PwC China faces six-month business ban, large fine over Evergrande audit, sources say
Chinese regulators will likely order business suspension for a big part of PricewaterhouseCoopers' auditing unit in mainland China for six months, as part of punishment for its work on troubled property developer Evergrande, five sources said.
The business ban is expected to be imposed on PwC Zhong Tian LLP, the registered accounting entity and the main onshore arm of PwC in China, said the sources, who have knowledge of the matter but declined to be named as the information was private.
The six-month ban is expected to focus on PwC Zhong Tian's securities-related business — which would affect the firm's work for clients including listed firms, IPO-bound companies, and investment funds on the mainland, said the sources.
It will be accompanied by a fine which is expected to be at least 400 million yuan ($56 million), three of the people said. Combined with the business suspension, it would be the toughest ever penalty received by a Big Four accounting firm in China, the three people added.
The PwC penalties, which are being mainly handled by China's Ministry of Finance (MOF), the primary regulator of accounting firms in the country, are yet to be finalised, said one of the sources.
"Given this is an ongoing regulatory matter, it would not be appropriate to comment," a PwC spokesperson said in statement.
The MOF did not immediately respond to requests for comment.
PwC has been under regulatory scrutiny for its role in auditing China Evergrande Group <3333.HK> since the troubled property developer was accused in March of a $78-billion fraud. PwC audited Evergrande for almost 14 years until early 2023.
Chinese regulators are expected to announce PwC's penalties in the coming weeks, three of the people said.
The Financial Times first