The Accounting Information Quality Check Result released by China's Ministry of Finance shows that SST Tianhai, ST Huapao and Aviation Communications all have been involved in accounting fraud in the past several years.

According to local media reports, MOF found out that the accounting practices and management of some state-owned enterprises need to be further regulated.

Tianjin Tianhai Group Company is said to have provided misleading accounting information, and the company's financial management is disorderly. Liuyang Huapao Holding Company included CNY18.59 million fees and CNY7.86 million payable taxes in 2005 in order to cover the losses of 2003 and 2004. Aviation Communications reportedly increased CNY31.1 million in virtual profit for the years between 2003 and 2005 through fund turnovers via other units.

MOF also found that some real estate companies break the rules in accounting practices, bad loans and credit and tax payment, and a few accounting firms, particularly medium and small ones, have such problems as weak internal quality controls and inefficient auditing.

MOF focused on the audits of large state-owned enterprises, listed companies, real estate companies and accounting firms. A representative from MOF says that they will strengthen the punishments and exposure of those illegal companies to further improve the efficiency of accounting supervision.