Pu’er Lancang Ancient Tea Co., Ltd. (the Group) released an update regarding certain frozen bank accounts and outlined plans to engage an independent third-party institution for investigation. The Group intends to appoint Peng Sheng Certified Public Accountants (Special General Partnership) to conduct an independent review focused on potential deficiencies related to seal management, fund management and inventory oversight.
According to details disclosed, the primary goals of the investigation include verifying the scope and impact of the frozen accounts, identifying any internal control weaknesses involving unauthorized seal usage and inventory losses, and tracing suspicious fund flows to confirm any compliance breaches. The audit firm will examine documentation and directly contact banks and courts for verification. Upon concluding the investigation, Pengsheng plans to provide targeted rectification proposals.
Additionally, the Group’s auditor, Da Hua Certified Public Accountants (Special General Partnership), highlighted four core audit areas for the 2025 annual report. These areas are asset impairment, inventory existence and valuation, going concern capability, and revenue recognition. A large portion of the Group’s assets comprises inventory, which stood at 67.33% of total assets at the end of 2024 and 71.93% by mid-2025, making inventory management a critical audit consideration.
Da Hua’s planned audit approach will include analyzing internal controls related to warehousing, participating in year-end stock counts, and evaluating whether the Group’s reported inventory figures align with actual conditions. The firm also emphasized examining the rationality of asset impairment, verifying compliance with bank debt covenants for going concern assessments, and reviewing sales transactions to detect any revenue recognition irregularities.
The announcement further referenced prior disclosures of unauthorized borrowings by former directors, bank account freezing incidents, and internal control gaps related to seal usage. Da Hua confirmed that these issues would be incorporated into the continuing audit scope and tested alongside the Group’s updated processes.
The Board of Directors noted that upon finalizing the investigation, Pengsheng will issue two formal reports (an independent investigation report and an internal control review report) summarizing all findings and proposing corrective measures. The Group will disclose relevant updates in accordance with regulatory requirements.