The Chinese authorities are intensifying their scrutiny of PricewaterhouseCoopers LLP (PwC) in connection with the accounting practices of China Evergrande Group, which has been accused of a $78 billion fraud.
What Happened: The Chinese securities regulator has accused Evergrande’s subsidiary, Hengda Real Estate Group, of inflating sales and significantly overstating its revenue from 2019 to 2020 before Evergrande’s default, reported Bloomberg on Friday.
The report, citing people familiar with the matter, said authorities are now investigating PwC in connection with the case. They are in contact with former PwC accountants who handled Evergrande’s audit. The authorities have not decided whether to penalize the auditor, as they are still investigating other suspected crimes of Evergrande’s founder, Hui Ka Yan.
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This development comes at a challenging time for PwC, which is already dealing with the repercussions of scandals in other parts of its global network. The firm’s practices in Australia and the UK have been under fire for various issues.
"There are serious questions about PwC's role in the Evergrande fraud, specifically what it knew about the improper revenue recognition," said Nigel Stevenson, an analyst at accounting ...