PwC China is set to face a six-month business ban related to its audit of the collapsed Chinese real estate developer, Evergrande. The firm’s clients have been informed that the ban is expected to be imposed by China’s securities regulator as soon as September, according to the Financial Times.
In August 2022, Hong Kong’s audit watchdog began investigating PwC over its audit of Evergrande. By early 2023, PwC resigned as Evergrande’s auditor due to disputes over the audit of the developer’s 2021 financial statements. Evergrande subsequently filed for bankruptcy in the US later that year amid a debt restructuring process.
In early 2024, a Hong Kong court ordered the liquidation of Evergrande after the company failed to finalize a restructuring deal with creditors. In March, China’s securities regulator accused Evergrande and its founder Hui Ka Yan of overstating its mainland Chinese revenues by nearly $80 billion for 2019 and 2020.
According to the FT, the ban on PwC Zhong Tian (commonly known as PwC China) could be highly disruptive, as it would prevent the firm from signing off on financial results, initial public offerings, and other regulated activities. Despite the ban, the firm has assured clients that its staff will continue working during the suspension.
This penalty is more severe than the one imposed on Deloitte last year for “serious audit deficiencies” related to its work with China Huarong Asset Management. Deloitte was fined 211.9 million yuan (£25.3 million) and had its Beijing operations suspended for three months.
PwC China has declined to comment, citing the ongoing nature of the regulatory matter.
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By Benjamin
PwC China is set to face a six-month business ban related to its audit of the collapsed Chinese real estate developer, Evergrande. The firm’s clients have been informed that the ban is expected to be imposed by China’s securities regulator as soon as September, according to the Financial Times.
In August 2022, Hong Kong’s audit watchdog began investigating PwC over its audit of Evergrande. By early 2023, PwC resigned as Evergrande’s auditor due to disputes over the audit of the developer’s 2021 financial statements. Evergrande subsequently filed for bankruptcy in the US later that year amid a debt restructuring process.
In early 2024, a Hong Kong court ordered the liquidation of Evergrande after the company failed to finalize a restructuring deal with creditors. In March, China’s securities regulator accused Evergrande and its founder Hui Ka Yan of overstating its mainland Chinese revenues by nearly $80 billion for 2019 and 2020.
According to the FT, the ban on PwC Zhong Tian (commonly known as PwC China) could be highly disruptive, as it would prevent the firm from signing off on financial results, initial public offerings, and other regulated activities. Despite the ban, the firm has assured clients that its staff will continue working during the suspension.
This penalty is more severe than the one imposed on Deloitte last year for “serious audit deficiencies” related to its work with China Huarong Asset Management. Deloitte was fined 211.9 million yuan (£25.3 million) and had its Beijing operations suspended for three months.
PwC China has declined to comment, citing the ongoing nature of the regulatory matter.