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PwC, the auditor of bankrupt Chinese property developer Evergrande, could soon face a ban in China.<\/p>\n
The Chinese entity of the \u201cBig 4\u201d accounting firm has told clients that it expects authorities to impose a six-month business ban as early as next month, The Financial Times <\/em>reports<\/a>.<\/p>\n Beijing is reportedly considering a huge fine on PwC in addition to the business ban. The fine could go as high as 1 billion yuan ($140 million), Bloomberg<\/a> reported in May, which would be the largest fine imposed on an auditing firm in China.\u00a0<\/p>\n Regulators are scrutinizing PwC for its role in auditing China Evergrande Group, the embattled property developer that has become the poster child of China\u2019s property crisis. In March, authorities accused<\/a> Evergrande of inflating its revenue by almost $80 billion in 2019 and 2020.\u00a0<\/p>\n Evergrande defaulted<\/a> on its debts in 2021, helping to trigger China\u2019s still-ongoing real estate crisis, which is continuing to drag down the economy. A Hong Kong court ordered<\/a> Evergrande\u2019s liquidation earlier this year.\u00a0Evergrande\u2019s liquidators have reportedly<\/a> started legal action against PwC China, accusing the auditor of \u201cnegligence.\u201d<\/p>\n According to the Financial Times, <\/em>a ban would stop PwC from signing off on financial results and initial public offerings, and from conducting other regulated activities.\u00a0<\/p>\n A PwC China spokesperson said it was not appropriate to comment on an ongoing regulatory matter. <\/p>\n Clients are already abandoning PwC China, which was China\u2019s leading auditing firm as late as this March. In a late Monday filing, state-owned Bank of China said it would switch auditors<\/a> to EY.<\/p>\n The loss of clients has reportedly led to job losses and pay cuts at PwC\u2019s China practice.<\/p>\n PwC\u2019s China troubles are just the latest crisis for the global auditing firm. Last October, the CEO of PwC\u2019s Australian practice apologised<\/a> to the Australian government for leaking confidential government tax plans to U.S. clients. PwC\u2019s Australian entity cut over<\/a> 600 jobs following the tax leak scandal and sold off its government consulting business for 1 Australian dollar ($0.67)\u00a0<\/p>\n Then, in December, a U.S. regulator fined<\/a> PwC $7 million after finding that over 1,000 of the auditor\u2019s China-based staff cheated on internal training exams related to U.S. auditing practices.<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>High-level insights for high-powered executives. Subscribe to the CEO Daily newsletter for free today. Subscribe now<\/a>.<\/div>\n<\/div>\n