The Hong Kong Stock Exchange has told Tianhe Chemicals that it must hire a forensic accountant to address questions about its 2014 finances before trading of the companys stock can resume.
The stock exchange wants further outside input on questions raised by Tianhes former auditor, Deloitte Touche Tohmatsu, Tianhe disclosed in a Nov. 6 filing. The chemical company – which is based in Jinzhou city, China – said it is working with the stock exchange to meet that and other requirements, including the publishing of financial results and establishment of internal controls to ensure compliance with the exchanges rules.
Deloitte Touche Tohmatsu resigned as Tianhes auditor in September after reaching an impasse with the company over questions about its 2014 finances. While performing its audit of those finances early this year, the accounting firm requested additional information on three topics: payments for a base oil capital project; sales to a key customer; and bank statements.
Tianhe, which claims to be Asias largest lubricant additive supplier, said it went to great lengths to address Deloittes questions but was unable to satisfy the firm, partly because other companies doing business with Tianhe eventually refused to provide additional information.
Tianhe has hired a new accountant, which is working to finish an audit of the 2014 results. Trading of Tianhes stock has been suspended since March 26 for failure to meet the deadline for publishing those results.