
Chinese regulators are likely to order suspension of business for a big part of PricewaterhouseCoopers's (PwC) auditing unit in mainland China for six months, as part of punishment for its work on troubled property developer Evergrande, Reuters reported citing sources.
The business ban is expected to be imposed on PwC Zhong Tian LLP, the registered accounting entity and the main onshore arm of PwC in China, the report added.
Chinese regulators have in recent months asked several large state-owned clients of PwC to drop the auditor as it braces for penalties over its work for troubled property developer Evergrande, according to reports.
PwC is under regulatory scanner after China’s securities regulator in March said Evergrande had inflated its revenues by almost $80 billion in the two years before the developer defaulted on its debts in 2021, despite PwC’s China unit giving the firm’s accounts a thumbs up.
The six-month ban is expected to focus on PwC Zhong Tian’s securities-related business. It will be accompanied by a fine which is expected to be at least 400 million yuan ($56 million). Combined with the business suspension, it would be the toughest ever penalty received by a Big Four accounting firm in China, the Reuters report added.
PwC Zhong Tian is registered in Shanghai and is part of PwC’s global network of accounting firms. It served as Evergrande’s auditor for over a decade until its resignation in January 2023 over audit-related disagreements.
Liquidators of the beleaguered Chinese realty firm Evergrande have launched court proceedings against PwC, accusing the Big Four auditing firm of “negligence” and “misrepresentation” in its work for the collapsed property group.
PwC China was the country’s largest accounting firm by revenue in 2022, bringing in Rmb7.9 billion ($1.1 billion), according to government data.
Bank of China (BOC), China Life Insurance, PICC, China Taiping Insurance and China Cinda Asset Management, are now among the Chinese companies that have axed PwC as auditor this year, following a government 'guidance'.
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