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The Chinese arm of PriceWaterCoopers (PWC) has been banned in China for six months with a fine of Rmb441 million, around $62 million slammed on it for auditing failures related to the collapsed property developer Evergrande, in Beijing’s toughest action yet against a Big Four firm. Techeconomy has reported.
The move follows a March announcement by China’s securities regulator that PwC China had approved Evergrande’s accounts even though the developer had inflated mainland revenues by nearly $80 billion in the two years before its default in 2021.
The penalty surpasses the $31 million fine and three-month partial business ban imposed on Deloitte last year for “serious audit deficiencies” related to its work with China Huarong Asset Management, one of China’s largest bad-debt managers.
China’s finance ministry said PwC issued “false audit reports” of Evergrande and that the audit procedures had “serious defects” in design and implementation, leading to many false conclusions. It also accused PwC of not maintaining “professional scepticism” and failing to point out errors and a lack of information disclosure by Evergrande during the audits.
The securities regulator said 88 per cent of the records kept by PwC regarding the real estate projects were inconsistent with the actual implementation and were “seriously unreliable.” When on-site investigations were carried out, some projects were still “a piece of vacant land” despite being considered to have met the delivery conditions, the regulator said.
“The work performed by PwC Zhong Tian’s Hengda audit team fell well below our high expectations and was completely unacceptable,” Mohamed Kande, global chair of PwC, said in a statement on its website. Hengda is the principal subsidiary of China Evergrande Group.
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