PwC weighs halving of China financial services audit staff, Reuters reports

PricewaterhouseCoopers is considering slashing up to half its financial services auditing staff in China, two people with knowledge of the matter said, as a regulatory investigation and an exodus of clients darken business prospects.

The move follows Chinese regulators' scrutiny of PwC this year for its role as the auditor of troubled property giant China Evergrande Group, which, in turn, triggered the exit of some clients.

PwC's financial services auditing operation employs at least 2,000 people across mainland China with main hubs in Beijing and Shanghai servicing clients such as banks, insurers, and asset and wealth managers, said the sources, who sought anonymity.

The firm, with 781 partners and nearly 19,000 employees in mainland China as of last September, according to its website, is also mulling laying off about 20% of the staff in other auditing teams and non-auditing business lines, they added.

PwC's China businesses range from consulting to tax services, besides auditing. The size of the cuts in its financial services auditing unit and other business lines is being reported for the first time by Reuters.

PwC China's layoffs started last week, and the overall target is expected to be met over a period of time, said the sources, who declined to be identified as they were not authorized to speak to media.

"In light of changes to the external environment, we are making some adjustments to better optimize our organizational structure to align with market demand," a PwC spokesperson said in an emailed statement.

Chinese authorities have been examining PwC's role in Evergrande's accounting practices after the securities regulator accused the developer in March of a $78-billion fraud over a period of two years through 2020.

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