China Hits PwC with Blockbuster Fine and Suspension over Evergrande Audit

Chinese regulators have imposed a six-month business suspension and a record fine of 441 million yuan on PwC's auditing unit over its audit of China Evergrande Group. The penalties aim to promote standardized audit practices and have widespread implications on China's auditing market.

Chinese regulators have slapped PwC's mainland China auditing unit with a six-month business suspension and a record 441 million yuan ($62 million) fine over the firm's audit of the embattled property developer China Evergrande Group.

Authorities have scrutinized PwC's role in accounting for Evergrande's Hengda Real Estate following allegations of a $78-billion fraud by the securities regulator in March. The penalties, encompassing revenue confiscation and fines, are designed to warn both domestic and international accounting firms to adhere to standardized audit practices.

Experts predict that this landmark penalty will reshape China's auditing market, likely causing a shift of PwC clients to other big firms like EY and KPMG. The suspension and financial hit will also elevate discussions about the necessity for joint-auditing models and the potential development of a domestic auditing giant.

(With inputs from agencies.)