JC Master · Listed Company Securities Compliance Column | Wuliangye’s Revenue of RMB 30.3 Billion Revised Downward—Is It a Correction of an Accounting Error, or Does It Conceal Something Else?

The high-quality development of the capital market hinges on the compliance foundation of listed companies. As the registration-based system is fully implemented and regulatory frameworks are iteratively refined, securities compliance has become a central pillar for the stable operation of listed offices. Accurately aligning with regulatory guidance and fortifying compliance safeguards are critical enablers for enterprises to navigate market cycles.

To this end, we have established this dedicated column, focusing on the core areas of securities compliance for listed companies: summarizing the key points of new regulatory rules, deconstructing the logic behind typical enforcement actions, dissecting the essence of court rulings, and conducting in-depth analysis of practical compliance challenges. Adopting a legal‑professional perspective, we employ pragmatic language and scenario‑based analysis to interpret compliance requirements, map out risk pathways, and provide actionable guidance, thereby helping companies strengthen their internal control systems, mitigate compliance risks, and enhance the effectiveness of their compliance management.

When compliance thrives, enterprises thrive; when compliance is stable, development is stable. We hope this column will serve as a trusted partner for listed companies—providing insights into regulatory trends, helping to address compliance challenges, mitigating compliance risks, and strengthening the foundations of sustainable growth—so that together we can foster the sound and healthy development of the capital market.

On April 30, 2026, Yibin Wuliangye Co., Ltd., the leading baijiu producer (stock code: 000858; hereinafter referred to as “Wuliangye”), disclosed its “…”. Announcement on the Correction of Prior-Period Accounting Errors 》， the company has made accounting error corrections and retrospective adjustments to its financial statements for the first, second, and third quarters of 2025 that were previously disclosed. The core of these adjustments involves revising the accounting treatment related to revenue recognition for certain business segments in 2025. The magnitude of these adjustments is substantial: operating revenue for the first three quarters of 2025 has been reduced from RMB 60.945 billion to RMB 30.638 billion, and net profit attributable to shareholders has been cut from RMB 21.511 billion to RMB 6.475 billion, representing reductions of approximately 50% and 70%, respectively.

This substantial retrospective adjustment to the company’s financial data has drawn widespread market attention. Subsequently, online reports emerged indicating that the Shenzhen Stock Exchange had issued an annual‑report inquiry letter to the company regarding the correction of these accounting errors. As of the date of this release, the purported inquiry letter and its accompanying documents have not yet been officially disclosed through either the listed company’s or the SZSE’s official channels, nor has the company issued a formal conofficeation announcement on the matter. According to the circulating content of the inquiry letter, regulators are focusing on the specific rationale, commercial reasonableness, and compliance of the accounting adjustments related to revenue recognition. They have requested the company to verify whether the relevant accounting treatments comply with the applicable provisions of the Enterprise Accounting Standards and to clarify whether this adjustment constitutes a change in accounting policy or a correction of prior‑period accounting errors. In addition, the inquiry seeks to determine whether the company has used adjustments to revenue‑recognition accounting to manipulate financial results across reporting periods, and it requires the company to provide supplementary disclosures on the specific impact of this adjustment on key financial metrics such as operating revenue and total profit for each reporting period, as well as on the establishment and implementation of internal control procedures pertaining to revenue recognition. It is important to note that the foregoing information reflects only market‑circulated reports; the final regulatory findings shall be determined solely by the company’s official announcements and other publicly released communications.
 

However, even with respect to this particular revenue revision, there are indeed grounds for skepticism:
 

1. What is the basis for this revenue reduction?
 

At this time, it is not yet possible to conclude that fraud has occurred. According to Wuliangye’s announcement, the adjustment “is based on a review of the 2025 business model and in accordance with the principle of prudence, involving corrections to errors in the revenue recognition accounting for the consolidated financial statements for the first quarter, half-year, and third quarter of 2025,” and is classified as a correction of prior‑period accounting errors.
 

The adjustment is based on Accounting Standard for Business Enterprises No. 28—Changes in Accounting Policies, Accounting Estimates, and Correction of Errors (hereinafter referred to as “Standard No. 28”). It is supported by applicable standards, follows a complete procedure, involves no fictitious transactions, no falsified data, and no concealment of information, and has been duly approved by the auditors. The purpose of the adjustment is solely to rectify previously non‑compliant revenue recognition practices, thereby restoring the true financial performance; it constitutes a correction of accounting errors within the framework of the accounting standards.
 

2. Does this reduction in revenue constitute a correction of an accounting error?
 

So‑called accounting errors, as defined in Article 4 of Accounting Standard No. 28—Changes in Accounting Policies, Accounting Estimates, and Correction of Errors (hereinafter referred to as “Standard No. 28”), refer to omissions or misstatements in prior‑period financial statements arising from the failure to apply, or the incorrect application of, information. Prior‑period errors include: computational errors, errors in the application of accounting policies, oversight or misinterpretation of facts, and the effects of fraud.
 

However, accounting errors must be objective and free of subjective intent; they should not reflect deliberate choices and must constitute systematic adjustments over an entire period, rather than a patchwork of selective corrections. In contrast, Wuliangye’s recent adjustment fails to meet these criteria: first, its shift from recognizing revenue upon shipment to recognizing revenue upon acceptance demonstrates deliberate action; second, this adjustment applies solely to 2025, with no prior-year systematic revisions.
 

Accordingly, it remains doubtful whether this adjustment can be characterized, as Wuliangye contends, as a correction of an accounting error.
 

3. How do baijiu companies recognize revenue?
 

From the perspective of revenue recognition practices in the baijiu industry, mainstream baijiu producers generally align with their own distribution models, typically designating “shipment/dispatch of goods” and “customer receipt/delivery” as the key milestones for transferring control and recognizing revenue. Specifically:
 

Kweichow Moutai – Revenue recognized upon delivery and receipt.
 

Yanghe Corporation – Revenue recognized upon delivery or receipt of goods.
 

Luzhou Laojiao—Revenue is recognized upon shipment and receipt.
 

Shanxi Fenjiu – Revenue is recognized upon shipment/warehouse dispatch.
 

Gujing Gongjiu – Revenue recognized upon shipment/warehouse dispatch.
 

Wuliangye’s retrospective adjustments to its revenue‑recognition accounting reflect a judgment on the point at which control of the goods is transferred that differs to some extent from the prevailing practices and industry norms among its peers in the baijiu sector. Moreover, since distributors are merely sales channels rather than subsidiaries or branches of Wuliangye, significant controversy remains regarding whether they have both the obligation and the capacity to implement Wuliangye’s revenue‑recognition policies, as well as, under the revised framework, whether ownership has been transferred and who bears the risks of damage or loss. Such adjustments cannot be resolved by a single announcement; Wuliangye must provide further clarification to address concerns from both the market and regulators.
 

4. Are there any issues with the audit office’s practices?
 

Both the 2024 and 2025 annual reports were audited by Tianzhi International Certified Public Accountants, with the same signing certified public accountant. Moreover, the textual descriptions of the revenue recognition principle— an important accounting policy— in both the 2024 and 2025 reports are identical. Given that the same accounting office applied the same revenue recognition policy, one must ask: why, under the same auditing office and with the same signing auditor, did the 2024 financial report recognize revenue in accordance with this policy and receive a standard unqualified opinion, while the 2025 report, based on the “principle of accounting conservatism,” made substantial adjustments to the accounting treatment of revenue recognition for the same business?

This multi-billion‑yuan restatement of accounting errors has, to a certain extent, shaken market and investor confidence in the reliability of financial reporting. As of now, the matter remains under close market scrutiny. It should be noted that, even though no formal regulatory inquiry has yet been issued, the company’s substantial retrospective adjustments to prior‑period financial data have already touched upon key regulatory requirements for listed‑company information disclosure. Consequently, there remains the possibility that the stock exchange may issue a formal regulatory inquiry, or that securities regulators may initiate an investigation and impose administrative penalties. The ultimate outcome of these developments will continue to be determined by the official announcements released by the listed company and the formal disclosures made by the regulatory authorities.

This article is published by Jiangsu JC Master Law Office. The author is Jiangsu JC Master Law Office, and the copyright belongs to the author. Please cite the original source when reprinting; violations will be prosecuted.