Press "PandaGuides" above to follow us!
PwC Zhong Tian, the China unit of the Big Four accounting firm, has been fined a record 441 million yuan (US$62.2 million) and banned for six months from conducting auditing activities. The penalties stem from the firm’s failure to properly audit the finances of bankrupt developer China Evergrande Group, according to a recent statement by China’s Ministry of Finance.
This is the harshest penalty imposed on an audit firm in China to date, part of the government’s efforts to strengthen financial regulations and promote market integrity. PwC Zhong Tian was found to have overlooked Evergrande’s actual financial condition and the company’s false accounting practices between 2018 and 2020.
According to the Ministry of Finance, PwC Zhong Tian, including its Guangzhou unit, did not provide a proper audit opinion during that period and failed to identify significant issues in Evergrande’s financial statements. These included misrepresented assets and liabilities, which contributed to the company’s growing financial crisis.
In addition to the Ministry of Finance’s findings, the China Securities Regulatory Commission (CSRC) also revealed that PwC Zhong Tian helped conceal fraudulent activity. The firm failed to conduct thorough onsite audits, missing key discrepancies such as Evergrande’s claims of completed properties, which were actually undeveloped land.
The heavy fines and the temporary suspension aim to hold accounting firms accountable and prevent similar oversight failures in the future as China pushes for greater transparency and reliability in its financial sector.
Source: SCMP
