Chinese authorities have banned the accounting firm PricewaterhouseCoopers LLP for six months and fined it more than 400 million yuan (US$56.5 million) over its involvement in the audit of collapsed property developer China Evergrande Group (恆大集團).
The punishment is the heaviest yet for international accounting firms operating in China.
PwC would be banned from signing off on any financial results in the country for six months. Already, it has been losing clients.
Photo: AP
The Chinese Ministry of Finance in a statement on Friday said that it was imposing 116 million yuan in fines and confiscation of illegal gains on PwC Zhong Tian LLP (普華永道中天會計師事務所), also known as PwC China, as well as a six-month business suspension, revocation of PwC’s Guangzhou branch and an administrative warning.
A separate regulator, the China Securities Regulatory Commission, also imposed fines and confiscations totaling 325 million yuan on PwC for allegedly failing to perform due diligence in the audit of Evergrande.
The Chinese Ministry of Finance said PwC issued “false audit reports” of Evergrande and that the audit procedures had “serious defects” in design and implementation, leading to many false conclusions.
It also said that PwC did not maintain “professional skepticism” and failed to point out errors and a lack of information disclosure by Evergrande during the audits.
The securities regulator said 88 percent of the records kept by PwC regarding the real estate projects were inconsistent with the actual implementation and were “seriously unreliable.”
When on-site investigations were carried out, some projects were still “a piece of vacant land” despite being considered to have met the delivery conditions, the regulator said.
“The work performed by PwC Zhong Tian’s Hengda audit team fell well below our high expectations and was completely unacceptable,” PwC global chair Mohamed Kande said in a statement. Hengda Real Estate Group Co (恒大地產集團) is the principal subsidiary of China Evergrande Group.
“It is not representative of what we stand for as a network and there is no room for this at PwC,” he said.
The statement said PwC Zhong Tian has cooperated fully with regulators, respects their decisions and would fully comply with the administrative penalties.
The firm is also in the process of issuing financial penalties for current and former firm leaders who were responsible for the business, the statement said.
PwC came under Beijing’s scrutiny after the collapse of Evergrande in January, the world’s most indebted developer and a symbol of China’s ongoing property crisis.
China’s securities regulator in March said that Evergrande had inflated its China revenues by almost US$80 billion in 2019 and 2020.
In May, authorities fined the company US$577 million.
PwC had audited Evergrande’s accounts for 14 years until last year and gave it a clean bill of health.
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
‘IMMENSE SWAY’: The top 50 companies, based on market cap, shape everything from technology to consumer trends, advisory firm Visual Capitalist said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was ranked the 10th-most valuable company globally this year, market information advisory firm Visual Capitalist said. TSMC sat on a market cap of about US$915 billion as of Monday last week, making it the 10th-most valuable company in the world and No. 1 in Asia, the publisher said in its “50 Most Valuable Companies in the World” list. Visual Capitalist described TSMC as the world’s largest dedicated semiconductor foundry operator that rolls out chips for major tech names such as US consumer electronics brand Apple Inc, and artificial intelligence (AI) chip designers Nvidia Corp and Advanced
Saudi Arabian Oil Co (Aramco), the Saudi state-owned oil giant, yesterday posted first-quarter profits of US$26 billion, down 4.6 percent from the prior year as falling global oil prices undermine the kingdom’s multitrillion-dollar development plans. Aramco had revenues of US$108.1 billion over the quarter, the company reported in a filing on Riyadh’s Tadawul stock exchange. The company saw US$107.2 billion in revenues and profits of US$27.2 billion for the same period last year. Saudi Arabia has promised to invest US$600 billion in the US over the course of US President Donald Trump’s second term. Trump, who is set to touch
SKEPTICAL: An economist said it is possible US and Chinese officials would walk away from the meeting saying talks were productive, without reducing tariffs at all US President Donald Trump hailed a “total reset” in US-China trade relations, ahead of a second day of talks yesterday between top officials from Washington and Beijing aimed at de-escalating trade tensions sparked by his aggressive tariff rollout. In a Truth Social post early yesterday, Trump praised the “very good” discussions and deemed them “a total reset negotiated in a friendly, but constructive, manner.” The second day of closed-door meetings between US Secretary of the Treasury Scott Bessent, US Trade Representative Jamieson Greer and Chinese Vice Premier He Lifeng (何立峰) were due to restart yesterday morning, said a person familiar
RSS