PwC Zhong Tian ⁇ a, the Chinese unit of PwC ⁇ , was fined 441 million yuan ($62.2 million) and banned from activities for 6 months, the Ministry of Finance said in a statement.
In the statement, it was stated that the company failed to detect the frauds in Evergrande ⁇ 's accounts and the real financial outlook of the company during the audits carried out in 2018-2020, and therefore reported a misleading audit opinion.
While the company was fined 5 times its income from account audits in 2018 and 10 times its income in 2019 and 2020, this was the most severe sanction against a financial consultancy and independent audit company to date.
On the other hand, the company was banned from its activities in China for 6 months, while the business license of its office in the city of Guancou, which supervises Evergrande ⁇ , was revoked.
Headquartered in Shanghai, China, PwC Zhong Tian undertook account audits of the sunken real estate giant for more than 10 years before terminating its contract in January 2023 due to disputes.
Irregular debt bonds with deceptive balance sheets
Evergrande, one of China's largest construction and real estate companies, was in a deepening debt crisis after the decline in the real estate sector during the Covid-19 period.
The company, whose total debt obligation exceeded $300 billion, defaulted on its debts because it could not pay it when it was due. In the lawsuit filed by the creditors in Hong Kong, the court decided to liquidate the company's assets in order to pay the debts.
In addition to debt problems, an investigation was launched by regulatory agencies and judicial authorities, and Chairman Hui Ka Yan was placed under judicial supervision.
China's Securities Regulatory Commission (CSRC) reported that Evergrande ⁇ 's main subsidiary, Hengda Real Estate Group, had issued irregular debt bonds by reporting more income and profitability on its financial balance sheets in the process of sinking.
