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The penalties have already triggered an exodus of clients and internal cost-cutting measures at PwC China, further clouding the firm’s future in the world’s second-largest economy
PricewaterhouseCoopers (PwC) China is expected to face a six-month suspension of its auditing operations related to securities in mainland China, following regulatory scrutiny over its audit work for the troubled property developer Evergrande. Sources indicate that the ban, set to impact PwC Zhong Tian LLP, PwC’s main onshore entity, could affect clients including listed companies, IPO-bound firms, and investment funds.
Additionally, PwC is likely to be hit with a fine of at least 400 million yuan ($56 million), marking the largest penalty ever imposed on a Big Four accounting firm in China. The penalties are being led by China’s Ministry of Finance (MOF), which has not yet finalized the details. PwC audited Evergrande for nearly 14 years until early 2023, and the firm has been under intense scrutiny since Evergrande was accused of a $78-billion fraud in March.
The penalties have already triggered an exodus of clients and internal cost-cutting measures at PwC China, further clouding the firm’s future in the world’s second-largest economy. The business suspension is expected to extend beyond securities-related services, potentially barring PwC from signing off on key documents for new state-owned or domestically-listed clients for up to three years. The Chinese regulators are expected to finalize and announce the penalties in the coming weeks.
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