The textile workshop owner's daughter ignited sponges stacked on the first floor of the workshop on March 26, the Administration of Work Safety of Guangdong Province said in its report.
Twelve people were killed in the blaze in south China's Guangdong Province, state-run Xinhua news agency reported.
The factory owner had been illegally using a residential building as a workshop, and violated several fire safety laws such as insufficient exits, shortage of fire-extinguishing equipment and failure to conduct safety training for employees, officials said.
Wu Ximing, deputy head of the township, and two others were being investigated for suspected abuse of power.
All but one of the injured have now been discharged from hospital.
Family members of the victims have signed compensation agreements, the report said without specifying the amount.
Fire accidents happen regularly at mines and factories in China, where workplace safety standards are a matter of concern.
In June last year, a deadly blaze at a poultry farm in the northeastern province of Jilin killed 120 and injured at least 70.
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