China hands PwC a six-month ban and fine for Evergrande involvement

PwC won’t be doing business in the world’s second-largest economy for the next half year.

Chinese regulators announced a six-month ban and record $62 million fine on the Big Four accounting firm for its audits of China Evergrande Group, according to media reports.

Regulators found PwC Zhong Tian (ZT) “helped cover up” fraud at Evergrande’s main onshore unit, Hengda Real Estate, Reuters reported. Evergrande’s “collapse in late 2021 jump-started the country’s property crisis,” according to the Wall Street Journal.

The China Securities Regulatory Commission said it found that 88% of PwC ZT’s audit work on Evergrande from 2019–2020 was untrue, according to Reuters.

In a statement, PwC said its China unit’s audits of Evergrande were “unacceptably below the standards we expect of member firms of the PwC network.”

PwC said it fired six partners and five other employees who were “directly involved” with the Hengda audits, and has started issuing penalties against “current and former firm leadership” involved with the dealings.

The Journal noted that the ban “freezes the firm out of the audit-busy months of January to April,” meaning it can’t “sign off on” companies’ annual reports in that period. Chinese companies that were working with PwC to go public in Hong Kong or the US will also be impacted, the Journal added.