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No. 21 of 2016 (General Serial No. 252): The Audit Results of the Financial Revenues and Expenditures of China National Travel Service (HK) Group Co.,
2017-06-08日   Soure : 【www.9455.com:International Cooperation Department】 :

No. 21 of 2016 (General Serial No. 252):

The Audit Results of the Financial Revenues and Expenditures of China National Travel Service (HK) Group Co., Ltd. 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 audit on the financial revenues and expenditures for the year 2014 of China National Travel Service (HK) Group Co., Ltd. (hereinafter referred to as CTS (HK) Group). The audit focused on the headquarters of CTS (HK) Group and 5 secondary units including China Travel Service (HK) Huamao International Logistics Co., Ltd. (hereinafter referred to as Huamao Corporation), with the extension and tracing back to relevant items.

I. Overview

CTS (HK) Group was founded in October 1985. The main business areas it engages in include tourism and relevant cultural business, entity investment (iron), real estate development and operation and logistics trades etc.. As reflected in the consolidated financial statement, by the end of 2014, CTS (HK) Group possesses 361 wholly-owned or holding subsidiaries and 23 joint stock companies, has RMB7.053 billion of registered capital. The total assets amounted to RMB98.102 billion, the total liabilities reached RMB68.465 billion, and there was RMB29.637 billion worth of owners’ equity. The asset-liability ratio was 69.79%. The realized operating revenue of the same year was RMB50.314 billion and a net profit of RMB1.477 billion was earned. The return on equity was 5.14%, and the rate of the value maintenance and value increase of state-owned capital was 102.5%.

Dahua Accounting Firm, entrusted by CTS (HK) Group, audited the consolidated financial statement of 2014 of the corporation and issued an audit report with unqualified opinions.

The audit results conducted by the CNAO indicated that CTS (HK) Group planned the overall development, refined business plans, improved the industrial distribution, strengthened the key position of its major industry and optimized the corporation’s governance structure. The system of decision-making of board of directors on significant matters was tentatively formed. The results also demonstrated that some problems still existed in fields such as financial management, accounting, important corporation decisions and management, development potential, and professional ethics.

II. Major Problems Found in the Audit

(I) Financial management and accounting

uFrom 2009 to July 2015, the headquarters of CTS (HK) Group and its 3 subunits had irregularly claimed or used RMB2.084 billion of special funds, among which RMB300 million of industry upgrading funds were mainly used to buy financial products in 2014.

u From 2006 to June 2015, four units including the sub-unit Shaanxi Weihe Power Co., Ltd. had understated RMB83 million of income including electricity selling income, understated RMB91 million of costs including advertising expenses, and overstated RMB166 million of costs including housing fund, among which the understated income and understated costs of 2014 were RMB79 million and RMB29 million respectively.

uFrom 2013 to July 2015, the sub-unit CTS International Conference Exhibition Service Co., Ltd. had illegally used annulled and invalid invoices to reimburse RMB6