In China Railway Construction's annual report, 'other expenses' surged by nearly 1 billion

　　April is the peak period for annual report releases, but reporters found that many central enterprises' 'sky-high entertainment expenses', which caused a stir in previous years, have disappeared. Taking China Railway Construction as an example, in its 2012 annual report, its 837 million yuan sky-high entertainment expenses attracted widespread attention. At that time, China Railway Construction promised to strive to reduce business entertainment expenses by more than 10% in 2013 compared to the previous year. Strangely, after searching through China Railway Construction's 2013 annual report, reporters could not find the item 'entertainment expenses'.

　　Entertainment expense cleanup began with the interim report

　　The strict implementation of the Central Eight-Point Regulation in 2013 indeed led to a downward trend in 'business entertainment expenses' within listed companies' administrative expenses in financial statements. Currently, 1,049 listed companies have disclosed their 2013 entertainment expense data, totaling 6.235 billion yuan, a decrease of 10.9% compared to the same period in 2012.

　　Among these listed companies, nearly 60% saw a decrease in entertainment expenses, with many experiencing significant drops. For example, China Coal Energy's entertainment expenses fell from 113 million yuan in 2012 to 77.79 million yuan in 2013, a decrease of 40%. Although the remaining 40% of companies saw year-on-year increases, most increases were small, remaining within 10%.

　　In fact, even before the annual reports were published, changes in business entertainment expenses could be seen in the interim reports released by listed companies. Reporters reviewed the 2013 interim reports of listed companies and found that among the 1,628 companies that disclosed business entertainment expenses, the highest was Gezhouba with 73.116 million yuan, and only three companies exceeded 50 million yuan: Gezhouba, China CNR, and Jishi Media. Even though second-half entertainment expenses are likely to exceed those of the first half, companies with annual entertainment expenses exceeding 100 million yuan will certainly not be many.

　　12 central enterprises hide 'business entertainment expenses'

　　The reduction in business entertainment expenses is only one phenomenon; some companies have simply stopped disclosing this expense. Overall, among the 251 central enterprises that have disclosed annual reports, only 156 disclosed entertainment expenses, accounting for 62%, compared to 168 in 2012, meaning 12 central enterprises hid this data in 2013.

　　For example, China Railway Construction, which revealed 837 million yuan in entertainment expenses last year, removed the 'business entertainment expenses' item from its 2013 annual report. China Communications Construction and Power Construction Corporation of China, which ranked second and third with 780 million and 342 million yuan in entertainment expenses in 2012, also did not publish their 2013 data.

　　Although the entertainment expense item is hidden, where exactly is the 'entertainment' money spent? It is reported that although central enterprises do not disclose entertainment expenses, nearly 60% of annual reports show significant increases in 'other' categories. For instance, China Railway Construction's 'other' item increased from 2.24 billion yuan to 3.226 billion yuan, a surge of 986 million yuan in one year, an increase of 44%.

　　The cancellation of entertainment expenses and the surge in other items have precedents. In its 2012 annual report, China State Construction Engineering Corporation had already removed the 'business entertainment expenses' item, but the amount under 'other' changed from 440 million yuan the previous year to 1.74 billion yuan.

　　Experts: The 'black box' of entertainment expenses hides many irregularities

　　China Railway Construction, China Communications Construction, and Power Construction Corporation of China—these central enterprises famous for their entertainment expenses—all come from the construction industry, and this is probably not a coincidence.

　　Business entertainment expenses refer to various expenses paid by enterprises for reception and socializing in business management activities, including expenses for external liaison, public relations, and guest reception. Industries with high business entertainment expenses are often those with many approval procedures or unfair competition.

　　Certified public accountant Ma Jinghao believes that 'the item of business entertainment expenses is, to some extent, a conceptually vague "box" that can hold both necessary business entertainment consumption and luxury or excessive consumption. Business entertainment expenses do not need to disclose details like the "three public expenses"; in short, it means lack of transparency.'

　　An employee of a construction central enterprise once said in an interview, 'Business entertainment expenses in the construction industry are higher than in general industries because under market economy conditions, whoever has more money gets things done easier, and you don't necessarily have to choose a central enterprise. If you want to take on projects and make money, you have to give gifts, and this part of the expenditure is often listed under the reception expense item.'