PwC Receives Record Fine and Suspension in China Over Evergrande Audit

Chinese regulators imposed a six-month business suspension and a record 441 million yuan fine on PwC's auditing unit in mainland China over its audit of the troubled property developer China Evergrande Group. The punitive action highlights the critical role of Big Four accounting firms in China and examines their auditing activities of major Chinese companies.

In an unprecedented move, Chinese regulators have levied a six-month business suspension and a record fine of 441 million yuan ($62 million) on PwC's mainland auditing unit, over its work on the troubled property developer China Evergrande Group.

This severe penalty is the toughest ever handed to a Big Four accounting firm in China. It draws attention to the dominant role these firms play in auditing major Chinese enterprises. The regulators' scrutiny follows allegations by the China Securities Regulatory Commission accusing Evergrande of a $78 billion fraud relating to its Hengda Real Estate unit.

PwC's network expressed disappointment over its member firm's audit quality, which it deemed fell below acceptable standards. This action accentuates the significant presence and influence of firms like PwC, EY, Deloitte, and KPMG in China, which audit a vast majority of the nation's largest state-owned companies and financial institutions.

(With inputs from agencies.)