China hits PwC with six month ban and large fine in record penalty over Evergrande audit

Source: Reuters

China hits PwC with six month ban and large fine in record penalty over Evergrande audit

Julie Zhu and Xie Yu
Updated Fri, September 13, 2024 at 12:08 PM EDT·5 min read

HONG KONG (Reuters) -Chinese regulators hit PwC's mainland China unit with a six-month suspension and a record fine of 441 million yuan ($62 million) on Friday over the firm's audit of failed property developer China Evergrande Group.

Delivering a strong rebuke to the Big Four firm, China's securities regulator said its investigation found that PwC Zhong Tian LLP "turned a blind eye" to and "even condoned" Evergrande's fraud while auditing the annual results of the developer's onshore flagship unit - Hengda Real Estate and assisting its bond issuance - in 2019 and 2020.

"PwC's behavior goes beyond mere auditing failure. It, to a certain extent, covered up and even condoned Hengda Real Estate's financial fraud and fraudulent issuance of corporate bonds," said the China Securities Regulatory Commission (CSRC) in a statement.

Chinese authorities have been examining PwC's role in Evergrande's accounting practices since the CSRC accused the developer in March of a $78-billion fraud over a period of two years through 2020.

PwC audited Evergrande for almost 14 years until early 2023.

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