China mulls record fine for PwC over Evergrande auditing, Bloomberg News reports

By Thomson Reuters May 30, 2024 | 4:30 AM

(Reuters) -China is weighing a record fine for PricewaterhouseCoopers LLP (PwC) and suspending some of the auditor’s local operations over its role in auditing troubled property developer China Evergrande Group, Bloomberg News reported on Thursday.

The fine could be at least 1 billion yuan ($138 million), while PwC is facing a halt of operation at some of its mainland offices. China’s Ministry of Finance may announce the penalties as soon as this week, the report added, citing people familiar with the matter.

PwC and the Ministry of Finance did not immediately respond to Reuters’ queries on Thursday.

PwC has been in the spotlight since a Chinese regulator earlier this year found Evergrande, once the country’s biggest developer, had overstated revenue at its main unit Hengda by 564 billion yuan in the two years through 2020.

PwC was Evergrande’s auditor for almost 14 years until it resigned in early 2023. Evergrande said in a previous filing that this was due to disagreements on audit matters.

Meanwhile, PwC is under a separate investigation initiated by a Hong Kong financial regulator in April, after a whistle-blower letter was circulated that raised concerns over audit deficiencies in matters including China Evergrande.

Evergrande was ordered to be liquidated by a Hong Kong court earlier this year for not able to deliver a debt restructuring plan more than two years after it defaulted on offshore note payments.

($1 = 7.2494 Chinese yuan renminbi)

(Reporting by Gursimran Kaur in Bengaluru and Xie Yu in Hong KongEditing by Mark Potter)