China cracks down on PwC, slaps $62.2 million fine, six-month ban over evergrande audit fiasco
By Shweta Kumari | First Published Sep 13, 2024, 5:56 PM ISTPricewaterhouseCoopers (PwC) has been slapped with a staggering $62.2 million fine and subjected to a six-month suspension, following its controversial audit of the struggling property titan, Evergrande.
In a dramatic escalation of its crackdown on financial misconduct, Beijing has unleashed a severe penalty on the illustrious accountancy firm PricewaterhouseCoopers (PwC). The firm has been slapped with a staggering $62.2 million fine and subjected to a six-month suspension, following its controversial audit of the struggling property titan, Evergrande. This action forms a pivotal part of China’s stringent measures aimed at rectifying financial misconduct within its real estate sector.
The Ministry of Finance’s thorough investigation unearthed a troubling revelation: PwC, alongside its Guangzhou branch, was acutely aware of critical inaccuracies in Evergrande Real Estate’s financial disclosures during the audit period. “After investigation, it was found that PricewaterhouseCoopers and its Guangzhou branch knew that there were major misstatements in Evergrande Real Estate’s financial statements during the audit,” the Ministry declared in a stark statement, reported Times Of India (TOI).
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Consequently, PwC is now facing a formidable set of administrative sanctions. The firm’s Guangzhou branch has been irrevocably shuttered, and PwC itself is barred from operating for six months. This stringent measure underscores the gravity of the situation and the government's resolve to enforce high auditing standards.
In tandem, China’s premier securities regulator has confirmed the imposition of the fine, which, in conjunction with the Ministry of Finance, amounts to a hefty 441 million yuan ($62.2 million). The regulator’s statement laid bare the firm’s failings: PwC’s audit was marred by a blatant disregard for due diligence.
The regulator accused PwC of "failing to maintain due professional scepticism, failing to make correct professional judgments, and failing to discover Evergrande Real Estate’s financial fraud, which was of large scale and high proportion."
This decisive action against PwC not only highlights the Chinese government’s unwavering commitment to combating financial dishonesty but also serves as a stark warning to other firms about the necessity of stringent compliance with auditing standards.
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