CNFinance Announces Change of Auditor

Rhea-AI Summary

CNFinance Holdings (NYSE: CNF), a leading home equity loan service provider in China, announced the dismissal of KPMG Huazhen LLP and appointment of HTL International, as its new independent registered public accounting firm, effective December 6, 2024. The change follows a thorough evaluation and received audit committee approval.

KPMG's reports on CNFinance's consolidated financial statements for fiscal years 2022 and 2023 contained no adverse opinions, disclaimers, or modifications regarding uncertainty, audit scope, or accounting principles. No disagreements occurred between CNFinance and KPMG on accounting practices, financial disclosures, or auditing procedures during this period. The company is working to ensure a smooth transition between auditors.

Positive

• Clean audit reports from KPMG for fiscal years 2022 and 2023 with no adverse opinions or modifications
• No disagreements with previous auditor on accounting practices or financial disclosures

Negative

• Change in auditor could signal potential internal changes or increased scrutiny of financial reporting

Insights

Financial Analyst

The shift from KPMG, one of the Big Four accounting firms, to HTL International represents a significant downgrade in auditor prestige that could raise red flags among investors. While the company states there were no disagreements or adverse opinions, such changes often warrant careful scrutiny, particularly for Chinese-listed companies. The timing of this change, announced late in the year for FY2024 audit, is unusual. KPMG's clean audit opinions for 2022 and 2023 provide some reassurance, but the switch to a lesser-known firm could impact investor confidence and potentially affect compliance costs. The 56.9M market cap suggests this is a smaller player in the Chinese financial services sector, making maintaining robust audit standards important for investor trust.

Corporate Governance Expert

This auditor change warrants attention due to several governance implications. While the company emphasizes a "careful and thorough evaluation process" and audit committee approval, the switch from a Big Four firm to a smaller, less recognized auditor could impact the company's credibility in international markets. The disclosure meets regulatory requirements by confirming no disagreements or reportable events, but investors should monitor subsequent filings closely. The timing of the announcement in December for the current fiscal year is noteworthy and somewhat unusual. This transition might affect the depth and scope of future audits, potentially impacting the robustness of financial oversight.

GUANGZHOU, China, Dec. 6, 2024 /PRNewswire/ -- CNFinance Holdings Limited (NYSE: CNF) ("CNFinance" or the "Company"), a leading home equity loan service provider in China, today announced the dismissal of KPMG Huazhen LLP ("KPMG"), the Company's independent registered public accounting firm, and appointment of HTL International, LLC ("HTL") as the Company's independent registered public accounting firm for the fiscal year ended December 31, 2024, effective December 6, 2024.

The appointment of HTL was made after a careful and thorough evaluation process and has been approved by the audit committee of the Company's board of directors.

HTL succeeds KPMG, the Company's previous independent registered public accounting firm. The reports of KPMG on the Company's consolidated financial statements for each of the fiscal years ended December 31, 2022 and 2023 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.

During each of the fiscal years ended December 31, 2022 and 2023 and the subsequent period through December 6, 2024, there have been no disagreements between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreements in its report on the consolidated financial statements, and there have been no "reportable events" as the term is described in Item 16F(a)(1)(v) of Form 20-F.

The Company is working closely with KPMG and HTL to ensure a seamless transition.

The audit committee would like to express its sincere gratitude to KPMG for its quality of services rendered to the Company over the past years.

About CNFinance Holdings Limited

CNFinance Holdings Limited (NYSE: CNF) ("CNFinance" or the "Company") is a leading home equity loan service provider in China. CNFinance, through its operating subsidiaries in China, conducts business by connecting demands and supplies through collaborating with sales partners and trust companies under the trust lending model, and sales partners, local channel partners and commercial banks under the commercial bank partnership model. Sales partners and local channel partners are responsible for recommending micro- and small-enterprise ("MSE") owners with financing needs to the Company and the Company introduces eligible borrowers to licensed financial institutions with sufficient funding sources including trust companies and commercial banks who will then conduct their own risk assessments and make credit decisions. The Company's primary target borrower segment is MSE owners who own real properties in Tier 1 and Tier 2 cities and other major cities in China. The Company's risk mitigation mechanism is embedded in the design of its loan products, supported by an integrated online and offline process focusing on risks of both borrowers and collateral and further enhanced by effective post-loan management procedures.

View original content:https://www.prnewswire.com/news-releases/cnfinance-announces-change-of-auditor-302324697.html

SOURCE CNFinance Holdings Limited

FAQ

Who is CNFinance's new auditor as of December 6, 2024?

HTL International, was appointed as CNFinance's new independent registered public accounting firm.

Were there any adverse opinions in KPMG's audit reports for CNF in 2022-2023?

No, KPMG's reports for fiscal years 2022 and 2023 contained no adverse opinions, disclaimers, or modifications regarding uncertainty, audit scope, or accounting principles.

Why did CNFinance (CNF) change its auditor?

The change came after a careful and thorough evaluation process and was approved by the audit committee of the Company's board of directors.