China Mulls Record Fine And Suspension Of PwC Operations Over Evergrande Auditing

China Mulls Record Fine And Suspension Of PwC Operations Over Evergrande Auditing

China is imposing a record fine on PricewaterhouseCoopers LLP (PwC) and suspending certain operations of the auditing firm due to its involvement in auditing the troubled property developer China Evergrande Group, as reported by Bloomberg News on Thursday.

The fine could amount to at least 1 billion yuan ($138 million), with PwC facing the suspension of operations at some of its offices in mainland China. Sources familiar with the matter stated that China's Ministry of Finance may announce these penalties as early as this week, according to the report.

Neither PwC nor the Ministry of Finance responded immediately to Reuters' inquiries on Thursday.

PwC has come under scrutiny following a finding by a Chinese regulator earlier this year, revealing that Evergrande, once China's largest developer, had inflated revenue at its main unit, Hengda, by 564 billion yuan over the two years leading up to 2020.

PwC served as Evergrande's auditor for nearly 14 years until it stepped down in early 2023. Evergrande stated in a previous filing that the resignation was a result of disagreements on audit-related issues.

Meanwhile, PwC is facing a separate investigation initiated by a Hong Kong financial regulator in April, following the circulation of a whistle-blower letter raising concerns about audit deficiencies, including those related to China Evergrande.

Earlier this year, a Hong Kong court ordered the liquidation of Evergrande for its failure to produce a debt restructuring plan more than two years after defaulting on offshore note payments.