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No.26 of 2016 (General Serial No. 257):The Audit Results of the Assets, Liabilities, Profits and Losses of China Taiping Insurance Group Co., Ltd. for
2017-06-08日   Soure : 【来源:International Cooperation Department】 :

No.26 of 2016 (General Serial No. 257):

The Audit Results of the Assets, Liabilities, Profits and Losses of China Taiping Insurance Group Co., Ltd. for the year 2014

In accordance with the stipulations of the Audit Law of the People’s Republic of China, in 2015, the China National Audit Office (CNAO) conducted an audit on the assets, liabilities, profits and losses of China Taiping Insurance Group Co., Ltd. (hereinafter referred to as China Taiping) for the year 2014, with the extension and tracing back to relevant items. The auditing work focused on the headquarters of China Taiping and 5 subsidiaries including Taiping Life Insurance Co., Ltd., Taiping Property Insurance Co., Ltd., Taiping Asset Management Co., Ltd., Taiping E-commerce Co., Ltd. and Taiping Pension Insurance Co., Ltd. (hereinafter referred to as Taiping Life, Taiping Property, Taiping Asset Management, Taiping E-commerce and Taiping Pension respectively).

I. Overview

China Taiping has been the only central financial insurance group so far of which the headquarter is set in Hong Kong and has 20 secondary wholly-owned or holding companies. As reflected in the consolidated financial statement, by the end of 2014, the total assets of China Taiping had reached RMB353.144 billion, the total liabilities had been RMB313.945 billion and the owners equity had been RMB39.199 billion; the realized operating revenue of the same year had been RMB67.588 billion and a net profit of RMB3.723 billion had been earned.

The audit results indicated that China Taiping implemented the state economic and financial policies, promoted the establishment of modern corporate governance systems, highlighted the development of core business, doubled the growth of main development indicators in three years and preserved and increased the value of the state-owned assets. The results also demonstrated that some weak links still existed in such fields as financial revenue and expenditure, business operation, the risk management and control and professional ethics.

II. Major Problems Found in the Audit

(I) Financial revenue and expenditure

u From July 2012 to the end of 2014, the seats for telephone sales workers rented by Taiping E-commerce remained idle, resulting in RMB33.619 million loss of rent, among which the amount of 2014 was RMB8.415 million.

u From May 2012 to September 2013, Taiping Property irregularly used RMB2.3584 million of union funds to pay for employee benefits.

(II) Business operation

u China Taiping failed to actively develop agricultural insurance and loan guarantee insurance for small enterprises in accordance with related policies. In 2014, the accepted agricultural insurance only accounted for 0.08% of the national market share of the year; only 3 out of 30 property insurance branches had independently developed the loan guarantee insurance business for small enterprises and the premium income of 2014 was RMB767,600.

u From June 2008 to February 2015, through false listing of advertisement fee and meeting expenses, Taiping Life and Taiping Property defrauded RMB254 million to pay for employee rewards and marketing, among which the amount of 2014 was RMB46 million.

u From 2012 to 2014, in the name of travel expenses and physical examination fee, Taiping Life and Taiping Property paid RMB125 million, which was beyond the contracted business benefits, to the insurance applicants, the insured and the agencies, among which the amount of 2014 was RMB29 million.

u From 2012 to 2014, Taiping Property accounted such direct business as the car insurance applied by the part-time insurance agency institutions as agent service, resulting in an overpayment of RMB3.8368 million agency commissions, among which the amount of 2014 was RMB1.2 million.

u From April 2012 to the end of 2014, Taiping E-commerce irregularly paid RMB37.2361 million to purchase information data to be used for insurance marketing, among which the amount of 2014 was RMB1.88 million.

u From April 2012 to March 2015, in contravention of relevant regulations, Taiping Life directly organized persons instead of bank staffs qualified for insurance marketing to develop the banksagency business for telephone sales insurancein the banks and paid RMB155 million for related personnel expenses.

u From September 2012 to October 2014, without the permission of the parents of the insured, Taiping Pension irregularly accepted the life insurance kindergartens applied for the children, involving an amount of RMB105 million of accepted insurance fee and RMB120,100 of premium expenses, among which the amount of 2014 was RMB79,700.

(III) Risk management and internal control

u From April 2012 to the end of 2014, Taiping Asset Management chose related banks directly to develop deposit business of 51 items instead of inquiring and comparing some deposit banks in advance in accordance with the companys internal rules, involving an amount of RMB18.869 billion in total, among which the amount of 2014 was RMB7.389 billion.

u From December 2011 to April 2015, in violation of rules, Taiping Pension directly transferred the surrender value of group medical insurance of the clients into the accounts of pension security management products instead of returning it to the payment accounts of the original insurance products, involving an amount of RMB52.8104 million, among which the amount of 2014 was RMB24.5025 million.  

u In June 2011, when underwriting the pension security management plans of some individual enterprises, Taiping Pension failed to strictly audit on related materials provided by the clients that were necessary to proceed with the decision-making process for establishing the pension security management plan in accordance with regulations, and provided convenience for the clients to avoid the supervision of policies.

u On the construction of information systems, China Taiping failed to control the network access strictly enough, resulting in hidden danger in network security; the information management system of Taiping Asset Management wasnt perfect, which made the trading system fail to warn about inadequate fund balance in the accounts, resulting in liquidity management risks.

  

(IV) Professional ethics

u Since April 2012, through false listing of expenditures, the branch of Taiping Life in Sichuan Province has defrauded RMB3.2408 million to be used to arrange for tourism of the companys staff and their family members, among which the amount of 2014 was RMB1.2888 million.

u In violation of the regulations on professional ethics, one leader of the branch of Taiping Property in Yunnan Province engaged in running a business, which had business relationship with Taiping Property.

u By June 2015, the golf cards worth RMB9.12 million bought by Taiping Life and 3 provincial branches in Beijing, Shenzhen and Guangxi from 2002 to 2012 had not been cleared and returned.

III. Audit Disposal and Rectification

In regard to issues discovered through auditing, the CNAO has issued audit report and released letters of audit decisions in accordance with laws. China Taiping is organizing the rectification, and has formulated and improved 36 related regulations and punished those responsible. China Taiping will notify the general public of the details of rectification.

Clues related to issues in violation of laws and disciplines discovered through the audit have been transferred to departments concerned for further investigation.