China fines accounting firm PwC $62 million, halts operations for 6 months

The ministry added that PwC not only failed to point out these inaccuracies, but also allegedly falsified the audit report on Evergrande.

PwC responded to the fine and suspension in a statement.

“We are disappointed with the audit work of Hengda (Evergrande’s main subsidiary) by PwC Zhong Tian (or “PwC ZT”), which fell unacceptably below the standards we expect from PwC network member firms,” the PwC statement said. “PwC ZT has fully cooperated with its regulators, respects their decisions and will fully comply with the administrative sanctions.”

PwC has announced that it has terminated the employment of six partners and five employees who were directly involved in the audit work.

The company also said it has “taken accountability measures and has begun imposing financial sanctions on current and former company leaders who were responsible for the company’s operations.”

PwC defended the integrity of its audit, blaming the incident on “a very small number of members of the engagement team, which is representative of the work of the vast majority of PwC China’s 18,000 professionals.”

Questionable accounting and a lack of proper oversight contributed to Evergrande’s collapse, leading to a bankruptcy in 2021 that impacted China’s real estate development and housing construction sectors.

The China Securities Regulatory Commission has found that PwC overlooked large-scale fraud at Evergrande and “violated multiple audit standards and requirements.”