Chinese authorities have imposed a six-month ban on PwC and levied fines totaling over 400 million yuan ($56.4 million) due to its role in auditing the failed property developer Evergrande.
This penalty marks the most severe action taken against international accounting firms in China to date. PwC is prohibited from approving any financial statements within the country for six months, and it has already begun losing clients.
On Friday, China’s Ministry of Finance announced a fine of 116 million yuan (US$16.35 million) against PwC Zhong Tian, also known as PwC China, along with a six-month business suspension, the revocation of its Guangzhou branch, and an administrative warning.
Additionally, the China Securities Regulatory Commission has fined PwC 325 million yuan (US$45.8 million) for allegedly failing to conduct proper due diligence during the audit of Evergrande.
The finance ministry criticized PwC for issuing “false audit reports” on Evergrande, citing serious defects in the audit’s design and execution, which led to numerous inaccuracies. PwC was also accused of lacking “professional skepticism” and failing to highlight errors and inadequate information disclosure by Evergrande.
The securities regulator reported that 88 percent of PwC’s records related to real estate projects were inconsistent with actual conditions and deemed “seriously unreliable.” Some projects were still “a piece of vacant land” even though they were reported as meeting delivery conditions.
Mohamed Kande, PwC’s global chair, stated that the audit team’s work on Hengda, Evergrande’s main subsidiary, was “unacceptable” and did not reflect PwC’s standards. He emphasized that such performance is not representative of the network’s values and has no place at PwC.