Audit major PwC has been under regulatory scrutiny for its role in auditing China Evergrande Group since the developer was accused in March of a $78-billion fraud. PwC audited Evergrande for almost 14 years until early 2023.
Following the scandal, PwC resigned as auditor for defaulted developer Country Garden Holdings Co., as both firms navigate challenges to keep operations afloat in China. The real estate company said PwC is unable to fulfill the timetable requirements for the company’s need to publish its overdue financial statements for 2023. PwC will be replaced by Hong Kong-based Zhonghui Anda CPA, according to a filing.
In the most recent case of a Big Four auditor being hit with hefty penalties, Deloitte‘s Beijing branch in March last year was fined 211.9 million yuan and the branch’s operations were suspended for three months after serious deficiencies were found in its audit of China Huarong Asset Management.
In the past few months, at least 50 Chinese firms, many of which are state-owned enterprises or financial institutions, have either dropped PwC as their auditor or cancelled plans to hire the firm, according to stock exchange filings reviewed by Reuters.
PwC Zhong Tian recorded revenues of 7.92 billion yuan in 2022, making it China’s highest-earning auditor that year, followed by EY, Deloitte and KPMG, official figures show.(more to come)
