China Imposes Six-Month Ban and Fines PwC Over $56 Million for Evergrande Audit Failures

Chinese authorities have imposed a six-month ban on PwC and fined the firm over 400 million yuan (USD 56.4 million) for its involvement in the audit of collapsed property developer Evergrande. This marks the most severe punishment to date for an international accounting firm in China. PwC is prohibited from certifying financial results during this period and has already lost clients. The Ministry of Finance levied fines totalling 116 million yuan (USD 16.35 million) and revoked PwC’s Guangzhou branch.

Additionally, the China Securities Regulatory Commission fined PwC 325 million yuan (USD 45.8 million) for alleged negligence during the audit. Authorities accused PwC of issuing misleading audit reports and failing to exercise proper scepticism regarding Evergrande’s financial disclosures. Investigations revealed that PwC’s audit of Hengda, Evergrande’s main subsidiary, was seriously flawed, with 88% of project records deemed unreliable.

PwC responded by terminating six partners and five staff involved in the audit, acknowledging the misconduct while pledging to fully cooperate with authorities. This action follows Evergrande’s collapse in January, highlighting China’s ongoing crackdown on excessive developer borrowing during a real estate crisis. PwC has held a dominant position among China’s “Big Four” accounting firms.