PwC expects 6-month ban in China for Evergrande audit
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More than 30 publicly listed firms based in mainland China have dropped PwC as their auditor in 2024.
PHOTO: REUTERS
Sydney - PricewaterhouseCoopers’ (PwC) China unit expects the Chinese government to hand down a six-month ban as part of punishment over its audit of failed property giant China Evergrande Group, according to a person familiar with the matter.
The announcement is expected to be made within weeks, the person added, requesting not to be named because the matter is private.
PwC has been under the spotlight after China launched one of the biggest investigations of financial fraud in history.
The authorities said developer Evergrande’s main onshore unit Hengda overstated its revenue by 564 billion yuan (S$103 billion) in the two years through 2020.
Sources said in May that China is weighing a record fine
If the penalty is handed down, it is expected to stop PwC China from signing off on financial results, restructurings and initial public offerings, based on previous cases. PwC declined to comment on Aug 22.
PricewaterhouseCoopers Zhong Tian, a Shanghai-registered firm that is part of PwC’s global network, was Hengda’s auditor during the period in question.
PwC was Evergrande’s auditor for more than a decade until the global accounting firm resigned in January 2023, due to what the developer said were audit-related disagreements.
Among the Big Four accounting firms, PwC was one of the most commonly used by Chinese real estate firms listed in Hong Kong, according to data compiled by Bloomberg.
More than 30 publicly listed firms based in mainland China, including state-owned giants Bank of China and PetroChina, have dropped PwC as their auditor in 2024. Most of the changes happened after the firm came under scrutiny for its role in an alleged accounting fraud at property developer China Evergrande.
PwC still counts some of China’s biggest internet companies, including Tencent Holdings, Alibaba Group Holding, Meituan and Xiaomi, as clients.
PwC told clients its staff will keep working during the suspension and will be able to certify the audits on 2024 annual reports once the ban is lifted in March 2025, the Financial Times reported earlier. BLOOMBERG
