Resignation! PwC discovers that a listed company's 63 million bank loan was not recorded!

On March 25, Hongli Medical Management (09906) published an announcement stating that its auditors, Ro&Tian Yongda Certified Public Accountants, resigned on March 24, 2026.

The reason for the resignation is that, during the audit process, Ro&Tian Yongda discovered a bank loan with a principal amount of RMB 63.0 million that was not recorded in the financial statements, and advised that an independent investigation committee be established to review the matter.

As this matter has not yet been resolved, it may cause significant uncertainty to the audit timetable. Therefore, the Company has decided to stop providing the necessary materials, resulting in Ro&Tian Yongda being unable to continue auditing the Company’s financial year 2025.

The Company has appointed Grant Thornton Certified Public Accountants (「Guowei」) as the new auditors, effective from March 24, 2026, and serving until the conclusion of the next annual general meeting of shareholders. In assessing Guowei, the Board of Directors and the Audit Committee considered factors such as its qualifications, audit approach, independence, and market reputation, and are of the view that it is qualified to serve as the new auditors.

Auditors’ resignation

The Board of Directors hereby notifies the Company’s shareholders (the 「Shareholders」) and potential investors that, at the request of the Company and in view of the circumstances described below, Ro&Tian Yongda Certified Public Accountants (the 「Ro&Tian Yongda」) has resigned as the Company’s auditors with effect from March 24, 2026.

As stated in Ro&Tian Yongda’s letter of resignation dated March 24, 2026 (the 「Resignation Letter」), during the course of Ro&Tian Yongda’s audit of the Group’s consolidated financial statements for the year ended December 31, 2025 (the 「Financial Year 2025」), Ro&Tian Yongda became aware that a bank loan in the amount of RMB 63,000,000 and the subsequent equivalent amounts thereof were at that time not recorded in the Company’s financial statements. Ro&Tian Yongda reported the matter to the board audit committee (the 「Audit Committee」) (the 「Matter」) and recommended that the Audit Committee establish an independent investigation committee, together with independent investigation consultants, to conduct an independent review of the Matter.

Ro&Tian Yongda explained that the independent investigation results will serve as an important basis for its audit of the Financial Year 2025. As the Matter has not yet been resolved and may bring significant uncertainty to the audit timetable, the Company has stopped providing Ro&Tian Yongda with the materials and documents required for its audit of the Financial Year 2025, and, in accordance with the board resolution dated March 24, 2026, has proposed that Ro&Tian Yongda resign as the Company’s auditors. Ro&Tian Yongda stated that as of the date of the Resignation Letter, Ro&Tian Yongda was unable to obtain all the materials and documents necessary to continue the audit of the Financial Year 2025, including performing the necessary audit procedures in respect of the Matter. The communications and the Board’s decision clearly indicate that it will not be able to obtain the materials required to fulfill its responsibilities for the audit of the Financial Year 2025. After due consideration, in light of the circumstances stated in the Resignation Letter, Ro&Tian Yongda has agreed to resign as the Company’s auditors with effect from March 24, 2026.

Actions taken by the Company

In respect of the matters set out in the Resignation Letter, the Company has taken, including the following, actions: (i) For handling the matters set out in the Resignation Letter, the Company’s Audit Committee has established an independent investigation committee (the 「Independent Investigation Committee」), comprising independent non-executive directors (namely, Mr. Sun Jigang, Mr. Zhao Chun and Mr. Jiang Tianfan). (ii) In order to further assist the work of the Independent Investigation Committee, the Company, having consulted the Independent Investigation Committee, has also engaged independent practising accountants as well as law firms located in the People’s Republic of China and Hong Kong to assist with matters related to the investigation and other regulatory matters arising from the investigation. (iii) The Independent Investigation Committee will, with the assistance of its advisers, determine the scope and procedures of the investigation and conduct an investigation into the matters of concern. (iv) The Company will also bring to the attention of the new auditors appointed by the Company after Ro&Tian Yongda, namely Guowei, the matters pointed out by Ro&Tian Yongda.

The Company was incorporated in accordance with the laws of the Cayman Islands. To the best knowledge of the Board of Directors, the laws of the Cayman Islands do not require the outgoing auditors to confirm whether there are any matters relating to their resignation that they consider should be brought to the attention of the Company’s securities holders. Accordingly, Ro&Tian Yongda has not issued any confirmation letter.

The Board of Directors and the Audit Committee have confirmed that, save as disclosed above, they are not aware of any matters in relation to Ro&Tian Yongda’s resignation as auditors that need to be brought to the attention of the Shareholders.

The Company would like to take this opportunity to express its sincere gratitude to Ro&Tian Yongda for the professional services it has provided over the past many years.

Appointment of new auditors

Upon the recommendation of the Audit Committee, Grant Thornton Certified Public Accountants (Limited) (the 「Guowei」) has been appointed as the new auditors of the Company, effective from March 24, 2026, to fill the casual vacancy arising from Ro&Tian Yongda’s resignation, and to hold office until the conclusion of the next annual general meeting of the Company’s Shareholders.

The Audit Committee has considered various factors, in accordance with its duties set out in its terms of reference, including but not limited to: (i) Guowei’s qualifications, including its experience in handling audits of companies listed on the Stock Exchange, and its familiarity with the requirements of the Listing Rules and the Hong Kong Financial Reporting Standards; (ii) Guowei’s audit methodology; (iii) its independence and objectivity; (iv) its market reputation; (v) its resources and capabilities; and (vi) the guidance issued by the Hong Kong Institute of Certified Public Accountants.

Based on the above, after assessment and consideration, the Audit Committee is of the view that Guowei possesses independence, competence and qualifications to serve as the new auditors of the Company. The Board of Directors and the Audit Committee are of the view that the relevant appointment is in the overall interests of the Company and the Shareholders.

The Board of Directors would like to take this opportunity to welcome Guowei in its role as the Company’s auditors.

A vast amount of information and precise interpretation—Everything is available on the Sina Finance APP