paid, but the aforementioned oil stations still hadn’t been put into operation.

üIn 2012, without undertaking the Environmental Impact Assessment(EIA), the subunit Shanghai Petrochemical Corporation started the construction of two projects and the total investment was RMB182 million. By July 2015, the company still hadn’t obtained an official reply of the EIA.

ü In December 2013, the subunit Zhongyuan Oilfield Branch bought a complex building of living and working 13,200 square meters in Hohhot with RMB125 million without the listing it in investment plan.

ü From 2007 to April 2015, four enterprises including the subunit Shijiazhuang Refining and Chemical Branch had irregularly surrenderred RMB167 million of profits to related restructuring enterprises through selling products at low prices, among which the amount of 2014 was RMB21.7113 million.

ü From 2010 to 2014, two enterprises including the subunit Guizhou Brach had constructed 133 oil stations without calling for tender, involving an amount of RMB541 million, among which the amount of 2014 for the Guizhou Branch was RMB42.56 million.

ü From 2011 to 2014, fifty-nine projects of three enterprises including the subunit Northwest Branch should have called for tender but had not done so, involving an amount of RMB477 million, among which the amount of 2014 was RMB37.4069 million.

üFrom 2004 to April 2015, the subunit Chongqing Branch had entrusted such service items as the approval procedures of 204 oil(gas) stations to external bodies, involving an amount of RMB278 million, among which the amount of 2014 was RMB2.65 million.

ü From 2007 to 2014, the subunit Zhongyuan Petroleum Exploration Bureau had irregularly paid RMB90 million of entrusting service charge to related restructuring enterprises without being clear about charging standards, among which the amount of 2014 was RMB14.50 million.

ü From 2013 to 2014, in the absence of real trade, the subunit Guangdong Branch had confirmed the debts owned by related restructuring enterprises to financial agencies so that the related restructuring enterprises could get the loaning and factoring business; By September 2015, the related restructuring enterprises had failed to return bank loans, making the Guangdong Brach face the risk of compensation of RMB57 million.

ü In 2012, the subunit Guangdong Branch adopted the method of invitational tenders instead of open bidding of the projects, involving an amount of RMB9.8875 million.

üIn 2014, the subunit Beijing Yanshan Petrochemical Corporation (hereinafter referred to as Yanshan Petrochemical) failed to make asset assessment according to the rules and regulations, and made 7,126.8 square meters house properties available for rent to the outside.

uWith regard to the information construction, by the end of 2014, the centralized financial accounting system of 88 subunits and the Enterprise Resource Planning (ERP) system of 95 units had failed to conform to the interface standards.

(III) Development potential

uFrom 2011 to 2014, the research and development (R&D) investment of SINOPEC respectively accounted for 0.28% , 0.29%, 0.3% and 0.3% in the main business income and there was a big gap between above percentages and the 1.8% required by the regulatory authorities.

u From 2011 to 2014, the crude oil annual processing capacity of SINOPEC had increased from 243 million tons to 284 million tons, but the actual crude oil processing volume had only increased from 220 million tons to 238 million tons; there was a rising trend that the crude oil processing capacity exceeds the actual crude oil processing volume.

u Because of an underestimate of the risks of market changes and application of new technologies, from 2011 to 2014, fourteen new chemical projects built with RMB7.291 billion investment of 8 enterprises including the subunit Yanshan Petrochemical had failed to produce normally after completion, resulting in idle properties; five projects including the expansion and reconstruction of the 500,000 t/y of phenol acetone facility of Yanshan Petrochemical stopped construction after RMB439 million investment had been committed.

u By the end of 2014, because of changes in land use planning and the expiries of leasing contracts, SINOPEC had still possessed 1,133 gas stations that had stopped operation and must close permanently, which produced heavy pressure on their disposal; For the 131 gas stations that were newly purchased or rented by the 3 units including the subunit Shandong Branch, the annual sales of 65 out of the 131 gas stations had failed to achieve the expected results.

u From 2011 to 2014, the actual crude oil production of 29 overseas projects of SINOPEC was 89.9234 million tons less than the feasibility yield, failing to reach the expected goals.

(IV) Professional ethics

In 2013 and 2014, in violation of the spirits of the Eight Rules of the central government, five corporations including the subunit Commercial Oil Reserve Corporation purchased cigarettes and liquors as gifts and used public funds for reception, involving an amount of RMB2.0424 million.

(V) Rectification of Issues Found in Audits of Previous Years

In the audit of 2011, the CNAO pointed out that SINOPEC possessed 25,827 land cases that hadn’t got the land use right certificates. In regards to this issue, SINOPEC organized rectification. But by the end of 2015, a number of 3,202 land cases had still been in the process of handling the land use right certificates.

III. Audit Disposal and Rectification

In regard to issues discovered through auditing, the CNAO has issued audit report and released letters of audit decisions in accordance with laws, and SINOPEC will notify the general public of the details of straightening and rectification.

Clues related to issues in violation of laws and disciplines discovered through the audit have been transferred to departments concerned for further investigation.

XML 地图 | Sitemap 地图