China imposes record fine of at least 1 billion yuan on PwC, the largest in the country. Photo: Bloomberg
By Bloomberg News
The China arm of PricewaterhouseCoopers LLP expects the Chinese government to impose a six-month ban as part of punishment for the audit of bankrupt real estate giant China Evergrande Group, a person familiar with the matter said.
The announcement is expected to be made within weeks, the person added, speaking on condition of anonymity because it is a private matter.
PwC is in the spotlight after China launched one of the largest financial fraud investigations in history. Authorities said developer Evergrande’s main onshore unit, Hengda, overstated its revenue by 564 billion yuan ($79 billion) in the two years through 2020.
China imposes a record fine of at least 1 billion yuan on PwC, the largest fine for accountants operating in the country, insiders said in May.
If the fine is imposed, it is expected to prevent PwC China from signing off on financial results, restructurings and IPOs, based on previous cases. PwC declined to comment on Thursday.
PricewaterhouseCoopers Zhong Tian LLP, a Shanghai-based 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 over what the developer called audit-related disagreements.
According to data compiled by Bloomberg, PwC was one of the four largest accounting firms most used by Chinese real estate companies listed in Hong Kong.
More than 30 listed companies based in mainland China, including state giants Bank of China Ltd. and PetroChina Co., have dropped PwC as their auditor this year. Most of the changes came after the firm came under fire for its role in an alleged accounting fraud at property developer China Evergrande.
PwC still counts some of China’s largest internet companies among its clients, including Tencent Holdings Ltd., Alibaba Group Holding Ltd., Meituan and Xiaomi Corp.
PwC has told clients that its staff will continue to work during the suspension and that they will be able to certify audits of 2024 annual reports once the ban is lifted in March, the Financial Times reported earlier.
First publication: Aug 22, 2024 | 10:05 AM IST