China's securities regulator has disclosed that 214 listed companies received modified audit opinions on their 2025 annual financial reports, according to its latest accounting supervision review. While most firms demonstrated a solid grasp of corporate accounting standards and disclosure rules, a notable subset showed errors in areas such as revenue recognition and financial instruments, prompting heightened scrutiny from authorities.
The China Securities Regulatory Commission (CSRC) announced it will further refine its oversight framework for financial information disclosure and enhance regulatory effectiveness. As of April 30, 2026, a total of 5,517 listed companies had released their 2025 annual reports, comprising 3,201 on the main board, 1,397 on the ChiNext board, 608 on the STAR Market, and 311 on the Beijing Stock Exchange. Among those that filed on time, 214 received non-standard audit opinions: 109 were issued unqualified opinions with emphasis of matter or going-concern paragraphs, 87 received qualified opinions, and 18 were given disclaimers of opinion.
The regulator conducted a targeted sampling review of these annual reports. It found that while most listed companies correctly implemented corporate accounting standards and financial disclosure rules, some still made errors in accounting treatment or disclosure—particularly in revenue, financial instruments, long-term equity investment and business combinations, asset impairment, and research and development (R&D) expenditures.
On revenue-related issues, the regulator flagged instances where companies failed to appropriately apply the net method for revenue recognition, misjudged the timing of control transfer for goods, mishandled contract fulfillment costs, or incorrectly processed variable consideration. In the area of financial instruments, some firms did not properly handle investments in limited-life entities, failed to correctly recognize obligations to purchase shares of subsidiaries from other investors, inaccurately calculated expected credit losses on contract assets, or misstated receivables and their associated bad debt provisions.
Regarding long-term equity investments and business combinations, certain companies did not correctly determine the scope of consolidated financial statements, failed to properly recognize investment income from associates, or inaccurately accounted for gains or losses on equity disposals. In asset impairment, some firms did not appropriately allocate asset groups for impairment testing, conducted inadequate goodwill impairment assessments, or failed to set aside proper provisions for long-term equity investment impairments. On R&D expenditures, a few companies did not accurately determine the capitalization point for outsourced R&D costs, mis-measured intangible assets and inventory arising from customized product development, or improperly recognized internal R&D project expenditures.
To address these findings, the CSRC outlined four key priorities going forward. First, it will deepen implementation of central government directives to improve the supervisory mechanism for financial disclosure and boost regulatory efficiency. Second, it will continue tracking all issues identified through financial report reviews and handle follow-up regulatory actions in accordance with laws and rules. Third, it will strengthen coordination among regulators to unify standards on key common problems. Fourth, it will enhance practical guidance on complex accounting issues to improve consistency and effectiveness in how listed companies apply corporate accounting standards and disclosure rules across the capital market.
The regulator emphasized that listed companies and intermediaries, including accounting firms, should take the issues highlighted in the report seriously. They are urged to promptly correct errors in financial reports, stay current with corporate accounting standards and disclosure regulations, and strengthen the quality of financial information disclosure to support the healthy development of the capital market.