Ministry of Finance fines PwC RMB 116 mn
According to the latest announcement from China's Ministry of Finance today (13th), a special investigation team was organized in January 2024 to examine the audit quality of PricewaterhouseCoopers (PwC) Zhongtian LLP and its Guangzhou branch in relation to Evergrande Real Estate Group.
In response to issues identified during the investigation, the Ministry of Finance, in September 2024, issued an administrative penalty against PwC and the involved certified public accountants, based on the Law of the People's Republic of China on Certified Public Accountants and the Law of the People's Republic of China on Administrative Penalty.
As per the penalty decision, the Ministry of Finance imposed an administrative fine of RMB 116 mn on PwC for illegal activities related to the 2018 audit of Evergrande Real Estate, including the confiscation of illegal gains. Additionally, PwC was issued a warning, suspended from business operations for six months, and its Guangzhou branch was revoked.
Regarding individual certified public accountants, the Ministry, in accordance with the Law of the People's Republic of China on Certified Public Accountants, revoked the licenses of four signing accountants responsible for the audit reports of Evergrande Real Estate's financial statements from 2018 to 2020. Furthermore, seven accountants involved in the preparation of Evergrande's consolidated financial statements were either fined or issued warnings under relevant regulations.
As for the responsibility of PwC Hong Kong, which provided audit services to China Evergrande Group, the Ministry of Finance will work through cross-border audit supervision mechanisms to coordinate with the Hong Kong Accounting and Financial Reporting Council to investigate and address relevant violations.
Moving forward, the Ministry of Finance will continue to strengthen its financial supervision efforts, cracking down on financial fraud and audit misconduct to uphold fairness, regulate market order, and support high-quality economic development.
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