Deloitte Touche Tohmatsu is no longer the auditor of GCL-Poly Energy Holdings Ltd (HKG:3800) as the two were unable to reach a consensus on the scope of an independent forensic investigation into a previously made prepayment for a now terminated project.
The Chinese polysilicon maker announced this on Monday, saying that Deloitte had tendered its resignation on May 14.
Last month, Deloitte signalled that while performing the audit of GCL-Poly’s 2020 annual results, it encountered an issue relating to a CNY-510-million (USD 79.4m/EUR 65m) prepayment made in 2019 by subsidiary Jiangsu Zhongneng Polysilicon Technology Development Co Ltd. The prepayment was made for the purposes of an engineering, procurement and construction (EPC) contract for a silicon material production project in Jiangsu Province that was eventually cancelled in April 2021 due to the impact of the COVID-19 pandemic. The lead contractor has subsequently made a cash refund of CNY 495.28 million, which represents the aforementioned prepayment minus costs incurred in relation to the contract.
In a previous bourse filing, GCL-Poly said that the auditors had raised concerns primarily in relation to the commercial rationale of the EPC contract, including the validity of the prepayment. Deloitte has then suggested that an independent accounting firm is hired to carry out a forensic investigation into the matter. While GCL-Poly did engage such a firm, it and Deloitte have failed to agree on the scope of the investigation, which has resulted in the latter’s resignation.
The polysilicon maker has subsequently mandated Crowe (HK) CPA Ltd as the new auditor of the company.
GCL-Poly is meanwhile dealing with debt issues as its solar plants operating unit GCL New Energy Holdings Ltd (HKG:0451) defaulted on USD 500 million (EUR 410m) worth of 7.1% senior notes on January 30, 2021.
