China hands PwC a 6-month ban and fine over audit of the collapsed developer Evergrande
Chinese authorities have banned the accounting firm PwC for six months and fined it over $56 million for its involvement in the audit of collapsed local property developer Evergrande
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Your support makes all the difference.Chinese authorities have banned the accounting firm PwC for six months and fined it over 400 million yuan ($56.4 million) over its involvement in the audit of collapsed property developer Evergrande.
The punishment is the heaviest yet for international accounting firms operating in China. PwC will be banned from signing off on any financial results in the country for six months. Already, it has been losing clients.
China's Ministry of Finance said in a statement Friday that it was imposing 116 million yuan ($16.35 million) in fines and confiscation of illegal gains on PwC, as well as a six-month business suspension, revocation of PwC's Guangzhou branch as well as an administrative warning.
A separate regulator, the China Securities Regulatory Commission, also imposed fines and confiscations totaling 325 million yuan ($45.8 million) on PwC for allegedly failing to perform due diligence in the audit of Evergrande.
The auditor came under Beijing’s scrutiny after the January collapse of Evergrande, the world’s most indebted developer and a symbol of China’s ongoing property crisis.
China's securities regulator said in March that Evergrande had inflated its mainland China revenues by almost $80 billion in 2019 and 2020. In May, authorities fined the company $577 million.
PwC had audited Evergrande’s accounts for 14 years until 2023 and gave it a clean bill of health.
PwC has been the largest of the “big four” accounting firms operating in China, taking in nearly 8 billion yuan ($1.1 billion) in revenues in 2022, above competitors Deloitte, KPMG and EY, according to the Chinese Institute of Certified Public Accountants.
China has been cracking down on excessive borrowing by developers during a prolonged property market slump that has hit many other parts of the economy, including construction, building materials and home appliances.
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Soo reported from Hong Kong.