Hong Kong’s Accounting and Financial Reporting Council (AFRC) has stated that it will start an investigation on PwC’s role behind the auditing of the Chinese real estate developer, Evergrande.
PwC was the auditor for Evergrande for more than a decade before resigning last year amid disagreements on the audit of the firm’s 2021 accounts. The AFRC’s decision follows the publication of a whistleblower report, which sought to criticise the Big Four firm’s handling of the Evergrande audit.
In an official statement, the AFRC said: “It has come to the attention of the Accounting and Financial Reporting Council (AFRC) that a whistle-blower report has been circulating and reported in the media. The report expressed significant concerns regarding potential alleged deficiencies in PricewaterhouseCoopers’ systems of quality management and the quality of the audits of China Evergrande Group.
“Given the gravity of these allegations and the necessity to safeguard the interests of the investing public, the broader public interest in the auditing of listed entities, and to maintain public confidence in the integrity of the accounting profession, the AFRC is obliged to initiate an investigation. The AFRC will not hesitate to take stringent enforcement actions against any firms and individuals if they are found to have committed any misconduct or violated the Accounting and Financial Reporting Council Ordinance.”
PwC also said it had reported the matter to authorities and would investigate the incident with “high priority”. Chinese authorities are examining the role of PwC in auditing Evergrande, though no decision regarding penalties has been made, Bloomberg News reported last month.
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